Tax haven Georgia vs. the Netherlands: why the Dutch tax reform sharpens the contrast

While the Netherlands is introducing one of Europe's most restrictive forms of capital taxation from 2028, Georgia remains a beacon for tax-conscious investors. The Dutch parliament's recent decision to tax unrealised capital gains at 36% strikingly illustrates why more and more international investors are considering the Caucasus as an alternative tax home.

The Dutch tax revolution: a warning signal for investors

On Thursday, the Dutch House of Representatives passed the “Act on Actual Return in Box 3” – a reform that, from 1 January 2028, will charge Dutch taxpayers a flat rate of 36% on the actual returns from savings and investments. What at first glance appears to be an overdue correction of an unconstitutional system turns out, on closer inspection, to be a potential disaster for investors.

The distinctive and explosive feature of this reform lies in the taxation of unrealised gains. If a Dutch resident holds a share portfolio that gains 10,000 euros in value over the course of a year, the tax authority treats this book gain as taxable income – regardless of whether the investor has actually sold anything. The investor must therefore pay tax on gains they never received in cash, which can lead to significant liquidity problems.

Only real estate and shares in qualifying start-ups follow different rules and are taxed only on disposal. For all other assets – shares, bonds, cryptocurrencies – the annual valuation applies.

The Dutch tax system: an overview

The Netherlands taxes its residents on worldwide income and divides it into three separate “boxes”:

Box 1 covers income from employment and home ownership. For 2026, the first 38,883 euros are taxed at 8.10% (plus 27.65% social-security contributions). Income between 38,883 and 78,426 euros is taxed at 37.56%, everything above at 49.50%.

Box 2 applies to income from a “substantial interest” (at least 5% company shares) and is taxed at 24.5% on the first 68,843 euros and 31% on everything beyond.

Box 3 – the category just reformed – covers income from savings and investments. The old system applied notional rates of return which the Supreme Court classified as unconstitutional in 2021. The new rule replaces this with a 36% tax on actual returns.

The tax-free annual allowance is just 1,800 euros. Losses above 500 euros can be carried forward indefinitely, but smaller losses expire.

Georgia: the counter-model

The contrast with Georgia could hardly be greater. While the Netherlands, with a top tax rate of 49.50%, sits in the upper European range (only Denmark at 60.5%, France at 55.4% and Austria at 55% are higher), Georgia offers a radically different tax model:

Wealth tax: up to 1% (only on real estate, cars and yachts) Georgia levies a moderate wealth tax exclusively on certain physical assets. Real estate is taxed at up to 1% depending on value and location, as are cars and yachts. Crucially, however: financial assets such as shares, bonds, bank balances, cryptocurrencies or company holdings are not subject to any wealth taxation. This stands in stark contrast to the Netherlands, where the new Box 3 rule targets precisely these asset classes.

Income tax: 20% (small business: 1%) Georgian income tax is a flat 20% – well below the Dutch top rate. Even more attractive: for registered small businesses with annual turnover under 500,000 GEL (around 170,000 euros), a flat tax of just 1% on turnover applies. This makes Georgia exceptionally attractive for the self-employed, freelancers and small businesses.

Dividend tax: 5% (on domestic sources) While the Netherlands taxes dividends within Box 2 at up to 31%, Georgia levies just 5% on dividends from Georgian companies. Foreign dividends are in many cases even tax-free, depending on double-taxation treaties.

Capital gains tax: 0% This is where the most fundamental difference lies: Georgia does not tax capital gains. Anyone who buys shares, bonds or cryptocurrencies and sells them at a profit pays no tax on that profit. There is no distinction between short-term and long-term gains, no holding periods, no complicated calculations. The gain stays with the investor.

The direct comparison: a worked example

Let us consider an investor with a diversified portfolio worth 500,000 euros that grows 10% (50,000 euros) in one year and additionally yields 15,000 euros in dividends. The investor also owns a property worth 200,000 euros:

In the Netherlands (from 2028):

• Unrealised gain (securities): 50,000 euros
• Dividends: 15,000 euros
• Total taxable return: 65,000 euros
• Less allowance: 1,800 euros
• Tax base: 63,200 euros
• Box 3 tax liability (36%): 22,752 euros
• Property: taxed in Box 1 (complex, depending on owner-occupation)
• Tax burden on financial assets only: 22,752 euros
• Remaining gain from financial assets: 42,248 euros

In Georgia:

• Unrealised gain: 50,000 euros (not taxable)
• Dividends from Georgian sources: 15,000 euros × 5% = 750 euros
• Foreign dividends: potentially 0% (depending on double-taxation treaties)
• Property tax: approx. 0.5–1% × 200,000 euros = 1,000–2,000 euros per year
• Total tax burden: 1,750–2,750 euros (with domestic dividends)
• Remaining gain: 62,250–63,250 euros

The difference is over 20,000 euros per year – more than 45% of the return achieved. With an active portfolio that is regularly rebalanced, this contrast intensifies even further, since in Georgia even realised gains remain tax-free, whereas in the Netherlands every transaction has tax consequences.

