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Netherlands – Capital Growth Tax and Capital Gains Tax for Box 3

83 points by ivankra 11mo ago

deaux 11mo ago
(June 2025)
UltraSane 11mo ago
What happens when you have a capital loss after paying taxes on the gains and then it goes back to the same value you paid taxes on? Do you still pay the tax? Or does it have to go higher than the last highest value you paid taxes on? That seems the fairest option.
- typon 11mo ago
  ideally you should get a deduction in later years
- engineer_22 11mo ago
  Maybe they will treat them similar to how they treat realized capital losses currently
- divbzero 11mo ago
  Or, if you have a capital loss this year after paying taxes on gains last year, can you carry back the deduction to last year?
- jmyeet 11mo ago
  This is a solved problem. When you sell a house in the US, you ahve to determine what your capital gain is for tax purposes. That includes all purchase and selling costs (eg agents fees, transfer taxes, etc). Those are all added to the purchase price to determine your cost basis. The capital gain is simply the sale price minus the cost basis, which might be a loss. So if you've paid unrealized capital gains taxes along the way, you either get credit for those taxes already paid (and possibly get a refund if you've overpaid) or they're simply added to the cost basis.
LZ_Khan 11mo ago
well this will probably cause an exit of businesses
- ivankra 11mo ago
  Businessmen - it's for personal income taxes. I don't think it affects corporate taxes. Yet.
  - B1FF_PSUVM 11mo ago
    Don't IKEA have a tax-free "design foundation" over there?
  - keerthiko 11mo ago
    as worded is this tax not levied on any entity holding assets that can appreciate in value (businesses can hold stock too)?
- grimblee 11mo ago
  There's always that threath when we talk about fairer taxation, but let's not forget that the netherland (or any country for that matter) is a market that capital makes money from. If they leave, they won't be able to continue making money there, it would be a waste down the line. And I won't believe that fairer taxation will make it unprofitable, ot will be less interesting for the big ones but they'll stay because they're still making big bucks nonetheless.
tschellenbach 11mo ago
The title here mostly doesn't match the article right? Quote: "But unlike the capital growth tax, capital gains tax will, in principle, only be levied at the time of realisation. This is usually when the relevant asset is sold, but also when immovable property exits Box 3 for another reason, such as emigration."
- kingstnap 11mo ago
  As I understand it most things like stocks with be under the capital growth scheme, taxed yearly, but they left a carve out for real-estate where it only is levied at sale/realization time.
  - appreciatorBus 11mo ago
    Classic loophole. We tell ourselves this is to protect the little people who own homes, but the actual little people don’t have homes at all and rent. Meanwhile, anyone with money will get the picture invest all of it in real estate, once again enriching homeowner as well impoverishing the rest of us.
    - bongodongobob 11mo ago
      Only 29% of people in the Netherlands rent and that number is decreasing.
      - appreciatorBus 11mo ago
        Yes, exactly, this policy will result in 29% of people who don’t own real subsidizing the 70% who do.
    - tempestn 11mo ago
      In a way I agree with you that this will cause market distortion in the form of greater demand for real estate over eg. equities. But there are plenty of such tax distortions; for example many countries have favourable tax treatment for domestic dividends. Regardless, I assume the logic behind this exception is that while you can easily sell a portion of your holdings of publicly traded stocks to cover your annual tax burden, you can't sell a portion of a house. You could of course finance, but that's going to disproportionately benefit lenders.
kingstnap 11mo ago
> The capital growth tax will apply to most assets, taxing both realised and unrealised returns, including appreciation in value and income from assets like shares, cryptocurrencies, and savings. Exchange results on bank balances in currencies other than EUR will also be taxed. Ouch. I suppose this is supposed to combat the trend of share buybacks over dividends. Gonna seriously suck to be anyone Norwegian and having to sell stocks to pay for taxes on your unrealized gains. Also if the euro dives as well during inflation its gonna be painful.
- anon291 11mo ago
  The demonym of those from the Netherlands is 'Dutch'
  - kingstnap 11mo ago
    I totally misread the title as Norway, guess I was thinking about the sovereign wealth fund.
- tom_ 11mo ago
  This won’t obviously apply to Norwegians, as it’s for the Netherlands.
  - stunami 11mo ago
    Ah ha, but it would for expat Norwegians living in the Netherlands ! If we're not worried about the minority Norwegian expat groups, what has the world come to.
- tobyjsullivan 11mo ago
  Seems like it would also result in capital investors covering more year-to-year tax revenue, which could reduce some pressure on other tax payers. In theory, capital gains should average out over time. But in practice, I think an increasing amount of wealth is being held and not realized over many decades. It doesn’t help anyone that a few billion $ of gains will be taxed eventually if that is so far into the future that most citizens alive today will have passed away by then.
