The Netherlands is likely to start imposing taxes on capital gains annually by 2028.
The Netherlands is preparing to impose an annual tax on capital gains by 2028, covering both realized and unrealized gains, even if the investments have not yet been cashed out. The plan aims to amend the controversial Box 3 tax following a court ruling that criticized its reliance on fictitious returns.
The Tweede Kamer, the Dutch House of Representatives, discussed the proposal on Monday. The members expressed doubts and criticisms, posing more than 130 questions to the interim State Secretary for Taxation, Eugene Heijnen, regarding the new system. Despite the concerns, a majority of the members are expected to support the bill to avoid losing 2.3 billion euros annually in deferred tax revenues.
The main controversial point is the taxation of investors on unrealized gains, including profits from stocks, bonds, and cryptocurrencies. While the government's initial goal was to tax only realized profits, this approach is not feasible before 2028, forcing an early implementation of the system. Many parties, including VVD, CDA, JA21, BBB, and PVV, reluctantly agreed to support the project.
Parties like D66 and GroenLinks-PvdA support the taxation of undistributed profits in principle, considering it simpler to implement and not leading to significant budget losses. MP Luc Stultiens from GroenLinks-PvdA emphasized the need for a higher tax on large capital gains, while the new system also provides benefits for real estate investors, including deducting expenses from taxable profits and taxing only when profits are realized, with an additional tax on personal use of the second home.
Critics, including MP Peter Grinwis from ChristenUnie, warned that the revised Box 3 system may be as complex as or more than the current system. He explained the ongoing difficulty between the desire to simplify the tax system and the increasing complexity of the new rules, questioning whether the public is capable of dealing with these additional complexities.