ETF tax in the Netherlands — how Box 3 actually works

Dutch income tax is split into three boxes. Box 1 covers employment income, Box 2 substantial shareholdings, and Box 3 everything else you own — savings, investments, a second property. Box 3 is the one an ETF investor lives in, and it is unusual: rather than measuring your gains, it assigns a fixed assumed return to each category of asset and taxes that.

For 2026 the assumed return on investments is 6.00% and on bank savings 1.28%. Whichever applies, the resulting amount is taxed at 36%. So the annual cost of holding an ETF is the product of those two numbers — 6.00% times 36%, or 2.16% of the taxable holding, every year.

That product is the figure worth carrying around, and it is the one most commonly got wrong, because neither number in it is the cost. The assumed return is not a tax rate and the tax rate is not applied to your portfolio — it is applied to the assumed return. The result is much smaller than either input, and much larger than most people expect a wealth tax to be.

A tax-free allowance of €59,357 per person is subtracted before anything is taxed, doubling to €118,714 for fiscal partners. The part people get wrong is what happens next: the allowance is deducted from your total Box 3 assets, and the remaining taxable amount is then divided between savings and investments in the same proportions as your actual portfolio.

It is not applied to your cash first. Someone holding half cash and half ETFs has half the allowance set against each, so the investment slice is taxed on its full pro-rata share at the higher assumed rate. Assuming otherwise overstates the shelter, sometimes substantially.

The practical consequence is that the effective drag on your whole portfolio climbs toward 2.16% as you grow. Just above the threshold it is a small fraction of that; several times the threshold, it is nearly all of it.

Because the return is deemed rather than measured, a year in which your portfolio fell is taxed exactly as though it had returned the assumed rate. There is no loss relief and nothing to carry forward. This is the feature that most distinguishes Dutch investment tax from the German, Belgian and Italian systems, all of which key off something that actually happened.

Since 2025 there is a counter-evidence route: if your real return was lower than the deemed one, you can elect to be taxed on the real figure instead. It requires you to compute and substantiate that return, and it is precisely the years in which it matters that the paperwork is least welcome. The simulator linked below models the deemed system, which is what applies by default and to anyone who does not opt out.

Cash is treated more gently than investments — 1.28% assumed rather than 6.00%, which works out at roughly 0.46% a year against 2.16%. That gap is why the date a dividend lands can matter: cash sitting in the account on 1 January is assessed at the lower rate.

Box 3 does not care whether your fund accumulates or distributes, where it is domiciled, or what it holds. It charges on value. That is genuinely simplifying: the accumulating-versus-distributing question that dominates German, Belgian and Italian decisions is close to irrelevant here, and there is no Dutch capital gains tax on a sale to plan around either.

What remains worth optimising is everything Box 3 does not touch. The ongoing charge, the withholding tax the fund loses on its dividends before you ever see them, and your broker's commission all still compound against you — and unlike Box 3 they are avoidable by choosing differently. A fund's domicile matters for the treaty rate it gets on US dividends, not for your Dutch bill.

Do I pay Box 3 if my portfolio lost money?

Yes. The assessment is made on the value of your assets on 1 January and the return is assumed rather than measured, so a portfolio that fell is taxed as though it had risen by the deemed rate. Since 2025 you can elect to be taxed on your actual return where that is lower, but it is an election you have to make and substantiate — the default remains the deemed system.

Is there capital gains tax on selling an ETF in the Netherlands?

No. Selling is not a taxable event in Box 3, because the tax is on holding rather than on realising. That is why rebalancing, switching funds or taking profits carries no Dutch tax cost, and it is a meaningful advantage over systems that tax the gain on disposal — though you pay for it every year whether you sell or not.

Does an accumulating or distributing fund make a difference here?

Almost none, which is unusual. Box 3 charges on the value of what you hold, so a fund that pays dividends out and one that reinvests them are assessed identically. The only second-order effect is timing: a distribution received near year-end and left as cash on 1 January is assessed at the lower savings rate for that snapshot, which slightly reduces the bill and usually costs more than it saves once a reinvestment commission is paid.