andsoitis 11mo ago
Usually wealth taxes like this only applies to people with (net) assets in excess of a fairly large amount like 50m or 100m, etc. Skimming the article I couldn’t tell whether that’s the case here. If not, it seems like it would have pretty bad implications for the average person who isn’t super wealthy but who are trying to build wealth.
- oliv__ 11mo ago
  The people voting for these laws don't want anyone to be wealthy. It's a race to the bottom
- yunohn 11mo ago
  Sadly the threshold for wealth tax in the Netherlands has always been abysmally low - even in 2025, the untaxed “wealth” is only 50k.
jmyeet 11mo ago
Good. IMHO unrealized gains and profit shifting are two of the biggest problems in modern taxation that need to be addressed. Many people will have heard about the Buy Borrow Die strategy by now. In case not, it's basically where you don't sell an asset (and thus have to pay taxes on the gain). You use it as collateral for a loan and just spend the laon while the asset continues to appreciate (hopefully) faster than the interest rate. What's particularly gross about this is that many asets in many countries can be inherited by children on what's called a stepped up basis, meaning the base value for determining any capital gains taxes resets to the current market value when the owner dies. This is a massive tax break for the wealthy. Companies have their own version of this. This has been somewhat (but not entirely) addressed in the US tax code now but it used to be that foreign corporate profits did not incur US corporate taxes as long as the money wasn't repatriated, meaning it stays overseas. But you know what you can do? That's right. Borrow money used those foreign profits as collateral and wait long enough for the US government to give you a tax holiday or to otherwise change the rules (which they did). IMHO borrowing money against an asset should be realizing a gain and borrowing against foreign profits should be repatriating those profits. Some will argue how you can't tax unrealized gains or it's not fair, we do it all the time. They're called property taxes. Profit shifting is still a big problem. This is where, for example, tech companies would sell ads and services in the UK at "cost" to their Irish subsidiary, who would make all the profits. Almost nothing in UK profits where the tax rate is higher. Transfer pricing is (generally) illegal. Profit shifting isn't. What's the difference? Yes. I think the EU and the US in particular need to start doing what I call profit apportionment, meaning if 50% of your revenue is booked in the US then 50% of your worldwide profits are taxable in the US. You might say "they'll hide profits in subsidiaries" but really this is a solved problem already. We ahve ways of dealing with subsidiaries that are at arms length or not. We also have financial reporting to stock markets and there's really no reason tax authorities couldn't use published financial statements as a basis for taxation.
- anon291 11mo ago
  Unless you get to carry over unrealized capital losses , this taxation regime is highly regressive.
lordofgibbons 11mo ago
How are situations like lack of liquidity to pay the taxes handled? i.e, As an employee you get stock options, which you exercise when you leave the startup. Then long before the company has a liquidity event the FMV shoots up because the business is doing well. How do you as a wage worker pay the taxes on your paper riches without a way to sell your shares?
- temp2441139 11mo ago
  I guess there would be all sorts of megacorps happy to loan you money for this with your assets as collateral. Remember London and Amsterdam have extremely strong finance industry lobbying, and that shows up in their lawmaking.
  - jaco6 11mo ago
    [dead]
  - itake 11mo ago
    I know several people that got cleaned out in IPOs partially due to how taxes work on no-liquidity (lockout) periods. If you IPO'd at $10 ($3 goes to the tax man), and when you can finally sell it 6mo later and stock is only worth about $3, the IRS makes more money than you. Checkout what happened at Uber [0]. My cousin at Aurora borrowed money for his tax bill on IPO. I don't know the final numbers, but I hope he at least broke even. Real examples include: $GRAB, $AUR, $UBER [0] - https://www.cnbc.com/2020/08/28/nearly-200-uber-employees-sue-over-stock-price-decline-since-ipo.html https://www.cnbc.com/2020/08/28/nearly-200-uber-employees-su...
- monero-xmr 11mo ago
  You need to exit the Netherlands
- nimih 11mo ago
  I think in that case, you, the hypothetical wage worker, got hoodwinked pretty effectively by the beancounters when they were able to get away with compensating you in contracts that are apparently worthless to you.
exabrial 11mo ago
We dodged a huge bullet in the US with this. We already pay _excessive_ amounts of federal income tax for extreme inefficiency, the vast majority of it simply being funneled into the pockets of the ultra wealthy.
- Izikiel43 11mo ago
  When you say excessive amounts of federal income tax, do you mean each tax payer, or the overall amount? The top 10% of taxpayers contribute 72% of all income tax, so 90% of them aren't really contributing a lot, so per tax payer it's not a lot. The overall amount is staggering, yes.
- presentation 11mo ago
