I’m seeing a ton of anger online about the Netherlands giving the green light to a new tax on unrealized capital gains, which is set at around 36%.
So here's the deal: taxing unrealized gains isn’t a brand new thing in the Netherlands. But one of the big changes in this new bill is slashing the tax-free capital threshold from €57,684 in 2025 down to just €1,800. This means a lot of small investors, especially those in crypto, are gonna get hit with taxes on gains they haven't even cashed out yet. It might create liquidity problems and could force people to sell off some of their investments just to cover the tax bill.
If I got this right, there’s still a 3-year review period, so it’s not happening right away, but the idea of taxing folks on gains that aren’t real yet is pretty messed up and just not fair. Besides the obvious unfairness, if bigger countries decide to do the same, it could really shake things up across all markets for those assets. We might see a lot of forced sell-offs after tax seasons, which would drive prices down and mean actual realized gains end up being less than what they taxed people on.
I wonder if people in the Netherlands will react to such a law by not voting for those who want to introduce it in the next elections? To me personally, it is completely unfair and as if someone wants to demotivate people to invest at all. Countries have always been greedy with taxes, but this is a whole new level - I hope it doesn't spread to other EU countries.
These types of laws are proposed by people who don't understand anything, people who, unfortunately, abound among politicians. First, I think this will be overturned by the courts, as advanced countries do not normally allow confiscatory laws. But even so, if it ends up being implemented, I doubt it will work because those who have a lot invested will leave The Netherlands for countries where they are treated better, and small investors will either stop investing to avoid the headache of taxes or will have to sell by 31 December to avoid having to pay taxes in the middle of the following year on supposed gains that may no longer be such at the time of payment if they have not sold and are at a loss.
What a stupid law.
I read somewhere that the matter is not that simple, because even if they move from the Netherlands, they still have tax obligations to the country they left from for at least the next 5 years. However, this seems to me more like a test of public opinion, they want to see the reaction of the public, so the final decision will be in accordance with that.
I think the real tragedy in the so-called Western world is a still prevalent belief that you can just vote your way out of such things, despite the reality proving over and over again that this is not the case.
Despite democracy meaning to be the voice of the people, the "subject" very rarely gets what they want.
If we look at all the major changes over the years in the EU, people, in general, got the opposite of what they wanted. There was hardly any support for the federalisation of EU, uncontrolled mass immigration, cultural liberalism (e.g. transgenderism etc), the Green Deal/Fit for 55 (responsible for a massive increase in electricity bills) or Mercosour deal - but those have been pushed on people regardless of objections. What's more, governments and mainstream media have been moulding public opinion to the point that the public thinks that all of that is inevitable and there's nothing they can do (+ any opposition being painted as extremists or lunatics).
We are long past the times when governments were a reflection of the will of the people. Now the rulers shape the public to their liking.
So no, I don't think they will vote that bill out. I don't think any of those who voted in favour of the bill would advertise such intention during their election campaigns. In fact, as the media report, many expressed their regret for supporting it, but "they didn't have a choice" as they need the money.
Next to come: exit taxes, so people can't just move their wealth elsewhere.
I haven't heard about a tax on unrealized capital in a long time. A 36% income tax makes businesses uncompetitive, and a tax on unrealized capital is killing the crypto industry. In Russia, the profit tax on cryptocurrencies is 13%, and many people operate in the shadow economy to avoid paying anything.
Large investors will flee to other jurisdictions, and citizens will probably consider working in the shadow economy.
Has such a thing ever existed? In ancient times, there was no democracy as it exists today on paper, but in practice we know very well that politicians are only servants of those who finance them from the shadows. In most cases, you have choice A or B in elections, and it usually comes down to choosing the lesser evil, or not voting at all and risking someone stealing your vote.
Democracy is actually one big beautifully packaged lie that most of us elect every 4/5 years. In my opinion, the only democracy that functions to some extent is Switzerland (when it comes to Europe), because there people declare themselves in a referendum on all important (and non-essential) issues that concern them and the country in which they live.
This is surely the height of it all. How do one tax unrealised capital gain. I want to believe that when the asset is eventually sold at a loss, the taxed amount would be refunded. The only unrealised gains I have heard being taxed is when there is certainty of sale upon maturity of such asset and this is adjusted for. To expand this to unrealised gains would mean for every year one is holding the asset, you get charged for it and in a market of enormous uncertainty, this is outrightly ridiculous.
This is pure madness!
Even if they have arrived at a point where almost all parties, despite finding the solution inadequate, are voting for it anyway and the reason is that the Dutch Supreme Court has repeatedly ruled the country's old system for taxing investments to be unconstitutional, I I firmly believe that in this case the cure is worse than the disease.
This will drive major capital out of the Netherlands and create significant distortions within the country : whilst they have brought together crypto stocks and ETFs for example real estate is excluded from this taxation and will become a far more attractive investiment.
This reform has not yet been definitively approved and I hope that the Dutch parliament will reconsider its decision.
I cannot understand why any government would want to implement this sort of controversial tax system that is even difficult to implement practically. I don't even see how such a policy would benefit their economy, because they would be pushing investors out and wouldn't be attracting any.
I strongly believe this wouldn't be implemented and even if it is, i doubt it would spread. This is not a policy worth adopting, but then again we understand how stupid governments can be sometimes.
