The Netherlands' unrealized gains tax threatens market stability.

The Netherlands' unrealized gains tax threatens market stability. Starting in 2028, the Dutch government plans to levy a 36% tax on investment returns including unrealized gains—profits that exist only on paper. An investor holding shares worth €130 purchased for €100 would owe tax on the €30 gain despite never selling. This mechanism forces investors to liquidate assets simply to fund tax bills on paper wealth that could easily disappear. India's experience with punitive wealth taxes in the 1970s demonstrates how taxing theoretical gains distorts markets and investor behavior. The fundamental principle of taxation—paying tax only when actual money is realized through asset sales—is being abandoned.