Since v4.0.0, the Nextcloud folder is using a custom icon on macOS (I’m using the VFS client). I’ve created a symlink in my home, which now looks like this:
You probably are symbolically linking to ~/Library/CloudStorage/<File Provider Domain>. Those folders are not set up or managed by our client but macOS itself. Our file provider extension only interacts with system APIs which then manages the actual data in the file system. Those folders are not just plain folders as usual but there is a lot going on invisibly to make cloud storage integration work this way. If you cannot change the symbol or tags, those restrictions are imposed by macOS and we cannot do anything about it.
We have defined our own brand symbol as an icon for the file provider domain which appears in the Finder sidebar. However, the appearance may differ between macOS versions and is not used for the folder display in Finder as on your screenshot.
For reference, the Apple documentation about replicated file provider extensions:
Yes, I’m symlinking to that location, because the real path is very long. But you are right, macOS Tahoe seems to have changed how it displays the icons for cloud drives, I get the same non-folder icon for OneDrive as well (and other cloud apps will probably look similar):
Funnily enough, OneDrive automatically creates that symlink, so I wonder why no one else has complained about it. I still think this is really annoying and should be fixed by Apple, but there’s nothing that Nextcloud can do.