Dutch government went insane. 36% on UNREALISED capital gains (crypto included)

[Free Market Capitalist]

The trend looks bad imho for both Europe and America(s). China, India are growing, but yeah, China and capitalism sounds like two characters from a joke

Well, I don't see the joke anywhere. China is quite capitalist in its economy. What happens is that political power still retains the typical communist authoritarianism, but in general there is a lot of freedom to do business and get rich.

The first person to open up China's economy after Mao was Deng Xiaoping, and a long time has passed since that first opening, which has been getting bigger and bigger.

By the way, I just saw something about the aforementioned 12-hour shift reform in Argentina, and I think it's much more sensible than the mainstream media and the protesting Peronists are making it out to be.

I am quoting from ChatGPT:

The reform allows employers and employees to agree to workdays of up to 12 hours, replacing the traditional rule of 8 hours per day.

Instead of paying traditional overtime, extra hours can be put into a “banco de horas” (hours bank) and compensated with time off later, as long as weekly and rest limits are respected (e.g., 12 hours of rest between shifts).

I don't see what's wrong with that. I've worked more than 8 hours on occasion and been compensated for it. It's also common among people who work in healthcare.

In short

It doesn’t automatically force all workers to do 12-hour days, but it enables much longer daily shifts under new flexible systems.

Traditional overtime pay systems would be replaced by compensatory rest under the hours bank mechanism.

The reform is part of a broader effort by the Milei government to “modernize” the labor market but is deeply controversial and socially divisive

So basically, the guy is implementing reforms to make the economy more flexible, and the mainstream media is portraying it as if he were allowing business owners to chain workers up and whip them. And then you have all the Peronist lackeys causing a ruckus in the streets, but they were keeping quiet while the country sank deeper into misery every year under Peronism, which is basically a variant of communism.

[zasad@]

If I were Dutch, I'd buy assets every year and then sell them at a loss at the end of the year. The fact that these would be my tokens is a separate issue. But I'd always be a losing trader. Either you break the law or you don't invest in crypto.

Is there a difference in the steps or amount of tax paid if the gain is left to float or realized before the end of the year? I don't think there's a difference, considering the 36% rate applies to both types of gains. Anyway, if the Dutch believe realized gains are better taxed, we'll see selling pressure at the end of each year.

If only realized profits are taxed, fewer actions are required from citizens. But ultimately, the mechanism for reducing taxes is the same. Holders will be at ease.
I believe a reasonable tax system should have diversified tax rates: the more you own, the lower the tax.

[NeuroticFish]

Well, I don't see the joke anywhere. China is quite capitalist in its economy. What happens is that political power still retains the typical communist authoritarianism, but in general there is a lot of freedom to do business and get rich.

The first person to open up China's economy after Mao was Deng Xiaoping, and a long time has passed since that first opening, which has been getting bigger and bigger.

For many years (may no longer be actual though) if a western company wanted to enter China, they could do that only as a joint venture / partnership with Chinese company.
Even now, the owners of the big companies have to be "approved" by the party and if they say something wrong they can too easily disappear.
China looks better than in the past, I do agree with that, but let's not consider as full story only the part China allows to be shown/said publicly.

By the way, I just saw something about the aforementioned 12-hour shift reform in Argentina, and I think it's much more sensible than the mainstream media and the protesting Peronists are making it out to be.

It doesn’t automatically force all workers to do 12-hour days, but it enables much longer daily shifts under new flexible systems.

I didn't know this for sure, but it's not unexpected it has this form. Imho it's still bad, because of poverty and the herd mentality.
Imho even the "western way" to just allow multiple jobs is already bad (the pay should be better, and no money support for various cases, since we know that such scheme is instantly abused).
The 12h is now "a flexible system", but when most of your co-workers agree to work 12h, you will either do the same or get sacked, because the company will want to optimize their flow too.
So no, this 12h thing is imho a trap unfolding. And if we compare this to the trend in the Netherlands I've read about some (well, not few) years ago = people starting to switch to 4-6h working days or 4-days working week to have more time for themselves... the difference is staggering.

