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

Original Article ↗ Hacker News Discussion ↗

Scope and Structure of the Dutch Box 3 Change

  • Box 3 currently acts like a wealth tax on financial assets via a fixed “fictional yield” (≈2% of wealth in tax); realized vs unrealized gains don’t matter.
  • The proposal replaces this with two regimes:
    • Capital growth tax (annual tax on realized + unrealized returns) for most financial assets (shares, crypto, savings, FX gains).
    • Capital gains tax (on realization only) for certain assets like real estate and startups.
  • There is a tax‑free threshold (≈€57k per person), so small savers are exempt.

Taxation of Unrealized Gains and Losses

  • Main questions: how losses offset prior taxed gains, whether you get refunds or higher cost basis, and if losses can be carried back or only forward.
  • One source cited says Box 3 losses can be carried forward indefinitely (above a small minimum), but not used against salary/business income.
  • Some argue this is conceptually similar to property taxes or mark‑to‑market rules already used in specific contexts.
  • Others worry about paying large cash taxes on paper gains that may evaporate the next year.

Real Estate Carve‑out and Housing Effects

  • Real estate largely remains taxed on realization, not annual growth, especially primary homes (which sit in a different box).
  • Critics see this as a political carve‑out favoring homeowners over renters and pushing more capital into property, worsening affordability.
  • Defenders argue you can sell part of a stock portfolio to pay annual tax, but you can’t sell 5% of your house.

Liquidity, Startups, and Volatile Assets

  • Strong concern about employees with illiquid startup equity being taxed on high paper valuations long before an exit.
  • Risk that people will have to borrow or sell assets in “fire sales” to meet tax bills, exacerbated by volatility in stocks and crypto.
  • Some predict this will push entrepreneurs, investors, and high‑net‑worth individuals to leave the Netherlands.

Distributional Fairness and Wealth Building

  • Supporters see this as closing “buy‑borrow‑die”‑style deferral and inheritance loopholes and making capital owners contribute more regularly.
  • Opponents call it regressive: poorer investors may be forced to sell each year and never benefit from long compounding, while the rich can hold and borrow.
  • Debate over whether loss carryforwards and thresholds meaningfully mitigate regressivity.

Economic Competitiveness and Capital Markets

  • Some worry this will further discourage equity investing in Europe, where households already favor savings accounts over markets, harming innovation.
  • Others argue similar Box 3 wealth taxation has existed for years without collapsing the Dutch economy; what’s new is tying tax to volatile annual gains.

Broader Political Reactions

  • Views range from seeing this as necessary reform against wealth concentration and profit shifting to labeling it “fiscal plunder” or a step toward state control.
  • Several note that fears of capital flight always accompany tax increases; whether it materializes at scale is viewed as uncertain.