Interesting for me also even though I have no exposure to NL taxation.
The fact is that countries around the world are looking for additional revenue and so these changes are useful to understand what is being tried, how it might work and gives a heads-up for what might also appear in other countries (which could impact you).
Except in that case does it even increase tax revenue? It’s not obvious to me (and it definitely wasn’t the goal, the goal was to fix something which wasn’t compliant to European rules).
I’m not sure in this specific case, but I remember some other countries discussing taxing unrealised gains. The tricky part is implications e.g. liquidity issues, also what if next year the gains decrease or become a loss, do you refund?
See posts above, you can deduct losses.
even this introduces volatility
e.g. you have santa rally, large gains become taxable, you get pushed into a higher tax bracket and taxed at higher rates.
then next year, the gains reverse you are back to net zero, but now you deduct losses but maybe you don’t have capacity to use them, or even if you do, you take a deduction but the marginal rates are low. so overall, looking across 2 tax years, you paid tax on zero net gains.
Whether it’d increase Dutch tax revenue or not, when you think about it from a theoretical and neutral economic perspective the whole thing is not as absurd as some make it sound.
Capital gains (realized or not) can be considered a form of income. If you look in the “net worth” threads, does anyone distinguish between realized and un-realized assets for something as liquid as stocks? No, it’s gained, it’s yours and would be available to be spent.
Taxing gains is quite common (typically realized ones), also in the US. Doing so at a preferred rate or deferred brings its own problems:
That’s what for example the US multi-billionaire tech-prodigies do: Most of their wealth is un-realized. They just don’t sell and rather take a loan, instead. Conveniently for them, the base is reset ("stepped-up) once they pass it on.
By the way, Biden for example (unsuccessfully) proposed taxing un-realized gains. If you don’t want to look into academic research or political arguments, The Economist (hardly a left-wing newspaper) acknowledged the efficiency of taxing un-realized gains in theory, but proposed taxation at point of inheritance as more realistic.
Now, in CH we have wealth tax instead, up to 1%. Is that so much better? Assuming 1m in stocks with 2% re-invested dividends and 3% capital gains, and 1% wealth tax, 30% income tax:
That’s 1.05m gross after a year, 6k income tax and 10.5k wealth tax.
Under the Dutch model, you’d also have 6k income tax and 10k capital gain tax.
With much higher capital gains, the NL tax is higher, of course. Yet there’s no tax in bad years, compared to CH wealth tax. Either way, they won’t have consider taxes for their investment strategy or point of selling.
Anyway, I don’t know enough about the Dutch situation, but the theory behind views on efficient taxes seems more interesting than ranting 
Does it make FIRE more difficult? Sure, but so does income tax or VAT.
Tax on capital gains exist in various jursidictions. I paid it when in the UK.
What is more controversial is taxing unrealised gains as you haven’t made the gains and the gains may not even exist when you come to sell.
If they start on this path, they might as well start taxing unrealised income. Just work out starting from when you are a kid what kind of job you could potentially get and start taxing you on the income before you earn it. They can adjust it once you retire
It’s a flat rate, not progressive. Honestly the change looks pretty thoughtful for an outsider (given the constraints they had).
I guess “hardly” can mean wildly different things to different folks.
Does it? If so then how?
I was speaking to a colleague from the UK the other day who said that capital gains are unfair and should be taxed to hell (50-80% - they are not very sophisticated and just threw numbers in the air) because “nobody worked for them”. While it’s technically true that they didn’t work for it, what’s harder to quantify is the risk associated: the investor got rewarded (paid) for taking on risk, far beyond the risk they’d take in a salaried job. Also salaried jobs have insurance, unemployment benefits, social contributions etc baked in. Capital gains seems unfair to anyone not getting them in my experience, only because appetite for risk, letting go of your money and delayed gratification are not quantifiable.
Edit: maybe what the Dutch are trying to do is efficient - I do hold them as a nation who is pretty sophisticated about money overall - but any sort of imputed or unrealized taxation is very hard to stomach for most people.
Edit 2: considering the much maligned dividend taxation in CH, personally even as a lover of holy divvies I think it makes sense for them to be taxed, it’s a share of the company’s profits, unlike covered calls.
Edit 3: Sweden has a good system - I found out when researching for a friend relocating there - the ISK account where a flat ~1% AUM gets taken per year by the custodian bank (always a bank), the tax agency gets notified automatically, and there is no cap to how much money one can contribute, trade, or withdraw in a year. The flipside is that while investment is also possible outside of such an account, there are capital gains taxes upwards of 30% IIRC.
