Finance minister Eelco Heinen told MPs on Wednesday he is going back to the drawing board over new asset tax proposals due to come into force in 2028.

The changes to the way assets are taxed in Box 3 have prompted a storm of protest in the Netherlands and abroad, including comment in the Washington Post. The measures passed in the lower house earlier this month and were due to be voted on in the senate shortly.

On Tuesday the VVD, one of the three parties in the minority coalition and Heinen’s own party, said it planned “to take its time” with the “complicated legislation” following the criticism – a hint that there is major opposition in the senate.

Heinen told MPs on Wednesday the proposals are an “intermediary” measure that “won’t work”. The new coalition has already said it plans to overhaul the entire asset tax system at a later stage.

The temporary measure stems from a Supreme Court ruled in 2021 which said taxing assets on the basis of returns that had not been realised breached EU legislation. A revised version was also struck down by the courts in June 2024.

The new system, due to take effect in two years, is based on real returns and requires the tax office to estimate how much people have actually earned, for example in interest on their savings. Savers and investors will also have to keep detailed records.

It is a hybrid system. People will pay tax each year on earnings from investments and savings but will only pay tax on increases in the value of property or start-up investments once they sell the building or shares, in line with practice in most other EU countries.

Investors have argued that they may be forced to sell shares to pay tax on gains that have not yet been realised. They also point out there is no offset for years in which investments make a loss.

Heinen told MPs he has discussed the problems with junior tax minister Eelco Eerenberg (D66) and wants to amend the plans with input from both houses of parliament.

However, any changes must not reduce tax income for the treasury, he said. “We are talking about billions and that needs to be paid.”