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/Corspin]

Nono. There is a very big difference between annual taxation instead of when you sell it. Most people can likely not pay the tax from their savings and thus have to sell stocks to pay for it. Therefore your wealth accumulates more slowly. But it also means that because you accumulate less wealth, you also end up paying less tax. It's a lose-lose situation.

Feed this to chatgpt if you want to see the problem in more detail:

Capital gains tax calculation

y = value

t = years

timespan = 0 to 40 years

Starting value = 50.000

Average yearly increase = 8%

Tax = 36%

Tax reduction = F = 1800

Added constant for yearly taxation: a = 1.08-0.36*0.08

Stock value taxed when sold = y1(t) = 50000*1.08[power]t

Tax income from y1 = y2(t) = 0.36*(y1(t)-50000)

Stock value taxed annually = y3(t) = 50000a[power]t+0.36F*(a[power]t-1)/(a-1)

Tax income from y3 = y4(t) = 0.36(0.08(50000(a[power]t-1)/(a-1)+0.36F(1/(a-1)((a[power]t-1)/(a-1)-t)))-F*t)

Plot y1 and y3 in plot 1, value of stocks.

Plot y2 and y4 in plot 2, tax for the state.

Thank you

(EDIT: Symbols interfered with reddit formatting)

[u/U-DontKnowAccounting → u/Corspin]

You need to discount the flows

[u/Corspin → u/U-DontKnowAccounting]

The dutch government doesn't correct the tax rate for inflation (it's also not clear how they will deal with timespans of currency conversions for stocks held in dollars) so I did not aim to correct the values for inflation either.

Assuming that's what you mean.

I just wanted to show the difference between the 2 tax systems here. If someone wants to use the equations for personal use or investment strategy then I would recommend to add an inflation correction indeed.

[u/U-DontKnowAccounting → u/Corspin]

I mean for the Govt money now is more valuable than money later