In an ideal world you would work, put a part of your gains in stocks and then with time work less and live off the capital gains. That is what FIRE is all about.
Taxes are always unfair and may get disastrous when they change the economic life of the people. Some business cannot be done because after tax it would be a negative. Some people do stop working or work less because of tax. The unrealized capital gain tax has the potential to change the economic life of many people.
I think the undercover economist published some original solutions: as it is not fair, never, it could be a lottery, to be paid in advance. If it is already paid you can make whatever you want… and probably will.
Just dreaming. I probably would pay much more if it was a lottery…
I agree it’s unconventional and controversial. But not so much from a theoretical standpoint: That capital gain is just as available as an accumulated or distributed, then re-invested dividend, isn’t it? Do you really distinguish those 3 when looking at your account balance?
Similar analogy to yours might be “my salary is still in my bank account, I save it for later” and not get taxed? 
Independent of taxes, capital growth has been higher than salaries for some time. And capital isn’t equally distributed.
If it’s not taxed at all or at a preferred rate, it’s shifting the tax burden even more relatively to folks that rely on their income (typically the less well off) vs. those with lot of capital.
The point here is not what you or I (or your UK colleague) consider fair, or the common “but it’s already been taxed once”, but how would it not?
I didn’t say I disagree with taxing capital gains, just enjoying being in a jurisdiction that doesn’t, and while this was not a material reason for me to move to CH, it WILL be a material reason when choosing where to move when we eventually leave - which is also why I noted above that this sort of discussion is more suitable for conversations around “where to FIRE”.
Edit: the point about capital growth vs salary growth (+vs inflation) is real, but I am not smart enough to claim to even be able to break it down. Some would say “capitalism bad, creates helots out of people” and under context they’d be right. Some others would say “taxes bad, create helots out of people”, and again under context they’d be right. I do get some kicks out of trying to snoop under the radar of using the word which triggered it all.
The point about whether not taxing those capital gains (or having LTCG vs STCG taxes like in the US) increases taxation needs for a country, and hence drops more tax burden on people who rely on their income is something I don’t know about. I think the point “It’s been taxed already” may be commonly said - including by me - but this doesn’t make it untrue. What I invest here has already been taxed at source so there needs to be something in place to separate CGs from income taxes. I think that’s both logical and fair.
Now, talking about billionaires, and inheritance, I have specific ideas about that but they’ve consistently been deleted so I won’t reshare them!
I certainly do, but I’m hardly a role model, or any other kind of model
Not the right analogy since you received it in your bank account.
What would be more analogous is if you are taxed on income you haven’t yet received e.g. future income, let’s say taxed on next 6 months of income based on your notice period etc.
Well, it was mildly tongue-in-cheek. And yet, a stock with unrealized gains is (almost) as available for me as money in my bank account. Yes, it might lose value if I don’t touch it, but so could my accumulated dividends, or, in theory my bank balance.
This isn’t available, though. As wouldn’t be expected future capital gains. Without pushing those examples too far, the salary would if I got actually paid 6 months in advance.
In the corporate world, your accountants would tell you that you’d need an accrual or something for advance payments, but that’s again a different perspective.
Main point, the concept is a bit more abstract, but I could follow the logic. I just learned that definition of income is a thing, called Haig-Simons income in Economics. “In theory, a Haig-Simons measure of income is the best measure of economic well-being” according to a publication of the US congress tax committee 
There you go 
Don’t get me wrong, the CH taxation of capital gains, or in general is quite beneficial for me, I just wanted to add that theoretical perspective.
Yeah it is interesting, read some advise from some Dutch tax professors a while back. To compare unrealized vs. realized gains taxes:
As taxes can be distortive, taxing transactions has been seen as negative in many cases (e.g. housing), though I think in forums like these we tend to think people have a tendency to trade too much, so taxes discouraging trading isn’t seen as much of a negative. And similarly we tend to be stock heavy, so taxing volatility more is considered painful.
Being a Dutchy living in CH, I have followed this with some interest. Talking with some people who have a bit of wealth indicates that little will change for them. Anybody having more that 300-500 k would move it into a Holding with different companies below for stocks, Real Estate etc.
That already has tax advantages now, and will have so in the future. Apparently also better for inheritance.
I would have expected such a thing. Most people with money put it in companies in EU countries.
For Switzerland it might be an optimization starting at a higher level and it’s very optional, meaning you can live wealthy and K.I.S.S. at a very comfortable level without being over-taxed as an individual (well, it depends on your tax tolerance / aversion).
Not 100% sure, but I don’t think that’s true for Denmark.
Ok, in some EU countries where tax is not individual-friendly.