Recent discussions in the Netherlands about changes to the taxation of private investments have raised concerns among long-term savers. While no final legislation has yet been enacted, the direction of the proposed reform is clear enough to merit attention.
One country that often enters that conversation is Spain, not merely for lifestyle reasons, but for the structural features of its investment and capital gains taxation.
Box 3 (vermogensaanwasbelasting): a fundamental shift
The Dutch government is considering a reform of Box 3, commonly referred to as vermogensaanwasbelasting, which would represent a significant departure from traditional capital gains taxation.
Under the current proposal, annual increases in the value of investment assets could become taxable, even where no sale or disposal has taken place. In practical terms, this would mean taxation of unrealised gains.
The reform is intended to apply from 2028 onwards, subject to parliamentary approval and possible amendments. While the exact scope and mechanics are still under discussion, the proposed timing alone is enough to prompt many investors to start reviewing their long-term tax position well in advance.
This potential shift would particularly affect holders of growth-focused assets such as shares, ETFs or cryptoassets, where value appreciation does not necessarily generate liquidity to fund an annual tax charge.
Why unrealised gains matter
For many investors, especially those saving for retirement, unrealised gains are not income. Taxing paper growth can force investors to either sell assets prematurely or fund tax liabilities from external cash reserves.
This is a structural issue, not a temporary one, and it explains why some investors are beginning to reassess whether the Dutch framework remains suitable for long-term capital accumulation.
How Spain takes a different approach
Spain follows a markedly different principle. Unrealised capital gains are not taxed. Capital gains taxation generally arises only when an asset is sold.
From a planning perspective, this offers several advantages:
- No taxation triggered by annual revaluations
- Tax payable only upon disposal
- Greater control over the timing of taxable events
- Improved cash-flow predictability for long-term investors
For investors focused on allowing capital to compound over time, this distinction can be significant.
Spain is not a low-tax jurisdiction in absolute terms, and it is not appropriate for every investor profile. Income tax, capital gains tax and, in some regions, wealth tax may apply.
However, when compared with a system that may move towards annual taxation of unrealised gains under Box 3, Spain’s realisation-based model can offer a more predictable and planning-friendly framework.
Preparing early for potential changes
With proposed changes to Box 3 potentially coming into effect from 2028, one practical lesson stands out: the earlier investors assess their exposure to different tax systems, the more options they retain.
Looking at alternative frameworks, such as the Spanish tax system, well in advance allows investors to understand how existing portfolios would be treated if residence were ever to change. This is particularly relevant when comparing regimes that may tax unrealised gains on an annual basis with those, like Spain, that generally tax capital gains only upon disposal.
This type of analysis is not about making immediate decisions, but about preparation. By understanding the Spanish rules ahead of time, investors can model outcomes, identify potential tax trigger points, and avoid rushed decisions if legislative changes eventually make a relocation worth considering.
In cross-border planning, clarity gained early often proves more valuable than flexibility sought too late.