  Wondering where you think the extreme inefficiency is exactly - apparently Elon Musk fell on his face when he tried to root them out as part of DOGE. If anything it seems inefficiencies tend to occur when people interfere with the government funding things, like CA high speed rail having their federal funding appear and disappear erratically depending on who's in power, throwing off all the construction plans.
askmike 11mo ago
To summarize the current Dutch personal income system: besides income from salary and income from own business (these are taxed quite high), income from investments (stocks, passive investments, real estate excluding your first home) is taxed quite low. The amount is simply a percentage based on the value (as per the start of the year) of your investments. So in the Dutch tax system there is no difference between realized and unrealized gain. As such it doesn't matter when you buy/sell your investments. It doesn't impact your tax burden. The effect you get is that everyone's wealth just slowly erodes away, just like with inflation (unless your yield outpaces that). But with this new law that all might change.
- lateforwork 11mo ago
  That seems like a reasonable approach. That's much preferable to a tax on realized gains and a tax on unrealized gains. In the US when you buy a mutual fund you're already paying a "tax", for example, Fidelity eats 0.83% if you invest in their FSLVX mutual fund [1]. [1] https://fundresearch.fidelity.com/mutual-funds/summary/316128602 https://fundresearch.fidelity.com/mutual-funds/summary/31612...
  - dwightgunning 11mo ago
    That's not a tax, that's the expense ratio, which is basically describing fees captured by the fund manager. Funds accessible to Dutch investors involve similar ERs. It's not an alternative.
    - lateforwork 11mo ago
      Yes, the tax can be thought of an extra expense ratio. Same impact on you, at the end of the day.
      - krageon 11mo ago
        It can be thought of the same way, but not from the perspective that's under discussion. As such it doesn't really add anything except a new perspective. Why are you introducing it, what does it add?
pembrook 11mo ago
Sometimes we have to place our hand on the stove to learn why we shouldn’t place our hand on the stove. There’s a bizarre silliness to implementing this compared the relative ease of just increasing capital gains taxes (accrued capital gains are already tracked and reported!) to match income. Will just be a massive jobs program for the bean counters and consultants. As someone living somewhat Netherlands adjacent, I will happily welcome all Dutch entrepreneurs and investors who wish to grow our local economy instead and not be forced to sell chunks of their company to the state over time.
SilverElfin 11mo ago
So can you get unrealized capital losses to turn into tax credits? And can a person build up these credits to use in different years? If not, this is just a big tax increase to support continued government inefficiency instead of fixing spending and efficiency problems.
- ekianjo 11mo ago
  No this only goes one way, of course.
- camer0 11mo ago
  Yes, losses can be carried forward indefinitely: > Losses within box 3 can be carried forward indefinitely and offset against future box 3 income. However, losses cannot be offset against income in other tax boxes in the Dutch personal income tax. To avoid administrative burdens, a minimum threshold of € 500 applies before a loss can be officially recognized. https://www.loyensloeff.com/insights/news--events/news/legislative-proposal-wet-werkelijk-rendement-box-3-was-published/ https://www.loyensloeff.com/insights/news--events/news/legis...
clickety_clack 11mo ago
About a year ago, Draghi released this report on European Competitiveness (https://commission.europa.eu/topics/competitiveness/draghi-report_en https://commission.europa.eu/topics/competitiveness/draghi-r...). In it he says "A key reason for less efficient financial intermediation in Europe is that capital markets remain fragmented and flows of savings into capital markets are lower." I don't have data readily to hand (and Draghi probably mentions this in the report, I can't remember), but anecdotally based on what I hear from many of my European friends, Europeans basically keep their savings in bank savings accounts. That means that there is less investment capital floating around, which in turn means that the tiny fraction that finds its way into innovation is in turn greatly diminished. Europeans are dependent on bank loans for funding, and banks want to see assets as security for their loans. Policies like this would further disincentivize Europeans to invest in their own stock markets, further damaging the ability of Europeans to innovate.
- itake 11mo ago
  > Europeans basically keep their savings in bank savings accounts. USA is not much different. The wealthiest 10% of the U.S. population holds the vast majority of stock market wealth. Recent data shows this group owns around 90-93% of all stocks, with the top 1% controlling about half of the total household equity. Many people hold cash in savings to prepare buying a house, paying for a child's college and more. IMHO, there is also less short-term need to invest your money as an adult. If you're happy with your job and don't need the extra money (or risk), then why invest in the stock market?
  - clickety_clack 11mo ago
    That’s exactly the issue, there’s so many taxes and frictions that people don’t think it is worth it, and that’s one of the reasons why Europe is stagnating. Investment in business creates strong economies.
  - Kirby64 11mo ago
