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Comment by tschellenbach | Hacker News Reader

The title here mostly doesn't match the article right? Quote: "But unlike the capital growth tax, capital gains tax will, in principle, only be levied at the time of realisation. This is usually when the relevant asset is sold, but also when immovable property exits Box 3 for another reason, such as emigration."

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Looks like they're coining a new legal term "Capital Growth Tax", under which they are going to tax unrealized capital gains. I'm not aware of any other country that taxes them like that (besides wealth/exit taxes), so maybe they're the world's first here!

Some countries have wealth taxes - but they are usually flat or scale with wealth, not the yearly increase in wealth. Note that currently NL does de facto have a wealth tax in Box 3 system - shares are presumed to have a fictional fixed yield of around 5-6% per year on which they charge you income tax, so it works out to about 2% wealth tax.

> I'm not aware of any other country that taxes them like that (besides wealth/exit taxes), so maybe they're the world's first here!

Real estate taxes.

> not the yearly increase in wealth.

Real estate taxes.

For real estate, yes, but it's a quite different type of asset with a stable value that (mostly) only goes up.

What about stocks or crypto (the assets this new law targets)? They can have wild value fluctuations in a year. If your crypto or startup's options have +1M paper gain this year and turn worthless the next year, is it fair to ask people to cough up some 300-500k of real cash in tax?

Maybe? You can deduct losses. If you have to sell a little of your crypto while the price is high to pay your taxes, then what have you lost after it goes to zero? At least the tax office get something out of it in tat case.

Yes, and we absolutely should.

> For real estate, yes, but it's a quite different type of asset with a stable value that (mostly) only goes up.

It's still a tax on wealth. So you just can't use this argument (the argument that we dont tax anything based on wealth and therefore is justification not to do it now).

> is it fair to ask people to cough up some 300-500k of real cash in tax?

I actually disagree that we should tax anything on asset value. Yes, RE is illiquid and thus has "stable" values. What's worse is that the value is tied to appraised values (and potentially government imposed caps) which you have no (or limited) control over.

Not really, property taxes in the U.S. are revenue-driven (sometimes called “budget-driven”), not rate-driven. The taxing authority adds up how much money it needs, then apportions it based on property values.

Huh? You're talking about budgeted values for the payee, not the rate that an individual payer. I'm talking about the rate established for the payer, which is based on the value of your property. In absolute value terms I may pay more than my next door neighbor if my property is deemed to have a higher asset value. This would be no different if both my neighbor and I owned AAPL stock, but if I held more stock than him, I would owe more (theoretically) in taxes on that stock.

> I'm not aware of any other country that taxes them like

My home's property taxes operate this way. The county calculates the current value of my home and charges me a % of that in taxes every year.

I think there are some other jurisdictions that require Mark to Market for tax purposes, at least in some situations.

In the US, certain traders can elect to mark to market [1].

[1] https://www.irs.gov/taxtopics/tc429

Germany is also already taxing unrealized capital gains of funds (Vorabpauschale).

Yeah but the previous paragraph says

> The bill regarding Box 3 introduces two main categories of taxation: capital growth tax and capital gains tax. The capital growth tax will apply to most assets, taxing both realised and unrealised returns, including appreciation in value and income from assets like shares, cryptocurrencies, and savings. Exchange results on bank balances in currencies other than EUR will also be taxed.

And normally unrealized capital gains on these sorts of assets aren't taxed.

I think in more general usage if you asked people what assets "taxing unrealized capital gains" would cover, you could get a basket if things like shares, real property, businesses, etc.

The article indicates that the Dutch government has decided to treat startups and real estate under the bucket "capital gains", and stuff under "capital growth".

So for an more informal standpoint, the title is a reasonable way to summarize what's happening to the layish person.

As I understand it most things like stocks with be under the capital growth scheme, taxed yearly, but they left a carve out for real-estate where it only is levied at sale/realization time.

Classic loophole. We tell ourselves this is to protect the little people who own homes, but the actual little people don’t have homes at all and rent. Meanwhile, anyone with money will get the picture invest all of it in real estate, once again enriching homeowner as well impoverishing the rest of us.

Only 29% of people in the Netherlands rent and that number is decreasing.

Yes, exactly, this policy will result in 29% of people who don’t own real subsidizing the 70% who do.

In a way I agree with you that this will cause market distortion in the form of greater demand for real estate over eg. equities. But there are plenty of such tax distortions; for example many countries have favourable tax treatment for domestic dividends.

Regardless, I assume the logic behind this exception is that while you can easily sell a portion of your holdings of publicly traded stocks to cover your annual tax burden, you can't sell a portion of a house. You could of course finance, but that's going to disproportionately benefit lenders.

It's true that it's a carve out, and current young generations are having huge problems getting homes in a lot of the world.

But in the Netherlands, the overall home ownership rate is still about 70 percent (https://ec.europa.eu/eurostat/databrowser/view/ilc_lvho02__c... might need to drill down a little).

In the US it's 65 percent.

Carve outs for home owners are some of the most understandable political strategies across the developed world.

I totally get that it’s an understandable political strategy. I just think it’s in defensible as anything but a political strategy, and that it will ultimately make life worse for more people versus simply treating assets as assets, including homes. If homeowners do not wish their homes to be treated as assets, then they could simply forgo the right to profits, but I suspect they will not do that.

While I don’t disagree, I think it’s worth noting that the Netherlands has a pretty good level of social housing. Not perfect, but I think it’s 26% based on the stats link in the parent. Also rent controls. Although these also tend to reward people who have been in the system longer (which _might_ be by design, but that’s just like my opinion)

Social housing and rent controls are not a substitute for basic tax fairness. Of course, as a political tactic, it’s a great way to distract from tilting the entire tax system toward those who already have the most rather than trying to at least try to achieve some sort of a level playing field.

Home ownership is and would continue be taxed in box 1, so that’s not even superficially the reason for carving out real estate.

Box 3 on real estate only come in play for home 2+, and rental properties.

Ok, we've put box 3 in the title above. Thanks!

(Submitted title was "Netherlands to start taxing unrealized capital gains yearly from 2028")

“The capital growth tax will apply to most assets, taxing both realised and unrealised returns, including appreciation in value and income from assets like shares, cryptocurrencies, and savings.”

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