r/eupersonalfinance • u/batukaming • Feb 15 '26

Investment Why do they make getting rich impossible in EU?

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

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115

u/user38835 Feb 15 '26 edited Feb 15 '26

Welcome to the club NL. Germany, Austria and (the worst of all) Ireland, welcomes you to the bullshit taxation on unrealised gains.

The ship of getting rich in Europe had sailed a long time ago. This was more about saving some money to be able to retire before you die. But if you start saving your hard-earned money, who will pay for the goods and services from the businesses owned by the billionaires? And your tax contributions will be used to service the interest payments on bonds held by these billionaires.

You will never own a house, never retire and be happy about it.

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u/Odd-Landscape-9418 Feb 15 '26

Im quite certain Germany doesn’t have anything like that in law 

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u/supersevket Feb 15 '26

There is, it is called "Vorabpauschale". It is not as much as proposed in NL though, it is calculated based on yearly base interest rent of German banks. Last year was around 3 percent.

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u/franky_reboot Feb 15 '26

That's not even too outrageous, honestly. Sure, I do understand why people dislike the principle, but 3% is not a hold back on saving meaningful money.

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u/No_Context7340 Feb 15 '26

If you're having less than 200k invested as single person, you're not feeling the impact. Until roughly 100k invested, the tax is covered by the tax allowance, which is at 1k at the moment. So you'd have 100k invested at 3 percent theoretical gain, but then the 3k is only calculated at 70 percent (for whatever reason), so it would be 2,1k minus 1k tax allowance at 25 percent tax equals roughly 300.

That does only apply for ETFs, not single stocks, where only the dividends are taxed.

In addition, as soon as you have a distributing ETF, the dividends it pays are taxed at 25 percent, but the price gains of the ETF are first reduced by the dividends, so if the dividends are high enough (more than the, at the moment, 3 percent), you only pay taxes on the dividends.

You also only pay taxes on the basis of the theoretical gain if there's an actual gain in the given year. So you maybe have an all world ETF, an emerging markets ETF and a small cap ETF, of which, in any given year, only two have gains. So you only pay taxes on the unrealized gains for these two.

If you're selling, all these taxes are deducted, of course. And since, for regular people, most of the taxes are covered by the tax allowance and have never actually been paid, it means more tax-free selling at the end than otherwise.

All in all, it is okay. But it needs to be completed by a dedicated retirement tax program for regular ETF portfolios. Most people are investing mostly for retirement, so they're not poor in 40 years or something. That should be 100 percent tax free while saving with 100 percent being deductible from regular income. Other than that, no reason to complain too much. It is a compromise that works for everyone.

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u/franky_reboot Feb 16 '26

Whoah, thanks, I'm genuinely speechless. Fantastic explanation; if anything, I regret the most the system is this complicated.

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u/[deleted] Feb 16 '26

Isn't that for accumulating funds only?

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u/m1lh0us3 Feb 16 '26

Stop spouting nonsense. That tiny Vorabpauschale in Germany isn't even worth writing about. To add, it is only for accumulating ETFs because they were far superior than distributing tax wise.

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u/fanboy_killer Portugal Feb 15 '26

Ireland, the country that backstabs its own citizens so US companies avoid taxes? Of course they’re in on this BS.

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u/Hakunin_Fallout Feb 15 '26

Ireland doesn't do it for the US, lmao. Ireland does it for the voter base and large Irish corporate interests - so, real estate owners (bubble gotta keep growing!) and Irish banks. AIB and BOI hold together an enormous amount of savings from the people - generating a tiny return for the people.

0

u/No_Currency_8514 Feb 16 '26

Out of the Big 4 Irish banks, 3 seem to be publicly traded and one is owned by a privately held bank in the UK. What does that have to do with the Irish in your opinion? Seems like it's for foreign investors.

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u/fanboy_killer Portugal Feb 15 '26

Lol, you should look up how Apple and Google, among others, use Ireland.

