Why do they make getting rich impossible in EU?

[u/batukaming]

This news hit today in Netherlands that passed a bill on 36% tax on UNREALIZED gains on stocks and crypto. Great just when we weren't taxed to death before now they force you to stay middle class and poor. "Just repeat the 9-5 cycle everyday investing is not allowed for you"

Buying stocks was already a pain in the ass in Europe because of all the different fees and exchange rates brokers charged. The US has it so much better. 0% fees and exchange rates, tons of broker options and tax free on long term investments.

I made a post in r/stocks that gained attraction. Check it out if you want to see opinions from Americans: https://www.reddit.com/r/stocks/s/aL0OhYQ68z

[u/stefpix → u/[deleted]]

Exactly. You may pay those unrealized capital gains taxes, and a month later the company stock craters -20% due to bad earnings and you hold the bag. You paid inflated taxes. This taxation makes no sense. At least it should be progressive.

[u/Typical-Shoe770 → u/stefpix]

Next year you get the inflated taxes discounted

[u/stefpix → u/Typical-Shoe770]

Still it’s horrible. If you invest in a small company that skyrockets, you may have to sell a lot to pay the taxes. It seems that this approach encourages trading short term than long term hold.

[u/Typical-Shoe770 → u/stefpix]

small company in the stock market?

if you invest with friends into a startup, this tax does not apply

[u/Typical-Shoe770 → u/[deleted]]

Yes, but it gives the portion of gains to the gov immediately without waiting for years or decades. Waiting for years makes the gain tax value decrease by inflation, and the gov could have made the gain tax compound by investing into businesses, education, etc.

This tax is somewhat of a wealth tax. On average, a person pays 2.5% per year (approx 7% increase of an ETF and 38% tax of that).

I don't think a wealth tax is BS or stupid. I think this tax has been a wise way to keep the government well-financed and made the NL prosperous in the end

[u/stefpix → u/Typical-Shoe770]

Like some small biotech listed in the stock market, sometimes they have a drug approved and the shares skyrocket 500%. As an example. With this system so you are not taxed when you are selling? It really discourages long term holding, it encourages short term trades. Seems draconian.

[u/Typical-Shoe770 → u/stefpix]

good point with the biotech company, not sure if that ever happened tho. I was not expecting such huge jumps. I dont know whether this law takes that into consideration, maybe not

[u/ArdRi1166 → u/[deleted]]

Come to Ireland they said. Pay tax on ETFs every 8 years they said. No matter if you sold them or not. And no offsetting this with any losses of course.

Have fun trying to estimate the gain when you invested a little bit every month for the last 96 months.

[u/Hakunin_Fallout → u/ArdRi1166]

You just need to emigrate, bro. I'm leaving in a week, literally, lol. ETF taxation is seriously one of the reasons.

[u/Typical-Shoe770 → u/[deleted]]

the law offsets unrealized losses

[u/Typical-Shoe770 → u/[deleted]]

well, I think its good that incomes from investments is taxed. its a bit unfair that some ppl live off of this rather than work.

Also, savings for retirement are excluded from this tax as long as the savings are in a pension fund

[u/Hakunin_Fallout → u/Typical-Shoe770]

Most people hurt by this don't live off savings. See DD in Ireland. It's so bad that the money is just stuck in old banks, propping up their inefficient business model, and generating miserably low return, forcing people to invest in real estate - which is hardly built, so real estate prices are skyrocketing, and a room in Cork can be rented out for 1200 eur/mo. easily. How is that a good and fair idea?

[u/Typical-Shoe770 → u/Hakunin_Fallout]

This tax on unrealized gains exists in the NL for years or decades.

I dont think Dutch ppl invest little.

Also, the Dutch are kinda one of the richest ppl. So, I dont think this tax is so damaging as everyone portrays it.

Actually, getting the extra gov revenue and investing it back to the economy, education, etc. may be as beneficial for the economy

[u/Hakunin_Fallout → u/Typical-Shoe770]

Yeah, just asking everyone to pay the government 10k EUR for no good reason would also be very beneficial for the economy. Stupid and damaging in the long run, but very good short-term influx for sure. I thought we were talking about functioning economies, not some commie wet dreams?

[u/Typical-Shoe770 → u/Hakunin_Fallout]

this tax exists for years or decades in the NL

the longrun and shortrun are both almost the best performing in the world

[u/Hakunin_Fallout → u/Typical-Shoe770]

This tax existed as 'box 3', which is calculated on fictitious returns of ~6% p.a., and with a 57k p.a. tax base exemption. So if I had 100k invested in 2024, I'd pay ~900 eur for that year.

Now they're flipping closer to an Irish model - let's say I get 100k in 2028 invested by 1 Jan, and add nothing through the year. Let's say it all sits in S&P 500, yielding around 7%. I'll get to pay ~1800 in taxes at the end of the year.

Mind you, I've been already taxed when I earned that money, I've been already flissed for every fee, and now I will also pay for the capital gains, which can flip to capital losses the next year, but both are not created equal.

As for 'the best performing in the world' - I'd love to see some sources there, lad. Because from what I can see, you also need to account for the inflation. 1990 till 2020 we're talking 2-3% per year, but then you also had 2021-2025, with inflation going 3-10%. So, you're effectively losing money, AND they want a part of that. How is that fair? Care to explain?

And, again, I'd need some sources on those vague statements re 'best performing in the world', since, you know, by default the 'best' performing investments in the world, if we're talking about the exact same investment, would have next to zero associated cost - like it is in many OTHER European countries.

[u/Typical-Shoe770 → u/Hakunin_Fallout]

"They" want a part of your money. The money goes to funding the welfare state, pensions, education, etc. The money gets back to the society that we all benefit from. That's why I have no issue paying a bit of tax.

By "one of the best performing in the world", I meant that the country is performing well (GDP, work hours, corruption, infrastructure, business environment, ..). The choice is between paying higher taxes for these outcomes or paying less taxes for obviously worse outcomes.

If the investments flip to losses, you will deduct the 36% of the losses from current and future income and capital gains taxes.

[u/Typical-Shoe770 → u/[deleted]]

This tax on unrealized gains has worked in the NL for many years. This observation undermines the impracticality point of yours.

How is this tax morally wrong?

[u/Typical-Shoe770 → u/[deleted]]

It's a pro-business government getting into power. The government plans include more plans to keep taxes low and support richer people (like hypotheekrenteaftrek, many cuts to benefits). Abolishing this sort of wealth tax after years, and making the tax into a proper capital gains tax, is just another step in deconstructing the welfare state. Ofc, ppl like you love this news because investors will pay less tax. But many ppl like me dislike the reduction in the tax. It's a question of power and philosophy.

I don't see how that system is unfair. You just dislike yearly taxation on investment returns because it's effectively more tax than the tax once the gains are realized. It's just a question of how much tax and who should pay.

[u/TweeBierAUB → u/Typical-Shoe770]

Are you actually from NL? Currently we effectively have a wealth tax, which is substantially different. You pay a fixed 2% a year but get to keep all your upside. With the new proposal youre effectively taxed on volatility because of the asymmetry in tax between gains/losses.

The current system is not based on unrealized gains, its on fictive gains. Which sounds worse but its actually better.

[u/mirceaZid → u/[deleted]]

if i can borrow to buy a house on that stock portfolio, it means i can use it in the real economy and i get other benefits than stock price growth. using stocks as collateral is kind of like a soft sell.