[Free Market Capitalist]

So no, this 12h thing is imho a trap unfolding. And if we compare this to the trend in the Netherlands I've read about some (well, not few) years ago = people starting to switch to 4-6h working days or 4-days working week to have more time for themselves... the difference is staggering.

Now compare the difference in productivity and you will see the same staggering difference.

If you're a country that's in deep shit, what you have to do is start producing like crazy, whereas if you're a rich country, you can afford to be comfortable.

[NeuroticFish]

Now compare the difference in productivity and you will see the same staggering difference.
If you're a country that's in deep shit, what you have to do is start producing like crazy, whereas if you're a rich country, you can afford to be comfortable.

Actually it was figured out lately that this is a false narrative. It looks like if you're a country that's in deep shit, what you actually have to do is to:
* make the state leaner and smarter
* reduce corruption / stealing / waste
* improve infrastructure (especially for transportation)
* make the tax structure smart and with rather small and clear taxes
* for long term improve everything that's related to the schools / education

For businesses it doesn't matter that much they can earn a lot from the low wages if they have to pay a lot extra to "find your way" in relation with the state / authorities. Of course, some businesses are attracted by such countries too, but it's not where the wealth comes from.
For businesses it doesn't matter that much they can produce cheap if it's a pain in the ass to get the products out of the country.

Also productivity growth comes from certain types of businesses, e.g. automatization, not from working more, especially if it's "dumb labor". And then we get to the topic of education.

[Free Market Capitalist]

Actually it was figured out lately that this is a false narrative.

Who figured out that?

It looks like if you're a country that's in deep shit, what you actually have to do is to:
* make the state leaner and smarter
* reduce corruption / stealing / waste
* improve infrastructure (especially for transportation)
* make the tax structure smart and with rather small and clear taxes
* for long term improve everything that's related to the schools / education

Those are good measures in general which lead to an increase in productivity, so I don't see how they can prove the false narrative. Quite the contrary.

Reduced state, reduce corruption better infraestructure, lower taxes and better education are means to produce like crazy, not the contrary.

[NeuroticFish]

Reduced state, reduce corruption better infraestructure, lower taxes and better education are means to produce like crazy, not the contrary.

I've heard a lot of times in the past the assumption poor country <=> lazy people. And that's what I was saying it's a false narrative.
I guess that it was a misunderstanding from my side. I thought that by "producing like crazy", given the context (the 12h working day), you only meant "work more".

[Free Market Capitalist]

I've heard a lot of times in the past the assumption poor country <=> lazy people. And that's what I was saying it's a false narrative.
I guess that it was a misunderstanding from my side. I thought that by "producing like crazy", given the context (the 12h working day), you only meant "work more".

That was obviously not what I was trying to say. But I think it's time we ended this conversation, which seems more like a private chat between you and me than a forum discussion.

I believe that this measure, and I am referring to the central topic of the thread, the unrealized capital gains tax, will have have to be withdrawn after a couple of year at most if it finally comes into effect.

The only thing it will do is cause those who can to leave the country, and those who can't will in many cases have to sell their property to pay the tax. If we were talking about 3%, I would still be against it, but I wouldn't think it would be so disastrous.

Besides, I am against the measure on principle, almost moral grounds, I might say. How can anyone possibly tax something that has not yet been done? They are trying to raise liquidity where there is none.

What worries me most is that it introduces an element of arbitrariness into tax collection because when you tax something that has not yet been realized, it is entirely possible that when it comes time to pay the tax, the asset will be at a loss.

But I think it will be like the wealth taxes that some European countries introduced and ultimately had to remove, with only a few remaining and not charging outrageous rates like 36%.

