About a year ago, Draghi released this report on European Competitiveness (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.

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.

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."

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?

> 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.

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.

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.

It is difficult to imagine a more catastrophically destructive economic policy.

If this is actually implemented, the Dutch are toast.

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.

So how does that work for assets with unclear value?

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.

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.

well this will probably cause an exit of businesses

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.

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.

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.

(June 2025)