The Dutch cabinet's proposed wealth tax reforms are in jeopardy due to strong opposition from the farmers' party BBB, which is threatening to block the plans in the Senate. The cabinet intends to tax investors and savers on the annual growth of their assets, a system previously supported by the VVD and CDA in the lower house. However, senators from these two parties, along with opposition parties like BBB and JA21, now favor a capital gains tax that would only tax actual profits from asset sales.
Finance Minister Eelco Heinen is under pressure from the BBB to withdraw the current plan, with the party's senator Bart Kroon stating, "Withdraw it or we’ll put it to the vote." Heinen had hoped to amend the bill for enactment before 2028, but a new bill would likely not be on the statute book before 2029, potentially costing the Dutch treasury an estimated $3 billion annually in lost revenue during the interim period. This marks a second setback, as Heinen had previously revised the plan due to international criticism over taxing unrealized returns.
This ongoing struggle stems from a 2021 Supreme Court ruling that the previous system, which taxed assets based on a notional growth rate, violated European human rights laws. A temporary system was then implemented, allowing savers to declare actual growth rates if lower than the fictional rate. The government's current proposal to tax unrealized gains from 2028 at a 36% rate has also met with fierce opposition, with critics arguing it could deter investment and negatively impact the business climate. Bloomberg Tax estimates that a switch to a capital gains tax could cost the Netherlands $25 billion through 2036.