[Lucius]

As I suspected, the proposal was rejected and everyone in the Netherlands can breathe a sigh of relief for now. This is just another example that shows that those who make/propose laws are not very intelligent.

https://bitcointalk.org/index.php?topic=178336.msg66446247#msg66446247

[SquirrelJulietGarden]

As I suspected, the proposal was rejected and everyone in the Netherlands can breathe a sigh of relief for now. This is just another example that shows that those who make/propose laws are not very intelligent.

It's sort of relief for people in Netherlands but government there and in other nations will try to exploit money in their citizens as most as possible. They failed this time in Netherlands but will try to return in the future with other proposals and perhaps with different political situations in the future, there will be proposals to be passed. The fight between governments and citizens never stop and it's true not only in Netherlands.

36% unrealized capital gains proposals is a very crazy proposal and it's good to see it failed to be passed as a new law and regulation in cryptocurrency industry there.

Which countries tax unrealized capital gains?
There are Denmark and Norway with tax on unrealized capital gain.

[Free Market Capitalist]

Which countries tax unrealized capital gains?
There are Denmark and Norway with tax on unrealized capital gain.

Not exactly. What the text of the article you cite says is as follows:

Which countries tax unrealized capital gains?

Denmark and Norway are two examples of countries that tax unrealized gains in the form of an exit tax. In Norway, unrealized gains on shares and ownership interests in Norwegian companies are taxed when you move to another country. The unrealized gains tax rate is 37.84%, though there are some exceptions to the rule.

It is completely different to be taxed on unrealized capital gains if and only if you move your tax residence to another country than an annual unrealized capital gains tax rate of 36%. The people who propose and approve this are not just not very intelligent, as Lucius says, but are downright imbeciles.

[LoyceV]

I only found this topic when Free Market Capitalist pointed me here from my own topic Dutch tax refugee: which country to move to?.

I read somewhere that the matter is not that simple, because even if they move from the Netherlands, they still have tax obligations to the country they left from for at least the next 5 years.

I've never seen such a law. I don't think it would be possible: in box 3, you pay your taxes annually. There are no untaxed gains to be taxed later. They may want to try this on box 2, but that will mean nobody will ever start a business again in the Netherlands.

I think the real tragedy in the so-called Western world is a still prevalent belief that you can just vote your way out of such things, despite the reality proving over and over again that this is not the case.

I feel the same way. The more people vote for a certain thing, the more government ignores it and moves in the opposite direction. On many subjects now, I feel like the exact opposite action from government would have been better. To stick to just the subject of this topic: it's framed as "taxing the rich", which sounds good, right? Except that the amount that's going to get the label "rich" is going to be less than 1 year of welfare, about 5% of the price of a house, and not even enough to cover a year without income. The actual rich don't pay this tax, it's a tax on middle class. And that's the problem: middle class used to be the backbone of society, and middle class is being hollowed out further.
And the politicians who came up with this? They really think they're doing something good! I bet they don't understand math.... Just like the media are generally framing it by comparing the taxes paid on a small investment over a year, so that the total amount paid is small. Investments, by definition, are meant for the long term, and if they would compare compound investments over 40 years, they'll get a totally different result. Long-term, you lose almost everything to taxes:

Let's assume you would have owned pizza money (10,000 Bitcoin) in 2010, and instead of buying pizza you'd have to pay the future Dutch tax starting in 2010: 36% annual tax on all unrealized capital gains. To be clear: this is a hypothetical scenario. Note that costs aren't deductible, so I assume 0.25% transaction costs when selling Bitcoin for euros. Let's see the math:
Bitcoin price on January 1^st of each year:
2010: $0.00 > €0.00
2011: $0.29 > €0.22
2012: $5.00 > €3.88
2013: $13.22 > €9.94
2014: €592.3
2015: €193.5
2016: €343.7
2017: €900.6
2018: €11,465.2
2019: €2,978.7
2020: €8,414.0
2021: €27,352.0
2022: €34,295.8
2023: €21,296.5
2024: €39,405.7
2025: €98,888.8
2026: €66,593.6
By 2026 in this (hypothetical) scenario, you would have had to sell the large majority of your Bitcoin, and have only 6.286% left. And that's not even including the fact that there is no backward loss compensation in the year 2028.
Note that you didn't sell anything for yourself in this scenario. You didn't take any profit, all you did was sell part of your Bitcoin to pay taxes, and lost 93.714% to taxes. In the next bull run, you'd have to sell even more. In the long run, as Bitcoin goes to infinity and fiat money goes to zero, your hodlings approach zero. ZERO!