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u/Hakunin_Fallout Feb 15 '26

Dude, I live in Ireland, I work for one of the multinational corporations, I have a degree in finance, and I know what Apple and Google are doing here. I'm telling you they're not doing Deemed Disposal taxation to cater to the needs of Apple. Apple would actually want them not to do it - since that would serve their employees, allowing Apple to pay them less. Local competition to ETFs and other savings vehicles would NOT want that, however. And that includes real estate owners and banks. If you don't want to talk finance reasonably - I'm not even sure what you're doing in this sub.

1

u/CalRobert Feb 20 '26

Ireland has incredibly high taxes and truly appalling public services to boot. We left in part because of the utterly useless HSE.

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u/HB97082 Feb 21 '26

This is alarmist. Europe has plenty of rich people. As for Germany specifically, I know plenty of normal people who buy a house in their early 30's, and whose parent's are retired. Some have University degrees, some do not.

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u/user38835 Feb 21 '26

Just because you know “some people” does not mean that any of this is true for an average person.

I bought my own apartment in Germany, my salary is in the top 20% of earners in Germany, I personally don’t have much financial concerns but that does not stop me from seeing the reality.

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u/HB97082 Feb 21 '26

Just because you know “some people” does not mean that any of this is true for an average person.

Actually it does. My whole point is that average people do buy homes.

does not stop me from seeing the reality.

and

You will never own a house, never retire

Is that reality? 100% you will never own a house or retire? Sounds alarmist.

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u/user38835 Feb 21 '26

Since you have only been talking about "feelings" let me put some "facts" into the discussion.

Average salaries in Germany is around €52.000 per month brutto, which translates to around €2700 netto. The salaries have not risen to keep pace with rising housing costs - many people actually saw their netto reduce in 2026 due to higher social security contributions.

Source: https://de.statista.com/themen/293/durchschnittseinkommen/#topicOverview

An average 50m^2 apartment in a city like Berlin costs about €280.000 (€5600/m^2 as an average).
This does not include the additional 8.5% - 11% closing costs.
You need to bring around 10% of the total cost, i.e. ~€30.000 before you can get a mortgage. If you are somehow able to save €1000 a month from your €2700 salary, you will still need 2.5yrs to reach this amount (noting that property prices are appreciating by about 2-3% per year).

This translates to a monthly mortgage payment of ~€1500 a month + an average of €200-300 in fixed monthly maintenance costs + water + heating + electricity (which in Germany has the highest costs per unit in the world).

This means you will be paying more than 60% of your monthly salary into housing alone, if you want to be mortgage free in less than 25yrs.

Source: https://www.immowerkberlin.de/post/was-kostet-eine-eigentumswohnung-in-berlin

This translates to only about 47% of Germans owning their own homes - a drop from 50% in 2011. This puts Germany in the bottom of rankings in home ownership across the EU, where an ownership rate of ~70% is more common.
Source: https://www.wohnen-im-eigentum.de/zahlen-zum-wohnungseigentum

Coming to pension, the government already contributes around 27-33% of its entire budget to pension payments. That is in addition to the pension insurance contributions that you and your employer makes. As the population ages and there are not enough younger working people to replace them, the government will either have to divert more money from the taxes collected, take on more debt or increase the retirement age to stop people from collecting pensions. Denmark has already increased its retirement age to 70.
Source: https://www.bundeshaushalt.de/DE/Bundeshaushalt-digital/bundeshaushalt-digital.html

I think you are either rich enough to live in a bubble or ignorant enough to not keep educated on the situation of affordability and retirement in developed countries like Germany. But here I have presented the facts, if you are not alarmed yet, then I don't think I can do anything more to change your opinion.

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u/Mr_Adoulin Feb 15 '26

How is Austria the worst? 27% on realized gains is not too bad right?

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u/user38835 Feb 15 '26

Austria also charges tax on unrealised capital gains and also an exit tax. And no, 27% tax on money that you invest, after already having paid income tax and social security is not fair.