    > If you're happy with your job and don't need the extra money (or risk), then why invest in the stock market? Because parking money in a savings account essentially erodes its value over time due to inflation. It’s safer, sure, but it’s a safe way to be guaranteed to lose money over time. Equity investing is essentially the only way for savings to outpace inflation.
bawolff 11mo ago
So how does that work for assets with unclear value?
abtinf 11mo ago
It is difficult to imagine a more catastrophically destructive economic policy. If this is actually implemented, the Dutch are toast.
- archagon 11mo ago
  The Netherlands has had a form of "Box 3" wealth/unrealized capital gains tax for years. (This is just an update to existing policy.) So far, the country has not imploded. Time to update your priors.
  - igor_akhmetov 11mo ago
    That's one of the reasons the housing market is so inflated. The goverment forces people to invest into housing.
- burnt-resistor 11mo ago
  "A number of my friends who belong in the very high upper brackets have suggested to me on several occasions of late, that if I am reelected president, they will have to move to some other Nation because of high taxes here. Now, I will miss them very much." (audience breaks into laughter) - FDR (Spoiler alert: The rich always act like victims and whine about having to move.)
notepad0x90 11mo ago
Why don't governments take a portion of the stock as tax payment? They can cash it in (or not), but if all your money is in stocks, are they forcing you to sell the stock to pay them? i.e.: The tax shouldn't be in numerated in currency but stock. If it is currency, you are forced to measure a portion of the stock based on its current value and sell that much stock, if they take a fixed percent of the stock that amount could be a lot or not so much depending on the value of the stock when they tax you. The amount of tax you pay shouldn't depend on how well the stock is doing at taxation time.
- pembrook 11mo ago
  Because within a few decades this would literally turn the Netherlands into the USSR. Compounding, but in reverse, away from individuals and into the inefficient state to manage and run all businesses. I know we have a lot of communists in Europe (and on HN) who want to run that stupid experiment again, but even in Europe it’s a fringe view.
blindriver 11mo ago
This is extremely regressive and means that lower income people will be forced to shed their assets every year to avoid paying this unrealized gains tax. This means they will NEVER get the chance to accumulate generational wealth by holding onto stocks or other assets that have the capability of increasing tremendously like real estate. It means they will need to sell their assets in order to pay this tax and only rich people will be able to afford holding onto assets long enough to become very rich. It’s stupid, regressive and the Netherlands will learn a great lesson. The other thing that makes me laugh is that no other taxes are going down so this is a straight up tax hike on top of every other the Dutch pay.
andsoitis 11mo ago
Countries raise taxes on wealth when they have high levels of debt and disappointing growth.
silexia 11mo ago
[flagged]
- deleted 11mo ago
  [deleted]
archagon 11mo ago
I'm not sure why this is suddenly news. As far as I'm aware from my immigration inquiries, the Netherlands has had a "Box 3" unrealized capital gains tax for many years. This merely looks like an adjustment/improvement of the existing system, not some radical new policy.
- ivankra 11mo ago
  They had essentially a wealth tax in Box 3 - your investments/savings are deemed to have a fixed fictional yield on which you pay income tax. Currently, 6.17% yield x 32% tax = 2% wealth tax. Hurts just a little bit, but it's a smooth, predictable cash flow. They are replacing it with a much worse and untested economic policy - taxing unrealized capital gains every year. Not a big deal for relatively stable assets (real estate etc), but can explode in your face if you're into any risky volatile stuff (stocks, options, crypto) - they can crash next year, but your tax bill won't. Lack of liquidity can get you as well - you may have huge gains on paper, but for various reasons unable to sell in a reasonable timeframe and come up with equally huge amount of cash for the tax office - we're talking probably 30-50% tax here vs 2% under the old system. Double taxation if you have US passport - you're going to have to please both tax systems or pay double the tax. The outcome I'd guess would be an exodus of the rich / upper middle class, and then they either scrap it or tighten further with exit taxes. Oh and they're also scrapping the coveted "30% ruling" for expats. Probably can forget about ever being able to FIRE in Netherlands.
kkfx 11mo ago
Countries that continue with fiscal plunder will only see those who can afford it flee, and after some time, popular uprisings from people who are fed up with Agenda2030 and still haven't figured out how to say no democratically. If some populations do this, as recently happened in Switzerland, they will likely avoid uprisings.
anthonj 11mo ago
I don't get how this works in practice. I am not wealthy, I don't even own an house. But I have a decent salary and buy some stocks occasionally. Most of my stocks are kinda volatile, so by paying taxes on unrealized gain I am taking much higher risk for owning them every year I don't sell. I would literally be paying taxes on money I don't own yet and could easily lose at the first mayor market upset.

