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

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

#21

Post by icegreentea2 »

tschellenbach wrote: post #6

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."

I think in more general usage if you asked people what assets "taxing unrealized capital gains" would cover, you could get a basket if things like shares, real property, businesses, etc.

The article indicates that the Dutch government has decided to treat startups and real estate under the bucket "capital gains", and stuff under "capital growth".

So for an more informal standpoint, the title is a reasonable way to summarize what's happening to the layish person.

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

#22

Post by B1FF_PSUVM »

ivankra wrote: post #8
LZ_Khan wrote: post #5

well this will probably cause an exit of businesses

Businessmen - it's for personal income taxes. I don't think it affects corporate taxes. Yet.

Don't IKEA have a tax-free "design foundation" over there?

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

#23

Post by appreciatorBus »

kingstnap wrote: post #12
tschellenbach wrote: post #6

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."

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.

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.

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

#24

Post by kingstnap »

anon291 wrote: post #14
kingstnap wrote: post #9

> 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…

The demonym of those from the Netherlands is 'Dutch'

I totally misread the title as Norway, guess I was thinking about the sovereign wealth fund.

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

#25

Post by oliv__ »

andsoitis wrote: post #10

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.

The people voting for these laws don't want anyone to be wealthy. It's a race to the bottom

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

#26

Post by tom_ »

kingstnap wrote: post #9

> 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…

This won’t obviously apply to Norwegians, as it’s for the Netherlands.

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

#27

Post by keerthiko »

ivankra wrote: post #8
LZ_Khan wrote: post #5

well this will probably cause an exit of businesses

Businessmen - it's for personal income taxes. I don't think it affects corporate taxes. Yet.

as worded is this tax not levied on any entity holding assets that can appreciate in value (businesses can hold stock too)?

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

#28

Post by tobyjsullivan »

kingstnap wrote: post #9

> 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…

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.

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

#29

Post by ivankra »

tschellenbach wrote: post #6

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."

Looks like they're coining a new legal term "Capital Growth Tax", under which they are going to tax unrealized capital gains. I'm not aware of any other country that taxes them like that (besides wealth/exit taxes), so maybe they're the world's first here!

Some countries have wealth taxes - but they are usually flat or scale with wealth, not the yearly increase in wealth. Note that currently NL does de facto have a wealth tax in Box 3 system - shares are presumed to have a fictional fixed yield of around 5-6% per year on which they charge you income tax, so it works out to about 2% wealth tax.

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

#30

Post by bongodongobob »

appreciatorBus wrote: post #23
kingstnap wrote: post #12

Earlier quoted context omitted.

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.

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.

Only 29% of people in the Netherlands rent and that number is decreasing.
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