Most of my stocks are kinda volatile, so by paying taxes on unrealized gain I am taking much higher risk for owning them every year I don't sell. I would literally be paying taxes on money I don't own yet and could easily lose at the first mayor market upset.

So in the Dutch tax system there is no difference between realized and unrealized gain. As such it doesn't matter when you buy/sell your investments. It doesn't impact your tax burden. The effect you get is that everyone's wealth just slowly erodes away, just like with inflation (unless your yield outpaces that).

But with this new law that all might change.

I don't have data readily to hand (and Draghi probably mentions this in the report, I can't remember), but anecdotally based on what I hear from many of my European friends, Europeans basically keep their savings in bank savings accounts. That means that there is less investment capital floating around, which in turn means that the tiny fraction that finds its way into innovation is in turn greatly diminished. Europeans are dependent on bank loans for funding, and banks want to see assets as security for their loans.

Policies like this would further disincentivize Europeans to invest in their own stock markets, further damaging the ability of Europeans to innovate.

i.e, As an employee you get stock options, which you exercise when you leave the startup. Then long before the company has a liquidity event the FMV shoots up because the business is doing well. How do you as a wage worker pay the taxes on your paper riches without a way to sell your shares?

Skimming the article I couldn’t tell whether that’s the case here.

If not, it seems like it would have pretty bad implications for the average person who isn’t super wealthy but who are trying to build wealth.

Ouch. I suppose this is supposed to combat the trend of share buybacks over dividends. Gonna seriously suck to be anyone Norwegian and having to sell stocks to pay for taxes on your unrealized gains.

Also if the euro dives as well during inflation its gonna be painful.

If this is actually implemented, the Dutch are toast.

If some populations do this, as recently happened in Switzerland, they will likely avoid uprisings.

It means they will need to sell their assets in order to pay this tax and only rich people will be able to afford holding onto assets long enough to become very rich.

It’s stupid, regressive and the Netherlands will learn a great lesson. The other thing that makes me laugh is that no other taxes are going down so this is a straight up tax hike on top of every other the Dutch pay.

Many people will have heard about the Buy Borrow Die strategy by now. In case not, it's basically where you don't sell an asset (and thus have to pay taxes on the gain). You use it as collateral for a loan and just spend the laon while the asset continues to appreciate (hopefully) faster than the interest rate. What's particularly gross about this is that many asets in many countries can be inherited by children on what's called a stepped up basis, meaning the base value for determining any capital gains taxes resets to the current market value when the owner dies. This is a massive tax break for the wealthy.

Companies have their own version of this. This has been somewhat (but not entirely) addressed in the US tax code now but it used to be that foreign corporate profits did not incur US corporate taxes as long as the money wasn't repatriated, meaning it stays overseas. But you know what you can do? That's right. Borrow money used those foreign profits as collateral and wait long enough for the US government to give you a tax holiday or to otherwise change the rules (which they did).

IMHO borrowing money against an asset should be realizing a gain and borrowing against foreign profits should be repatriating those profits.

Some will argue how you can't tax unrealized gains or it's not fair, we do it all the time. They're called property taxes.

Profit shifting is still a big problem. This is where, for example, tech companies would sell ads and services in the UK at "cost" to their Irish subsidiary, who would make all the profits. Almost nothing in UK profits where the tax rate is higher. Transfer pricing is (generally) illegal. Profit shifting isn't. What's the difference? Yes.

I think the EU and the US in particular need to start doing what I call profit apportionment, meaning if 50% of your revenue is booked in the US then 50% of your worldwide profits are taxable in the US.

You might say "they'll hide profits in subsidiaries" but really this is a solved problem already. We ahve ways of dealing with subsidiaries that are at arms length or not. We also have financial reporting to stock markets and there's really no reason tax authorities couldn't use published financial statements as a basis for taxation.

There’s a bizarre silliness to implementing this compared the relative ease of just increasing capital gains taxes (accrued capital gains are already tracked and reported!) to match income. Will just be a massive jobs program for the bean counters and consultants.

As someone living somewhat Netherlands adjacent, I will happily welcome all Dutch entrepreneurs and investors who wish to grow our local economy instead and not be forced to sell chunks of their company to the state over time.