83 points by ivankra 11mo ago

deaux 11mo ago

(June 2025)

What happens when you have a capital loss after paying taxes on the gains and then it goes back to the same value you paid taxes on? Do you still pay the tax? Or does it have to go higher than the last highest value you paid taxes on? That seems the fairest option.

typon 11mo ago
ideally you should get a deduction in later years
engineer_22 11mo ago
Maybe they will treat them similar to how they treat realized capital losses currently
divbzero 11mo ago
Or, if you have a capital loss this year after paying taxes on gains last year, can you carry back the deduction to last year?
jmyeet 11mo ago
This is a solved problem. When you sell a house in the US, you ahve to determine what your capital gain is for tax purposes. That includes all purchase and selling costs (eg agents fees, transfer taxes, etc). Those are all added to the purchase price to determine your cost basis. The capital gain is simply the sale price minus the cost basis, which might be a loss. So if you've paid unrealized capital gains taxes along the way, you either get credit for those taxes already paid (and possibly get a refund if you've overpaid) or they're simply added to the cost basis.

LZ_Khan 11mo ago

well this will probably cause an exit of businesses

ivankra 11mo ago
Businessmen - it's for personal income taxes. I don't think it affects corporate taxes. Yet.
- B1FF_PSUVM 11mo ago
  Don't IKEA have a tax-free "design foundation" over there?
- keerthiko 11mo ago
  as worded is this tax not levied on any entity holding assets that can appreciate in value (businesses can hold stock too)?
grimblee 11mo ago
There's always that threath when we talk about fairer taxation, but let's not forget that the netherland (or any country for that matter) is a market that capital makes money from. If they leave, they won't be able to continue making money there, it would be a waste down the line. And I won't believe that fairer taxation will make it unprofitable, ot will be less interesting for the big ones but they'll stay because they're still making big bucks nonetheless.

tschellenbach 11mo ago

The title here mostly doesn't match the article right? Quote: "But unlike the capital growth tax, capital gains tax will, in principle, only be levied at the time of realisation. This is usually when the relevant asset is sold, but also when immovable property exits Box 3 for another reason, such as emigration."

kingstnap 11mo ago
As I understand it most things like stocks with be under the capital growth scheme, taxed yearly, but they left a carve out for real-estate where it only is levied at sale/realization time.
- appreciatorBus 11mo ago
  Classic loophole. We tell ourselves this is to protect the little people who own homes, but the actual little people don’t have homes at all and rent. Meanwhile, anyone with money will get the picture invest all of it in real estate, once again enriching homeowner as well impoverishing the rest of us.
  - bongodongobob 11mo ago
    Only 29% of people in the Netherlands rent and that number is decreasing.
    - appreciatorBus 11mo ago
      Yes, exactly, this policy will result in 29% of people who don’t own real subsidizing the 70% who do.
  - tempestn 11mo ago
    In a way I agree with you that this will cause market distortion in the form of greater demand for real estate over eg. equities. But there are plenty of such tax distortions; for example many countries have favourable tax treatment for domestic dividends. Regardless, I assume the logic behind this exception is that while you can easily sell a portion of your holdings of publicly traded stocks to cover your annual tax burden, you can't sell a portion of a house. You could of course finance, but that's going to disproportionately benefit lenders.

kingstnap 11mo ago

> The capital growth tax will apply to most assets, taxing both realised and unrealised returns, including appreciation in value and income from assets like shares, cryptocurrencies, and savings. Exchange results on bank balances in currencies other than EUR will also be taxed. Ouch. I suppose this is supposed to combat the trend of share buybacks over dividends. Gonna seriously suck to be anyone Norwegian and having to sell stocks to pay for taxes on your unrealized gains. Also if the euro dives as well during inflation its gonna be painful.

anon291 11mo ago
The demonym of those from the Netherlands is 'Dutch'
- kingstnap 11mo ago
  I totally misread the title as Norway, guess I was thinking about the sovereign wealth fund.
tom_ 11mo ago
This won’t obviously apply to Norwegians, as it’s for the Netherlands.
- stunami 11mo ago
  Ah ha, but it would for expat Norwegians living in the Netherlands ! If we're not worried about the minority Norwegian expat groups, what has the world come to.
tobyjsullivan 11mo ago
Seems like it would also result in capital investors covering more year-to-year tax revenue, which could reduce some pressure on other tax payers. In theory, capital gains should average out over time. But in practice, I think an increasing amount of wealth is being held and not realized over many decades. It doesn’t help anyone that a few billion $ of gains will be taxed eventually if that is so far into the future that most citizens alive today will have passed away by then.

