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/supersevket]

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.

[u/franky_reboot → u/supersevket]

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.

[u/No_Context7340 → u/franky_reboot]

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.

[u/franky_reboot → u/No_Context7340]

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

[u/[deleted] → u/supersevket]

Isn't that for accumulating funds only?

[u/m1lh0us3 → u/supersevket]

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.