Taxes mean loss of popularity for governments.
But they need money. Badly.
So what to go? Tax unrealized gains, cause only rich people go trading, right? Riiight?? (And let's be honest, about Bitcoin they couldn't care less).
Well, I think that funds like certain types of life insurance funds or pension funds also do trading and will probably get unrealized capital gains.
And maybe it doesn't hurt now, but if the stocks will drop after a good year, some companies will not be happy and maybe even move out of the Netherlands.
So yeah, even without the obvious issues for crypto traders and for the hodlers who didn't suffer yet any boating accident, this law is plain stupid.
I hope that until the start of 2028 they'll find out how bad this is and do something about it.
Not really. What they are doing is creating an ever-growing class of people dependent on the state, who applaud these measures and consequently vote for them. This has already been seen in many places, for example in Argentina, which went from being the country with the highest GDP in the world at the beginning of the 20th century to being a disaster.
Fixed that for you in bold.
What has happened with governments in Europe is that they have devoted themselves to creating mammoth spending structures without worrying about revenue, as if being the continent of Plato and Julius Caesar meant that things would work out on their own.
Importing millions of low-skilled immigrants, giving them benefits and other crazy stuff policies increase the need for spending, and faced with the need for spending, we get bullshit like this tax.
Europe has no influence in the world today, and it will have less and less. It seems that politicians don't want to remember nothing about the fall of the Roman Empire.
Hmm, I don't know. Imho the Netherlands are more oriented towards proper capitalism, which imho also means that quite an important number of individuals and companies do trade stocks.
Of course, like everywhere, there are also people who depends on money from government - those may be happy, but I don't think that they're too many (e.g. not as big % as in my own country).
I think that the comparison with Argentina is incorrect (afaik Argentina was in really big shit when Milei started his reforms) and I think that Argentina is becoming lately less of a good model, after the 12h working hours scandal.
Yep, here I agree, they keep overspending increasingly more and the only "solution" they ever see is more taxes. And I think that it's not only greed and arrogance, it's also related to stupidity - I mean that if no one amongst them notices that they're doing it wrong... wow...
Benefits abuse has happened a lot at large scale in all western countries and, again, imho it's about lack of vision amongst politicians, there must be ways to remove the loopholes which can be abused so easy. However, it's a complicated topic, since on one hand the constitution(s) may need changes, else denying those benefits may be discrimination, on the other hand with such a disappointing demographics there may be hope that after 1-2-3 more generations those immigrants' descendants may fill the gap properly (i.e. similar education, skill and expectations as the rest of the population).
Of course, making the life easier for the current tax payers could also get them get more children and get to better results, heh...
They may somewhat wake up. And there are other areas of the worl that also don't look great in this aspect. We'll see. Things are changing, more than I would have been expecting 5 years ago.
In general, European courts do not allow retroactive effect if it is contrary to the individual. If you live in the Netherlands today, move to another country, and the law comes into effect on 1 January 2027, nothing will happen to you. It is another matter if you intend to move in mid-2027 and think that nothing will happen to you. You should pay that tax, and the authorities have up to five years to claim it from you before it expires. I imagine that must be what you saw.
This rule of law is far from what we see, the Netherlands is known for prosperity for its people, free fees are almost universal in government agencies, but I saw this news, If the Dutch authorities impose a 36% tax on crypto users on their investments and profits, this is the same as punishing crypto users in a sadistic manner.
If crypto users make crypto investments with profits that are only 100% of the capital, they only bring 64% not to mention other deductions, I think the Dutch authorities are unfair in this policy, it is necessary to revise the 36% tax law again.
This bill does not only apply to cryptocurrencies, but other assets too, i.e. stocks and bonds. However, real estate and stocks of startups are exempt from this new system, if it becomes law. They'll still follow the normal process of being taxed on gains that have been realised after the asset has been sold.
It is even worse because they are taxing paper gains. Though it may be worth mentioning that net losses in a given year can be carried over into future years. And these losses can be used towards reducing or settling taxable gains when they are applied.
If I were Dutch, I'd buy assets every year and then sell them at a loss at the end of the year. The fact that these would be my tokens is a separate issue. But I'd always be a losing trader. Either you break the law or you don't invest in crypto.
That doesn't matter; the point is the trend. The Netherlands is less capitalist today than it was 50 years ago, as is the UK, the land of Adam Smith, Ricardo, and Margaret Thatcher, which is accelerating its conversion into a third world country with the same recipe: higher benefits, higher taxes, and greater state control. The same is happening in most European countries.
He is probably a worse model lately. Milei has his flaws and does some things wrong, but the point is that he is fighting against a giant that turned a country that had the highest GDP in the world and to which people emigrated into a third world country.
Is there a difference in the steps or amount of tax paid if the gain is left to float or realized before the end of the year? I don't think there's a difference, considering the 36% rate applies to both types of gains. Anyway, if the Dutch believe realized gains are better taxed, we'll see selling pressure at the end of each year.
The trend looks bad imho for both Europe and America(s). China, India are growing, but yeah, China and capitalism sounds like two characters from a joke
Something bad may need to happen to change the current status. And I am afraid to think what can "something bad" mean when there's already war in Europe for so many years without any clear sign it would end soon. And it's not even the only war "nearby"... And a new one may also start any minute now...