andsoitis 11mo ago

Usually wealth taxes like this only applies to people with (net) assets in excess of a fairly large amount like 50m or 100m, etc. Skimming the article I couldn’t tell whether that’s the case here. If not, it seems like it would have pretty bad implications for the average person who isn’t super wealthy but who are trying to build wealth.

oliv__ 11mo ago
The people voting for these laws don't want anyone to be wealthy. It's a race to the bottom
yunohn 11mo ago
Sadly the threshold for wealth tax in the Netherlands has always been abysmally low - even in 2025, the untaxed “wealth” is only 50k.

jmyeet 11mo ago

Good. IMHO unrealized gains and profit shifting are two of the biggest problems in modern taxation that need to be addressed. Many people will have heard about the Buy Borrow Die strategy by now. In case not, it's basically where you don't sell an asset (and thus have to pay taxes on the gain). You use it as collateral for a loan and just spend the laon while the asset continues to appreciate (hopefully) faster than the interest rate. What's particularly gross about this is that many asets in many countries can be inherited by children on what's called a stepped up basis, meaning the base value for determining any capital gains taxes resets to the current market value when the owner dies. This is a massive tax break for the wealthy. Companies have their own version of this. This has been somewhat (but not entirely) addressed in the US tax code now but it used to be that foreign corporate profits did not incur US corporate taxes as long as the money wasn't repatriated, meaning it stays overseas. But you know what you can do? That's right. Borrow money used those foreign profits as collateral and wait long enough for the US government to give you a tax holiday or to otherwise change the rules (which they did). IMHO borrowing money against an asset should be realizing a gain and borrowing against foreign profits should be repatriating those profits. Some will argue how you can't tax unrealized gains or it's not fair, we do it all the time. They're called property taxes. Profit shifting is still a big problem. This is where, for example, tech companies would sell ads and services in the UK at "cost" to their Irish subsidiary, who would make all the profits. Almost nothing in UK profits where the tax rate is higher. Transfer pricing is (generally) illegal. Profit shifting isn't. What's the difference? Yes. I think the EU and the US in particular need to start doing what I call profit apportionment, meaning if 50% of your revenue is booked in the US then 50% of your worldwide profits are taxable in the US. You might say "they'll hide profits in subsidiaries" but really this is a solved problem already. We ahve ways of dealing with subsidiaries that are at arms length or not. We also have financial reporting to stock markets and there's really no reason tax authorities couldn't use published financial statements as a basis for taxation.

anon291 11mo ago
Unless you get to carry over unrealized capital losses , this taxation regime is highly regressive.

lordofgibbons 11mo ago

How are situations like lack of liquidity to pay the taxes handled? i.e, As an employee you get stock options, which you exercise when you leave the startup. Then long before the company has a liquidity event the FMV shoots up because the business is doing well. How do you as a wage worker pay the taxes on your paper riches without a way to sell your shares?

temp2441139 11mo ago
I guess there would be all sorts of megacorps happy to loan you money for this with your assets as collateral. Remember London and Amsterdam have extremely strong finance industry lobbying, and that shows up in their lawmaking.
- jaco6 11mo ago
  [dead]
- itake 11mo ago
  I know several people that got cleaned out in IPOs partially due to how taxes work on no-liquidity (lockout) periods. If you IPO'd at $10 ($3 goes to the tax man), and when you can finally sell it 6mo later and stock is only worth about $3, the IRS makes more money than you. Checkout what happened at Uber [0]. My cousin at Aurora borrowed money for his tax bill on IPO. I don't know the final numbers, but I hope he at least broke even. Real examples include: $GRAB, $AUR, $UBER [0] - https://www.cnbc.com/2020/08/28/nearly-200-uber-employees-sue-over-stock-price-decline-since-ipo.html https://www.cnbc.com/2020/08/28/nearly-200-uber-employees-su...
monero-xmr 11mo ago
You need to exit the Netherlands
nimih 11mo ago
I think in that case, you, the hypothetical wage worker, got hoodwinked pretty effectively by the beancounters when they were able to get away with compensating you in contracts that are apparently worthless to you.

exabrial 11mo ago

We dodged a huge bullet in the US with this. We already pay _excessive_ amounts of federal income tax for extreme inefficiency, the vast majority of it simply being funneled into the pockets of the ultra wealthy.