The liquidity problem: an existential threat

The Dutch reform harbours a fundamental problem that even the legislative memorandum acknowledges: the system requires investors to pay tax on gains they have not received in cash. 

Imagine an investor holds cryptocurrencies that rise in value from 100,000 to 200,000 euros. They immediately owe 36,000 euros in tax on the unrealised gain of 100,000 euros. If the market crashes the following year and the position falls to 80,000 euros, the investor has not only lost 20,000 euros of their original capital but also had to pay 36,000 euros in tax – a total loss of 56,000 euros on an investment that was never liquidated.

Losses can be carried forward, but this is of little help if the investor is forced to sell other assets to settle the tax debt. In volatile markets, this can lead to devastating forced sales.

In Georgia this problem simply does not exist. Since unrealised gains are never taxed and even realised gains remain tax-free, the investor retains full control over their liquidity planning.

Germany as an alternative for crypto investors

While Georgia is an attractive option for many investors, a considerable share of crypto investors from the Netherlands are likely to head to Germany, owing to geographical proximity and cultural familiarity. Germany offers a particularly advantageous arrangement for cryptocurrencies: crypto gains are completely tax-free after a holding period of one year.

For long-term-oriented crypto investors willing to hold their positions for at least twelve months, this represents an enormous advantage. Unlike the Dutch Box 3 rule, which taxes even unrealised appreciation annually at 36%, German residents can build up their crypto portfolios entirely tax-free – provided they observe the one-year speculation period.

This arrangement makes Germany especially attractive for “HODL” investors who believe in the long-term appreciation of digital assets and do not trade actively. Combined with the geographical proximity to the Netherlands, the absence of a language barrier for many Dutch nationals and the stable legal order, Germany is likely to be the more pragmatic solution for many Dutch crypto investors than a move to the Caucasus. However, it should be noted that gains within the one-year holding period are taxed in Germany at the personal income tax rate, which can be up to 45% (plus the solidarity surcharge).

Why was the old system replaced?

The reform follows a series of court rulings that found the previous Box 3 system unlawful. In December 2021, the Supreme Court of the Netherlands found that the existing system violated the right to property and the prohibition of discrimination under the European Convention on Human Rights. The court ruled that taxing people on notional income they had never actually earned was unjustified, particularly at a time of near-zero interest rates.

With each year the new system was delayed, the Dutch treasury lost an estimated 2.3 billion euros annually. This budgetary pressure drove the reform forward, even though State Secretary Eugène Heijnen conceded that the caretaker government would have preferred to tax investment returns only upon actual realisation.

Voting with their feet

Cointelegraph warned that many crypto-asset holders might consider leaving the country, particularly those for whom a move to another tax jurisdiction is realistic. This warning applies not only to crypto investors.

Georgia offers exactly what the Netherlands is giving up: an investor-friendly tax system that promotes rather than hinders economic growth and wealth accumulation. The Georgian government has deliberately created a system that attracts entrepreneurs and investors rather than driving them away.

Further advantages of Georgia

In addition to the superior tax system, Georgia offers:

• Easy residency: EU citizens can stay visa-free for up to one year. A permanent residence permit is relatively straightforward to obtain.

• Low cost of living: The cost of living in Georgia is well below Western European levels, while offering a high quality of life in cities such as Tbilisi or Batumi.

• Strategic location: As a bridge between Europe and Asia, Georgia offers access to both markets.

• Modern banking: The Georgian banking system is modern and internationally connected, with several banks geared towards international clients.

• No currency controls: Capital can be moved freely, without bureaucratic hurdles.

European context

With a top tax rate of 49.50%, the Netherlands sits in the upper European range. The average top tax rate in European OECD countries is 43.4%. At the lower end, Bulgaria and Romania levy a flat rate of 10%, while Hungary's top rate is 15%.

Most European countries that tax capital gains do so only on realisation. Norway taxes capital gains on disposal. Germany applies a flat withholding tax of 25% on capital income, also at the time of sale. The Dutch approach of valuing portfolios annually and taxing the change in value, even when no assets have been sold, is exceptional by European standards.

Outlook for the Batumi Investment Club

For members of the Batumi Investment Club, the Dutch tax reform underscores the strategic value of Georgian residency. While established Western European jurisdictions increasingly raise the pressure on wealth and capital income, Georgia offers stability and planning certainty.

The development in the Netherlands is unlikely to remain an isolated case. In the face of rising public debt and demographic challenges, many European countries will look for new sources of revenue. Wealthy and mobile investors are a preferred target.

Georgia deliberately positions itself as an alternative to this trend. The country relies on economic growth through incentives, not on redistribution through taxation. For investors who think long-term and want to optimise their wealth accumulation, this difference is becoming increasingly decisive.

The moderate wealth taxation of up to 1% on real estate, cars and yachts is negligible compared with the tax exemption on all financial assets and capital gains. While a Dutch investor must hand over more than a third of their portfolio gains to the tax office every year – regardless of whether they have realised those gains – a Georgian resident can let their wealth grow unimpeded.

The question is no longer whether to engage with tax-efficient jurisdictions, but when. The Dutch reform shows: those who wait may be too late.