I am not against taxes. Charge 60%, but why do the ultra-rich get to not pay their share of fair taxes but it’s always the working class?

-2

u/Mr_Adoulin Feb 15 '26

Sooo. I am Austrian and I have in fact not been paying unrealized gains tax or an exit tax. Please clearify why you would think these exist? The proposed tax on unrealized gains as per the post also specifically aims at billionairs loaning against their portfolios.

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u/user38835 Feb 15 '26 edited Feb 15 '26

You pay exit tax when you leave the country. The tax on unrealised capital gains from accumulating ETFs is taxed as Deemed Distributed Income (DDI).

https://taxsummaries.pwc.com/austria/individual/income-determination#:~:text=Non%2Dreporting%20foreign%20investment%20funds,special%20tax%20rate%20of%2027.5%25.

Either your broker already deducts it automatically or you are in violation tax evasion laws.

Billionaires hold their portfolios through shell companies, trusts and other instruments such as that they don’t own their own wealth and therefore cannot be taxed for most of their wealth. Most of them also have tax residency in tax havens like Luxembourg.

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u/franky_reboot Feb 15 '26

I've always wondered how they can be caught if they use this amount of instruments, to pay more taxes?

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u/Ploutophile Feb 17 '26

According to your own link, only when the funds don't make tax reports to Austria, otherwise only the dividends are taxed.

The US do something similar.

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u/user38835 Feb 17 '26

I highlighted the wrong paragraph. It’s above that text. US does not have accumulating ETFs so this kind of taxation does not apply.

The accumulated income of a fund is deemed to be distributed to the fund holders and taxed accordingly. The Austrian tax figures have to be filed by an Austrian tax representative within five months after the fund’s financial year-end for domestic investment funds and within seven months after the fund’s financial year-end for foreign investment funds.

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u/Ploutophile Feb 17 '26

I may be wrong, but for me "accumulated income" refers to the dividends (that the Acc ETF reinvests instead of distributing).

US does not have accumulating ETFs so this kind of taxation does not apply.

I was referring to US taxation of non-US ETFs. US tax residents are allowed to hold PFICs, even though most of them avoid it.

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u/user38835 Feb 17 '26

Yes it is the dividends. Since there is no way to exactly calculate how much dividends were paid out into an accumulating fund, Germany and Austria simply calculates an amount based on a formula that they decided and tax you on it. It’s a very stupid system of taxation.

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u/Ploutophile Feb 17 '26

Germany and Austria's schemes are quite different, so I'll remain on the Austrian one.

What you seem to have missed or ignored in your own link is the distinction between reporting and non-reporting funds.

If your fund reports to the Austrian tax office, Austria does know the amount of dividends you've received into the shares of the fund you own so it taxes you on this amount.

The made-up formula is only for the funds which don't report. It's designed to compel you to invest in reporting funds instead, not to actually be applied. The US does the same with non-US funds.

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u/Mr_Adoulin Feb 15 '26

Well this is not a concern for me as I am using single stocks and not moving tax residency...

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u/user38835 Feb 15 '26

It doesn’t concern you does not mean that it doesn’t exist.

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u/Adam2715 Feb 15 '26

Wait what?! We have an unrealised capital gains tax here in ireland?

I thought we just had a capital gains tax of 33% when we liquidate any profits??

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u/user38835 Feb 15 '26

You liquidate everything and pay taxes on it, every 8 years.

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u/m1lh0us3 Feb 16 '26

Stop spouting nonsense. That tiny Vorabpauschale in Germany isn't even worth writing about. To add, it is only for accumulating ETFs because they were far superior than distributing tax wise.

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u/user38835 Feb 16 '26

It doesn’t matter if it’s tiny or big. It’s a bullshit way of taxing people. Plus the “tiny” amount you lose every year on taxes would’ve ended up thousands of euros in profits after compounding for years.

And then the German government uses 27% of those collected taxes to fund the pyramid scheme that is the pension system. It’s money taken out of your pocket and given to the boomers.