Izikiel43 11mo ago
When you say excessive amounts of federal income tax, do you mean each tax payer, or the overall amount? The top 10% of taxpayers contribute 72% of all income tax, so 90% of them aren't really contributing a lot, so per tax payer it's not a lot. The overall amount is staggering, yes.
presentation 11mo ago
Wondering where you think the extreme inefficiency is exactly - apparently Elon Musk fell on his face when he tried to root them out as part of DOGE. If anything it seems inefficiencies tend to occur when people interfere with the government funding things, like CA high speed rail having their federal funding appear and disappear erratically depending on who's in power, throwing off all the construction plans.

askmike 11mo ago

To summarize the current Dutch personal income system: besides income from salary and income from own business (these are taxed quite high), income from investments (stocks, passive investments, real estate excluding your first home) is taxed quite low. The amount is simply a percentage based on the value (as per the start of the year) of your investments. So in the Dutch tax system there is no difference between realized and unrealized gain. As such it doesn't matter when you buy/sell your investments. It doesn't impact your tax burden. The effect you get is that everyone's wealth just slowly erodes away, just like with inflation (unless your yield outpaces that). But with this new law that all might change.

lateforwork 11mo ago
That seems like a reasonable approach. That's much preferable to a tax on realized gains and a tax on unrealized gains. In the US when you buy a mutual fund you're already paying a "tax", for example, Fidelity eats 0.83% if you invest in their FSLVX mutual fund [1]. [1] https://fundresearch.fidelity.com/mutual-funds/summary/316128602 https://fundresearch.fidelity.com/mutual-funds/summary/31612...
- dwightgunning 11mo ago
  That's not a tax, that's the expense ratio, which is basically describing fees captured by the fund manager. Funds accessible to Dutch investors involve similar ERs. It's not an alternative.
  - lateforwork 11mo ago
    Yes, the tax can be thought of an extra expense ratio. Same impact on you, at the end of the day.
    - krageon 11mo ago
      It can be thought of the same way, but not from the perspective that's under discussion. As such it doesn't really add anything except a new perspective. Why are you introducing it, what does it add?

pembrook 11mo ago

Sometimes we have to place our hand on the stove to learn why we shouldn’t place our hand on the stove. There’s a bizarre silliness to implementing this compared the relative ease of just increasing capital gains taxes (accrued capital gains are already tracked and reported!) to match income. Will just be a massive jobs program for the bean counters and consultants. As someone living somewhat Netherlands adjacent, I will happily welcome all Dutch entrepreneurs and investors who wish to grow our local economy instead and not be forced to sell chunks of their company to the state over time.

SilverElfin 11mo ago

So can you get unrealized capital losses to turn into tax credits? And can a person build up these credits to use in different years? If not, this is just a big tax increase to support continued government inefficiency instead of fixing spending and efficiency problems.

ekianjo 11mo ago
No this only goes one way, of course.
camer0 11mo ago
Yes, losses can be carried forward indefinitely: > Losses within box 3 can be carried forward indefinitely and offset against future box 3 income. However, losses cannot be offset against income in other tax boxes in the Dutch personal income tax. To avoid administrative burdens, a minimum threshold of € 500 applies before a loss can be officially recognized. https://www.loyensloeff.com/insights/news--events/news/legislative-proposal-wet-werkelijk-rendement-box-3-was-published/ https://www.loyensloeff.com/insights/news--events/news/legis...

clickety_clack 11mo ago

About a year ago, Draghi released this report on European Competitiveness (https://commission.europa.eu/topics/competitiveness/draghi-report_en https://commission.europa.eu/topics/competitiveness/draghi-r...). In it he says "A key reason for less efficient financial intermediation in Europe is that capital markets remain fragmented and flows of savings into capital markets are lower." I don't have data readily to hand (and Draghi probably mentions this in the report, I can't remember), but anecdotally based on what I hear from many of my European friends, Europeans basically keep their savings in bank savings accounts. That means that there is less investment capital floating around, which in turn means that the tiny fraction that finds its way into innovation is in turn greatly diminished. Europeans are dependent on bank loans for funding, and banks want to see assets as security for their loans. Policies like this would further disincentivize Europeans to invest in their own stock markets, further damaging the ability of Europeans to innovate.

itake 11mo ago
> Europeans basically keep their savings in bank savings accounts. USA is not much different. The wealthiest 10% of the U.S. population holds the vast majority of stock market wealth. Recent data shows this group owns around 90-93% of all stocks, with the top 1% controlling about half of the total household equity. Many people hold cash in savings to prepare buying a house, paying for a child's college and more. IMHO, there is also less short-term need to invest your money as an adult. If you're happy with your job and don't need the extra money (or risk), then why invest in the stock market?
- clickety_clack 11mo ago
  That’s exactly the issue, there’s so many taxes and frictions that people don’t think it is worth it, and that’s one of the reasons why Europe is stagnating. Investment in business creates strong economies.
- Kirby64 11mo ago
  > If you're happy with your job and don't need the extra money (or risk), then why invest in the stock market? Because parking money in a savings account essentially erodes its value over time due to inflation. It’s safer, sure, but it’s a safe way to be guaranteed to lose money over time. Equity investing is essentially the only way for savings to outpace inflation.

