Imagine being taxed on money you haven’t even earned yet—and worse, on assets you can’t sell. That’s the alarming reality Dutch startup employees and early investors are facing thanks to the New Box 3 tax, set to take effect in 2028. But here’s where it gets controversial: this revised tax system, approved by the Tweede Kamer earlier this month, could force these individuals to pay hefty taxes on unsold shares, leaving them scrambling to cover bills with personal savings or even loans.
According to a report by the FD (https://fd.nl/bedrijfsleven/1587228/start-ups-vrezen-hoge-belasting-voor-hun-personeel-in-nieuwe-box-3), Dutch startups and scale-ups are sounding the alarm, warning that the changes to Box 3—the Netherlands’ system for taxing income from savings and investments—will disproportionately impact those holding equity in fast-growing companies. And this is the part most people miss: many of these firms fall outside the bill’s exemptions, meaning employees and early backers could be taxed on dramatic increases in share value, even if those shares are illiquid.
To understand why this matters, let’s break it down. The current Box 3 system taxes individuals based on an assumed return on their investments, not their actual earnings. In 2021, the Hoge Raad deemed this approach unlawful, prompting the government to redesign the tax. The new system aims to address this issue, but startups argue it creates a fresh set of problems. For instance, if an employee receives shares in a startup as part of their compensation, and those shares skyrocket in value, they could face a tax bill based on that increase—even if they can’t sell the shares to cover the cost.
Michiel Muller, co-founder of online supermarket Picnic, highlights the human impact: “We have many international employees asking what this means for them, and it’s entirely logical,” he told the FD. “When the 30 percent ruling for expats was threatened, we saw the same anxiety. People move here because of the overall package we offer. It’s deeply problematic when key elements of that package keep shifting.”
Here’s the bold question: Is it fair to tax individuals on paper gains they can’t access? Critics argue this could stifle innovation by making it harder for startups to attract talent and investment. Supporters, however, might counter that the new system is a necessary correction to ensure everyone pays their fair share.
What do you think? Is the New Box 3 tax a justified reform, or does it unfairly penalize those building the future of the Dutch economy? Let us know in the comments—this debate is far from over.
