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In some countries, for example the Netherlands, unspent income is taxed if it is above EUR 25000 per person.

walshemj 8y ago
So would you not just spend that money investing into stocks / property etc and presumably you paid tax on receiving that income in the first place.
- antientropic 8y ago
  There is no "unspent income tax" in the Netherlands. There is however a tax of 1.2% on savings and investments over 25000 euros.
  - hondadriver 8y ago
    You're right it is a tax on the possessions (except your primary home) you have. so if you've bought a second home, it is also taxed, so not unspent , but if you put more than 25.000 on a current account with 0% interest rate, you still have to pay tax as if you have made 4% (the system changed, this is to keep it simple for non Dutch readers). In that case it at least feels like unspent income tax. Anyway, if you're in the position you need to pay this tax, you usually have nothing to complain about financially..
    - walshemj 8y ago
      Maybe but around 25 k euros would not be an uncommon deposit on a house / flat - so your not exactly taxing the super rich here.
      - hondadriver 8y ago
        True, but until recently it was very uncommon to save first to buy a house. This is because you could get a mortgage for up to 125% of the price of the house bought and the interest on this loan could be fully deducted from income tax. And to worsen things, you were not obliged to pay back on a monthly basis, but after 30 years you cannot deduct interest anymore the bank can ask for their money back (in practice it is mostly no problem if you can still pay the interest) Now you can 'only' get a loan upto 100% of the price and need to at least save up for the extra costs (bank, notary, taxes) And you have to pay back a monthly amount to be allowed to deduct the interest paid from income tax. But saving up very large amounts, which is common in many other countries, still is not done by most people...
- hondadriver 8y ago
  Yes you've paid income tax for it and have to pay VAT if you buy something. The idea is you are going to invest / save the money and earn interest, get dividends or profit from the stock price itself. The old system used a virtual profit of 4% a year, and over this 30% tax needs to be paid. That's 1,2% over the amount above EUR 25.000 (per person, so 50.000 if you're together with someone) Mind you do not have to pay tax over the real profits, and also pay if you loose. So if you make 8% a year, you are only taxed as if you've made 4% , but if you lost 8% you're still taxed for 4% They are changing it to a way the rate reflects the real interest rate better, and many people want the real profits to be taxed. I personally don't, because if you're just a bit good with ETF's you're easy beat the 4%
  - walshemj 8y ago
    Oh that's strange I have had one stock that did 100% plus in a year in the uk - so in Holland I would only pay 4%. They don't separate income vs capital gain ?
    - hondadriver 8y ago
      On your possessions above 25.000 (ex first home) on January 1st, you pay as if you will be making 4% the coming year. The tax is 30% over this virtual 4% gain. So 1,2% tax over the amount above 25.000 But mind if you keep the possessions, next year you again have to pay 1,2% over their value. In the case of profit tax, you only pay tax once over the real profit. (And can deduct loses) So in case you have 100.000 at the start of the year, you pay 900 tax. (1,2% of 75.000) Now if you make 100% profit and start the next year with 200.000, you'll pay 2.100 tax. Let's say you stop here and keep this amount for 4 years on a 0% interest account, you have to pay 2.100 every year. So a total of 9.300 tax If there would be profit tax of 30% you would pay 30.000 once. (30% on the 100.000 profit) So if you're an active succesful investor, the Dutch system mostly is way better. But now people are complaining it is not fair, because a savings account doesn't return 4%. Being an investor myself I fear we will get profit tax in the future.
    - hondadriver 8y ago
      There is income tax (interest / gains on stocks / crypto etc is not seen as income). And there is tax on your valuable possessions on the first of January, exceeding 25.000 a person, so 50.000 if you're together, ex. your first home and substantial ownership of a company. First home is tax free. Subtantial company ownership is taxed differently. Valuable possessions include art and cars kept only as investment (gray area), cash (exceeding a certain limit), crypto currencies, second home(s), stocks, bonds, savings.. but not the things you use in your household, such as the family car(s)..