bawolff 11mo ago

So how does that work for assets with unclear value?

abtinf 11mo ago

It is difficult to imagine a more catastrophically destructive economic policy. If this is actually implemented, the Dutch are toast.

archagon 11mo ago
The Netherlands has had a form of "Box 3" wealth/unrealized capital gains tax for years. (This is just an update to existing policy.) So far, the country has not imploded. Time to update your priors.
- igor_akhmetov 11mo ago
  That's one of the reasons the housing market is so inflated. The goverment forces people to invest into housing.
burnt-resistor 11mo ago
"A number of my friends who belong in the very high upper brackets have suggested to me on several occasions of late, that if I am reelected president, they will have to move to some other Nation because of high taxes here. Now, I will miss them very much." (audience breaks into laughter) - FDR (Spoiler alert: The rich always act like victims and whine about having to move.)

notepad0x90 11mo ago

Why don't governments take a portion of the stock as tax payment? They can cash it in (or not), but if all your money is in stocks, are they forcing you to sell the stock to pay them? i.e.: The tax shouldn't be in numerated in currency but stock. If it is currency, you are forced to measure a portion of the stock based on its current value and sell that much stock, if they take a fixed percent of the stock that amount could be a lot or not so much depending on the value of the stock when they tax you. The amount of tax you pay shouldn't depend on how well the stock is doing at taxation time.

pembrook 11mo ago
Because within a few decades this would literally turn the Netherlands into the USSR. Compounding, but in reverse, away from individuals and into the inefficient state to manage and run all businesses. I know we have a lot of communists in Europe (and on HN) who want to run that stupid experiment again, but even in Europe it’s a fringe view.

blindriver 11mo ago

This is extremely regressive and means that lower income people will be forced to shed their assets every year to avoid paying this unrealized gains tax. This means they will NEVER get the chance to accumulate generational wealth by holding onto stocks or other assets that have the capability of increasing tremendously like real estate. It means they will need to sell their assets in order to pay this tax and only rich people will be able to afford holding onto assets long enough to become very rich. It’s stupid, regressive and the Netherlands will learn a great lesson. The other thing that makes me laugh is that no other taxes are going down so this is a straight up tax hike on top of every other the Dutch pay.

andsoitis 11mo ago

Countries raise taxes on wealth when they have high levels of debt and disappointing growth.

silexia 11mo ago

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deleted 11mo ago
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archagon 11mo ago

I'm not sure why this is suddenly news. As far as I'm aware from my immigration inquiries, the Netherlands has had a "Box 3" unrealized capital gains tax for many years. This merely looks like an adjustment/improvement of the existing system, not some radical new policy.

ivankra 11mo ago
They had essentially a wealth tax in Box 3 - your investments/savings are deemed to have a fixed fictional yield on which you pay income tax. Currently, 6.17% yield x 32% tax = 2% wealth tax. Hurts just a little bit, but it's a smooth, predictable cash flow. They are replacing it with a much worse and untested economic policy - taxing unrealized capital gains every year. Not a big deal for relatively stable assets (real estate etc), but can explode in your face if you're into any risky volatile stuff (stocks, options, crypto) - they can crash next year, but your tax bill won't. Lack of liquidity can get you as well - you may have huge gains on paper, but for various reasons unable to sell in a reasonable timeframe and come up with equally huge amount of cash for the tax office - we're talking probably 30-50% tax here vs 2% under the old system. Double taxation if you have US passport - you're going to have to please both tax systems or pay double the tax. The outcome I'd guess would be an exodus of the rich / upper middle class, and then they either scrap it or tighten further with exit taxes. Oh and they're also scrapping the coveted "30% ruling" for expats. Probably can forget about ever being able to FIRE in Netherlands.

kkfx 11mo ago

Countries that continue with fiscal plunder will only see those who can afford it flee, and after some time, popular uprisings from people who are fed up with Agenda2030 and still haven't figured out how to say no democratically. If some populations do this, as recently happened in Switzerland, they will likely avoid uprisings.

anthonj 11mo ago

I don't get how this works in practice. I am not wealthy, I don't even own an house. But I have a decent salary and buy some stocks occasionally. Most of my stocks are kinda volatile, so by paying taxes on unrealized gain I am taking much higher risk for owning them every year I don't sell. I would literally be paying taxes on money I don't own yet and could easily lose at the first mayor market upset.