A question we regularly receive from Dutch investors: “How will my real estate in Dubai be taxed in the Netherlands? And what happens once the new Box 3 tax system takes effect?”
The good news: the tax exemption for real estate in Dubai will remain in place, and from 2028 onwards, it will, in many cases, become even more precise and complete than it is today.
In this article, we explain how the current system works, what will change from 2028, and why the new rules are actually favourable for many investors with property in Dubai.
The current Box 3 system
Until the end of 2027, the Netherlands will still use a system based on fictitious returns. The Dutch tax authorities assume an inevitable return on your assets, regardless of what you actually earn.
A temporary transition scheme now exists: you may request to be taxed on your actual return. In practice, however, this often results in higher taxation, which is why relatively few people use this option.
From 2028: Tax on actual returns
From 1 January 2028, the Box 3 system will undergo a fundamental reform. You will then be taxed on the actual return on your assets, such as:
- Rental income minus maintenance and operating costs
- Realised capital gains on sale minus renovation costs
- There will be no tax on unrealised value increases
This sounds fairer, but it has significant consequences for investors in the Netherlands.
If your actual return is higher than the fictitious return previously applied (5.88% in 2025), your tax burden will increase substantially from 2028 onward.
Example:
€100,000 in Ethereum growing to €130,000:
- Old system: €2,117 tax
- New system: €10,800 tax
The same issue arises with real estate in the Netherlands. An apartment worth €500,000 that appreciates 5% annually automatically generates a latent tax liability of €9,000+ per year, even before counting rental income.
But what about real estate in Dubai?
This is where things become much more positive for many of our clients.
The Netherlands has a tax treaty with the UAE. This treaty states that:
Income from real estate in Dubai, both rental income and capital gains, may be subject to tax in the UAE and must be exempted in the Netherlands.
Up until now, this exemption was applied through a rather complex Box 3 calculation. The Dutch tax authorities not only consider the value of your assets, but also the different fictitious return categories. Savings fall into a category with a low fictitious return; real estate into a much higher one.
What does this mean in practice?
Suppose you have:
- €100,000 in savings in the Netherlands, and
- €100,000 invested in real estate in Dubai
Your assets are split 50/50, but your fictitious return is not:
- Savings → low fictitious return
- Real estate → high fictitious return
Because the exemption is based on fictitious returns rather than asset value, the Netherlands may exempt, for example, only 30–40% of your Box 3 tax, even though half of your wealth is invested in Dubai.
Your Dubai real estate is officially exempt, yet you indirectly still pay slightly more tax on your Dutch savings.
Still more favourable than Dutch real estate, but not always intuitive.
From 2028: a simpler and fairer exemption
The new Box 3 system eliminates this complexity.
The Netherlands will then look at your total actual return, and the portion originating from Dubai real estate will be fully exempt, because the tax treaty grants taxing rights to the UAE.
Example:
- €100,000 savings in NL → €2,000 interest
- €100,000 real estate in Dubai → €6,000 net rental income
- Total return: €8,000
- Share attributable to Dubai: 75%
- Exemption: 75% → a full exemption of the Dubai portion
Meaning: The new system is advantageous for investors with property in Dubai.
Update from our tax specialists (2025)
We reviewed this analysis with our tax advisors. Their conclusions are essential for investors:
- There are no indications that the tax treaty between the Netherlands and the UAE will be renegotiated or terminated.
- Under the current legislative proposal, the exemption for real estate in Dubai remains fully intact.
- The Dutch “Decree for Avoidance of Double Taxation” (Bvdb) will require linguistic adjustments, as it still refers to the old Box 3 system.
- According to our tax specialists, this adjustment is expected to be technical rather than substantive.
In short, the exemption for real estate in Dubai remains in force, both today and under the new Box 3 regime from 2028.
We continue to closely monitor legislative developments to keep our investors entirely up to date.
Why are many investors exploring alternatives inside and outside the Netherlands?
For investors in Dutch real estate, crypto, and equities, the new Box 3 system is far less favourable.
This is why two strategies are becoming increasingly popular:
- Moving Out of Box 3 (Investment Holding/BV)
A common strategy is to place investments in a Dutch BV (limited liability company).
A BV is not subject to Box 3. Returns are taxed at the corporate income tax rate (19% up to €200,000 in profit). You only pay additional tax when dividends are distributed.
This can be attractive for investors who want to grow capital inside the company or defer taxation, particularly in real estate, crypto, or equity portfolios.
The final tax burden depends heavily on your strategy, timing, structure, and goals — professional advice is essential.
- Leaving the Netherlands (Emigration)
A growing number of entrepreneurs and investors are leaving the Netherlands due to rising tax and regulatory pressure. Dubai is one of the most popular destinations, thanks to:
- No income tax
- No wealth tax
- No tax on rental income or capital gains from real estate
- a highly favourable international tax and legal environment
Other popular destinations include Singapore, Andorra, Bulgaria, Portugal, and Qatar.
However, the Netherlands applies several exit taxes upon emigration.
With timely and expert planning, these can often be significantly reduced or deferred.
Dutch real estate remains taxable in the Netherlands, regardless of where you live.
But real estate in countries with favourable tax treaties — such as Dubai — can offer significant fiscal advantages when structured correctly.
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Conclusion for Dutch Investors in Dubai
For Dutch investors, the new Box 3 system is favourable for real estate investments in Dubai. The exemption resulting from the tax treaty with the UAE remains in place, and from 2028, it will be applied more simply and more completely than before.
While the new regime increases the tax burden for Dutch real estate, equities, and crypto, real estate in Dubai remains fiscally attractive and transparent.
With the right structure, whether privately, through a BV, or via an international setup, investors can benefit from the strong market growth in the UAE and the continued tax advantages provided by the treaty.
The exact impact varies per person and depends on your assets, structure, and long-term plans.
We advise Dutch investors on these decisions every day and work closely with specialised tax experts.
If you want to understand how the new system will affect your personal situation, feel free to reach out. We are happy to assist, and, if needed, we can arrange a meeting with our tax specialists for a fully tailored analysis.
