Dutch Lawmakers Approve a 36% Tax on Un-realized Gains
Discussion
https://www.imidaily.com/europe/dutch-lawmakers-ap...
Here is a more detailled explanation about how this could play out.
imidaily said:
The Dutch House of Representatives on Thursday voted to pass the Actual Return in Box 3 Act (Wet werkelijk rendement box 3), a reform that will tax residents at a flat rate of 36% on the actual returns they earn from savings and investments, effective January 1, 2028.
The bill replaces a system that taxed investment income based on assumed returns, a framework the Dutch Supreme Court ruled unconstitutional in a series of decisions beginning in December 2021.
Under the new regime, the tax applies not only to income that has actually been received, such as interest, dividends, and rent, but also to the annual increase in value of assets like stocks, bonds, and cryptocurrencies, even when those assets have not been sold.
It is my understanding that this isn't law yet and still needs to pass the second house. The bill replaces a system that taxed investment income based on assumed returns, a framework the Dutch Supreme Court ruled unconstitutional in a series of decisions beginning in December 2021.
Under the new regime, the tax applies not only to income that has actually been received, such as interest, dividends, and rent, but also to the annual increase in value of assets like stocks, bonds, and cryptocurrencies, even when those assets have not been sold.
Here is a more detailled explanation about how this could play out.
1) The Dutch House of Representatives on Thursday voted to pass the Actual Return in Box 3 Act (Wet werkelijk rendement box 3), a reform that will tax residents at a flat rate of 36% on the actual returns they earn from savings and investments, effective January 1, 2028.
2) The bill replaces a system that taxed investment income based on assumed returns, a framework the Dutch Supreme Court ruled unconstitutional in a series of decisions beginning in December 2021.
3) Under the new regime, the tax applies not only to income that has actually been received, such as interest, dividends, and rent, but also to the annual increase in value of assets like stocks, bonds, and cryptocurrencies, even when those assets have not been sold.
Para 3 deems to contradict Para 1. Can you have ACTUAL returns if the investment (or part of it) hasn't been sold? It seems that they almost did something stupid then retreated (albeit with 36% CGT)
2) The bill replaces a system that taxed investment income based on assumed returns, a framework the Dutch Supreme Court ruled unconstitutional in a series of decisions beginning in December 2021.
3) Under the new regime, the tax applies not only to income that has actually been received, such as interest, dividends, and rent, but also to the annual increase in value of assets like stocks, bonds, and cryptocurrencies, even when those assets have not been sold.
Para 3 deems to contradict Para 1. Can you have ACTUAL returns if the investment (or part of it) hasn't been sold? It seems that they almost did something stupid then retreated (albeit with 36% CGT)
Edited by Simpo Two on Monday 23 February 17:29
Yep, getting tiring now.
Since 2007 and GFC and birth of monetised social media, the world should have ended 50 times, nuclear war 5 times, economy ended 8 times, aliens invaded 2 times, money replaced with UBI twice, lockdown forever 2 times, on and on and on.
Easier to just wait a few months and if people are banging the drum louder still, maybe something to worry about. That never happens though, the doomsayers move onto the next dramatic headline.
Since 2007 and GFC and birth of monetised social media, the world should have ended 50 times, nuclear war 5 times, economy ended 8 times, aliens invaded 2 times, money replaced with UBI twice, lockdown forever 2 times, on and on and on.
Easier to just wait a few months and if people are banging the drum louder still, maybe something to worry about. That never happens though, the doomsayers move onto the next dramatic headline.
lizardbrain said:
I've no idea what the details are, but I'm very confident this is sensationalist exaggeration.
Unfortunately not, other than it not having passed their upper house yet. Dutch investor mate of mine says they're all spitting feathers over it.Right now they tax theoretical/assumed returns at the entire asset class level (e.g. ~6% I think for equities), and you can provide evidence to the contrary if your actual return is lower.
What this will do is tax actual returns whether realised or unrealised (i.e. mark-to-market), with losses deductible and able to be carried forward indefinitely but not backward.
They've had a form of this in Ireland for a long time now but from memory I think it's every 8 years and only applies to ETFs.
Well I don't know about a communist apocalypse but it's pretty crap policy for the economic and behavioural distortions it creates, which is probably why most places don't do it. It effectively penalises volatility, such that you absolutely could end up paying more than under a system where you're only taxed on realised gains, and erodes the longer term benefit of compounding.
By the sounds of it, none of the lawmakers want it, yet there it is.
In the Netherlands there's already a 2% tax on your overall wealth every year, home exempted, whether you sold it or made money or not so there's a smaller precedent already.
Other places do it too. In Ireland funds and ETFs have an unrealised 41% or so tax every 8 years.
Incredible that this is considered a viable move. Norway has triggered a wealth exodus with similar ish stuff.
It's not hard to predict what's going to happen.
In the Netherlands there's already a 2% tax on your overall wealth every year, home exempted, whether you sold it or made money or not so there's a smaller precedent already.
Other places do it too. In Ireland funds and ETFs have an unrealised 41% or so tax every 8 years.
Incredible that this is considered a viable move. Norway has triggered a wealth exodus with similar ish stuff.
It's not hard to predict what's going to happen.
NowWatchThisDrive said:
lizardbrain said:
I've no idea what the details are, but I'm very confident this is sensationalist exaggeration.
Unfortunately not, other than it not having passed their upper house yet. Dutch investor mate of mine says they're all spitting feathers over it.Right now they tax theoretical/assumed returns at the entire asset class level (e.g. ~6% I think for equities), and you can provide evidence to the contrary if your actual return is lower.
What this will do is tax actual returns whether realised or unrealised (i.e. mark-to-market), with losses deductible and able to be carried forward indefinitely but not backward.
They've had a form of this in Ireland for a long time now but from memory I think it's every 8 years and only applies to ETFs.
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