Week in Insights: Dutch Unrealized Gains Tax Is a Surprise Reform

The Netherlands didn’t set out to tax unrealized gains. It arrived there because its highest court invalidated a more modest policy of taxing “assumed” investment returns. Lawmakers were left with a multibillion-euro revenue hole and few legally viable ways to fill it.

Their solution was to tax the annual change in value of stocks, bonds, and crypto at 36% regardless of whether those assets are sold. It’s essentially a limited wealth tax, set to take effect in 2028.
For years, the Netherlands taxed savings and investment income under a simple deemed return calculation. The government applied a notional rate of return to financial assets held and taxed that figure. When interest rates were positive, the fictitious return rate was palatable. When interest rates collapsed, it wasn’t. Savers were being taxed on income that only existed on paper.

In 2021, the Dutch Supreme Court ruled the policy violated property rights protections under the European Convention on Human Rights. Taxing assumed income detached from reality wasn’t just bad policy; it was unlawful.

That court decision eliminated the politically expedient middle ground. Lawmakers could no longer hide behind rough estimates and back-of-the-envelope math. They had to either move to a capital gains system or tax annual returns as they accrued.

They chose the latter. Notwithstanding initial motivations or how it got there, the Netherlands is about to run a real-world test of mark-to-market taxation at scale.

In the US, debates over wealth taxes and taxing unrealized gains tend to unfold in the abstract. The Netherlands’ tax reform offers both a cautionary tale and a live experiment. It illustrates how quickly court intervention can winnow the menu of policy options. And it will test whether liquidity constraints force asset sales, as detractors contend, or the system hums along and tax revenue surges upward.

—Andrew Leahey

The Netherlands’ recent tax reform shows that court intervention can quickly winnow the menu of policy options.

Photographer: Sjoerd van der Wal/Getty Images

Welcome to the Week in Insights for Bloomberg Tax’s latest analysis and news commentary. This week, experts examined Congress’ DC tax decoupling vote, the IRS Independent Office of Appeals’ potential priorities, and more.

The Exchange—It’s where great ideas on tax and accounting intersect.

Insights

Speed Up Certainty in Tax Appeals by Narrowing Scope of Dispute

Taxpayers can obtain certainty during the appeals process through active measures, including upfront tax authority guidance, tax insurance, stipulations, and strategic pleading.

How Tax Pros Can Help Businesses Navigate Excise Taxes

Implementing excise taxes may require changes to point-of-sale systems, invoicing, and record-keeping. Tax professionals can help advise on necessary system changes to ensure taxes are calculated and collected accurately.

IRS Appeals to Confront Both Old and New Challenges in 2026

The recent appointment of a new permanent chief of the IRS Independent Office of Appeals provides an occasion to wonder where Appeals’ priorities will lie in 2026.

Congress’ DC Decoupling Vote Hurts Vulnerable Taxpayers the Most

A resolution requiring Washington, DC, to change its tax code to align with President Donald Trump’s signature 2025 tax law will have an immediate and destabilizing effect on taxpayers—especially families already operating with little margin for financial error.

Tax Departments Can ‘Wrestle the Alligator’ and Use AI Tools Now

AI in tax is a redesign challenge, not a replacement threat. When AI is aligned with high volume processes, tax departments gain speed, consistency, and audit readiness.

Transfer Pricing, VAT Risks Still Hazy After Stellantis Opinion

The Advocate General opinion in the Stellantis Portugal case is one interpretation of whether transfer pricing adjustments are subject to value-added tax, but such analyses are highly fact-dependent.

New Corporate Charitable Donation Rule Is a Double-Edged Sword

Corporations need to be careful if they try to reclassify charitable contributions as ordinary and necessary business expenses under the 2025 federal tax law.

Columnist Corner

Technically Speaking design by Jonathan Hurtarte/Bloomberg Tax

Massachusetts’ draft software taxation rules would create a burdensome apportionment process for multistate buyers that doesn’t account for real-world complexity, Andrew Leahey says in his latest Technically Speaking column.

The state should instead “allow business purchasers of standardized software to elect a fixed percentage for in-state use for tax purposes,” Andrew writes. The revenue department also could implement the safe harbor on a transitional basis while evaluating how the new apportionment system performs, he adds. Read More

News Roundup

Treasury’s Book-Tax Guidance Comes Down on Business’s Side

The Treasury Department signaled it’s putting its thumb on the scale in big business’s favor over the corporate book-income tax, easing up on how tough the tax should be on companies.

Alaska and Montana Revisit Sales Taxes to Help Stabilize Revenue

Mounting concern over long-term revenue stability is pushing two of the nation’s five remaining sales tax holdout states—Alaska and Montana—to seriously consider adopting statewide levies for the first time.

Private School Tax Credit Spurs Questions About Role of States

Backers and skeptics of a new federal tax credit for donations to private school scholarships are asking the Treasury Department to flesh out the role of the states, which hold significant sway over the new program.

EU Opens Consultation for Upcoming Tax Simplification Bill

The European Commission has launched a public call for feedback on its initiative to simplify the bloc’s tax rules.

Tax Management International Journal

How Transfer Pricing Trends Reshape Advanced Pricing Decisions

Transfer pricing trends increase advanced pricing agreements appeal for taxpayers seeking certainty amid heightened enforcement risks.

Tax Management Memorandum

How Complex Is the New Corporate Alternative Minimum Tax?

CAMT imposes costly compliance burdens on many firms while raising little revenue.

Career Moves

Paul Hastings Adds Alicia Osei as Tax Partner in London

Alicia Osei joined Paul Hastings’ tax team as a partner in London, the firm announced Monday.

Justin Wallace Joins Shumaker as Partner, Tax Lead in Tampa

Justin Wallace joined Shumaker as a partner and tax lead, the firm announced Tuesday.