So would you not just spend that money investing into stocks / property etc and presumably you paid tax on receiving that income in the first place.

antientropic 8y ago
There is no "unspent income tax" in the Netherlands. There is however a tax of 1.2% on savings and investments over 25000 euros.
- hondadriver 8y ago
  You're right it is a tax on the possessions (except your primary home) you have. so if you've bought a second home, it is also taxed, so not unspent , but if you put more than 25.000 on a current account with 0% interest rate, you still have to pay tax as if you have made 4% (the system changed, this is to keep it simple for non Dutch readers). In that case it at least feels like unspent income tax. Anyway, if you're in the position you need to pay this tax, you usually have nothing to complain about financially..
  - walshemj 8y ago
    Maybe but around 25 k euros would not be an uncommon deposit on a house / flat - so your not exactly taxing the super rich here.
    - hondadriver 8y ago
      True, but until recently it was very uncommon to save first to buy a house. This is because you could get a mortgage for up to 125% of the price of the house bought and the interest on this loan could be fully deducted from income tax. And to worsen things, you were not obliged to pay back on a monthly basis, but after 30 years you cannot deduct interest anymore the bank can ask for their money back (in practice it is mostly no problem if you can still pay the interest) Now you can 'only' get a loan upto 100% of the price and need to at least save up for the extra costs (bank, notary, taxes) And you have to pay back a monthly amount to be allowed to deduct the interest paid from income tax. But saving up very large amounts, which is common in many other countries, still is not done by most people...
hondadriver 8y ago
Yes you've paid income tax for it and have to pay VAT if you buy something. The idea is you are going to invest / save the money and earn interest, get dividends or profit from the stock price itself. The old system used a virtual profit of 4% a year, and over this 30% tax needs to be paid. That's 1,2% over the amount above EUR 25.000 (per person, so 50.000 if you're together with someone) Mind you do not have to pay tax over the real profits, and also pay if you loose. So if you make 8% a year, you are only taxed as if you've made 4% , but if you lost 8% you're still taxed for 4% They are changing it to a way the rate reflects the real interest rate better, and many people want the real profits to be taxed. I personally don't, because if you're just a bit good with ETF's you're easy beat the 4%
- walshemj 8y ago
  Oh that's strange I have had one stock that did 100% plus in a year in the uk - so in Holland I would only pay 4%. They don't separate income vs capital gain ?
  - hondadriver 8y ago
    On your possessions above 25.000 (ex first home) on January 1st, you pay as if you will be making 4% the coming year. The tax is 30% over this virtual 4% gain. So 1,2% tax over the amount above 25.000 But mind if you keep the possessions, next year you again have to pay 1,2% over their value. In the case of profit tax, you only pay tax once over the real profit. (And can deduct loses) So in case you have 100.000 at the start of the year, you pay 900 tax. (1,2% of 75.000) Now if you make 100% profit and start the next year with 200.000, you'll pay 2.100 tax. Let's say you stop here and keep this amount for 4 years on a 0% interest account, you have to pay 2.100 every year. So a total of 9.300 tax If there would be profit tax of 30% you would pay 30.000 once. (30% on the 100.000 profit) So if you're an active succesful investor, the Dutch system mostly is way better. But now people are complaining it is not fair, because a savings account doesn't return 4%. Being an investor myself I fear we will get profit tax in the future.
  - hondadriver 8y ago
    There is income tax (interest / gains on stocks / crypto etc is not seen as income). And there is tax on your valuable possessions on the first of January, exceeding 25.000 a person, so 50.000 if you're together, ex. your first home and substantial ownership of a company. First home is tax free. Subtantial company ownership is taxed differently. Valuable possessions include art and cars kept only as investment (gray area), cash (exceeding a certain limit), crypto currencies, second home(s), stocks, bonds, savings.. but not the things you use in your household, such as the family car(s)..