You could even lose everything you own and more in a single year when a bull run turns into a hard bear market and you didn't sell at the right moment:

If Bitcoin goes up 300% in 2028, I'll owe taxes around August 2029. If I don't sell quickly enough in January 2029 and Bitcoin takes a hard 80% drop, I'll have to sell everything to pay taxes and I'm left with a debt because it's not enough! I'll be broke, with a debt, just from being taxed after investing in a volatile asset.

We are long past the times when governments were a reflection of the will of the people. Now the rulers shape the public to their liking

Has such a thing ever existed? In ancient times, there was no democracy as it exists today on paper

At least in ancient times it was clear: you'll never climb up. Nowadays people believe we have a democracy because they're being told to believe it.

Democracy is actually one big beautifully packaged lie that most of us elect every 4/5 years. In my opinion, the only democracy that functions to some extent is Switzerland (when it comes to Europe), because there people declare themselves in a referendum on all important (and non-essential) issues that concern them and the country in which they live.

I really like the Swiss ways when it comes to democracy. It should be an example for the rest of Europe. In the Netherlands, we used to have an "advisory referendum", but that never went the way politicians wanted, so they just canceled it. And they did that in such a way that it wouldn't be possible to enforce an advisory referendum about canceling the referendum.... You can't make this up!

This reform has not yet been definitively approved and I hope that the Dutch parliament will reconsider its decision.

They're now proposing small changes, like €100 more untaxed, or lowering the interest from 36% to 35%. To me, this looks like a trick to get the law passed. It doesn't matter much for the total, and they can easily change those amounts again later.

I cannot understand why any government would want to implement this sort of controversial tax system that is even difficult to implement practically.

They claim it's going to take years to implement a new system for taxing actual realized gains (just like the rest of the world has been doing for decades). Nobody wonders why this takes so long to implement.

Taxes mean loss of popularity for governments.
But they need money. Badly.
So what to go? Tax unrealized gains, cause only rich people go trading, right? Riiight?? (And let's be honest, about Bitcoin they couldn't care less).

I've seen suggestions online to tax unrealized income. Just see how much you can earn the coming 10 years, then make you pay tax on that now. Or claim child allowance for unrealized children. Every analogy makes it obvious how ridiculous this plan is.

Well, I think that funds like certain types of life insurance funds or pension funds also do trading and will probably get unrealized capital gains.

Those are all exempted from this plan. "Box 3" only relates to private individuals. And that's the tricky part: out of the total capital in the country, the very large majority of it is elsewhere: pension funds are much bigger than "box 3", real estate is also much bigger. But they can't touch that, as it would involve almost everyone in the country and would lead to protest. So they claim they're going after "the rich", but because they can't touch them, they hit middle class.

What they are doing is creating an ever-growing class of people dependent on the state, who applaud these measures and consequently vote for them.

This is very true in my the Netherlands: almost everyone depends on some form of government handouts, varying from direct subsidies (71% of all households receives "toeslagen") to tax deductions or various kinds of benefits. I'd prefer lower taxes, less bureaucracy, and more self-reliance, but government seems to "want to be needed". Most jobs within government wouldn't exist without this, and they move towards more and more micromanagement.

If I were Dutch, I'd buy assets every year and then sell them at a loss at the end of the year. The fact that these would be my tokens is a separate issue. But I'd always be a losing trader. Either you break the law or you don't invest in crypto.

I came up with these ideas, but I have no idea how realistic (and legal) that would be. To me, it feels like a loophole that's inevitable when they're taxing unrealized gains:

Shower thought (considering Dutch tax plans): what if I trade 1 Dutch tulip bulb for 100 Bitcoin at the end of 2028? In the current tax system, I won't be taxed too much on the gains. In January 2029, I trade back the 100 Bitcoin for a tulip bulb, and take a massive loss on my investments. It will give me a massive tax write off for many years to come. Would that be a legal loophole? It's kinda the inverse of a boating accident, and considering the crazy idea of an annual (why not monthly or even daily, to give them any ideas?) tax on unrealized gains starting in 2028, I wouldn't mind to find a way out (other than leaving the country).

New installed Dutch goverment dismissed new proposed box 3 law with 36% tax on unrealized gains after an avalanche of critism.

Earlier, I came up with this hypothetical loophole. Today I thought of a new one: what if I create my own LoyceVshitcoin? I'll create one billion tokens, and at the end of 2027, I'll sell one for $0.01. That means LoyceVshitcoins are worth 10 million dollars, and my holdings are worth $9,999,999.99! On the first day of 2028, I'll dump all my 999,999,999 LoyceVshitcoins on the market, and crash the value to zero. I'll take a whopping $9,999,999.99 loss, enough to offset this tax for the rest of eternity!

The whole idea of taxing unrealized gains at an annual 36% is so utterly studid, many people want to leave the country. NOS (Dutch state-funded media) keeps referring to "wealthy people", while the tax is for anyone who has enough investments to buy a decent second hand car, but isn't rich enough to avoid paying this tax. Even the king's brother was publicly complaining about it. The king himself doesn't pay taxes.

I don't have high hopes of dismissing this crazy idea, right after it was accepted. But even if they do, I doubt we'll get something better for it.
To think that all this started after their previous wealth tax conflicted with EU regulations, they should look at Sweden. There, people can choose: a (low) fixed tax, kinda like we had, or a tax on real returns. That encourages people to invest, while it's not conflicting with EU regulations because that part is an opt-in.

As I suspected, the proposal was rejected and everyone in the Netherlands can breathe a sigh of relief for now.

That's incorrect: it hasn't been rejected, but the minister said (on his own, without any discussion with anyone else) that "he'll come up with some changes in September". So far, the "changes" are insignificant and the law is still very much on the table.

At the same time, EU wants people to invest more, to improve the investment climate in Europe. Sweden seems to have a pretty good system: many people have investments, and the tax on it isn't too high.

[Free Market Capitalist]

This is very true in my the Netherlands: almost everyone depends on some form of government handouts, varying from direct subsidies (71% of all households receives "toeslagen") to tax deductions or various kinds of benefits. I'd prefer lower taxes, less bureaucracy, and more self-reliance, but government seems to "want to be needed". Most jobs within government wouldn't exist without this, and they move towards more and more micromanagement.

In the Netherlands? I wish that were only the case in the Netherlands. It happens all over Europe. Even in the UK—the birthplace of theoretical capitalism, with Adam Smith and David Ricardo—a third of the population receives some kind of benefit.

Cultural Marxism has taken such a firm hold that when a left-wing party comes to power, it sets about increasing spending, expanding benefits, promoting mass migration, criticizing anyone who makes even a little progress, raising their taxes, and increasing regulations—and when the right-wing alternative takes over, what happens? Usually, not much. If they roll back any of these policies, it’s only a minor change because even they have consciously bought into cultural Marxism.

Europe succeeded in the decades following the end of World War II as an alternative to more radical forms of capitalism because it combined free enterprise with a certain degree of redistribution. This allowed people to get ahead, improve their standard of living, and become wealthy, while the redistributive system prevented the extremes seen in other parts of the world, such as the U.S. Fast forward a few decades, and starting in the year 2000—especially in 2010—all of Europe has turned into a woke mess that’s starting to look more like a Politburo in disguise than anything it was in previous decades. All they think about is regulating more, taxing more, and controlling more.