These investors, gathered in the Operator Exchange collective, then presented an urgent letter to the responsible state secretary Marnix van Rij (CDA) which is in the hands of BNR. In it, they explain what consequences the reform could have for promising new companies. “They are disastrous,” says Anke Huiskes, of investment fund NP-Hard Ventures and co-author of the letter.
The crux of the problem is that shareholders in the new tax system have to pay taxes on unrealized profits. From 2027, the Secretary of State may want to levy taxes on wealth growth. Due to this so-called “capital gains tax”, shareholders can therefore be faced with sky-high valuations, for example after a successful investment round. This while they can only cash in that value after an IPO or sale.
According to Operator Exchange, such a tax approach has far-reaching consequences for young startups, because they often pay their employees partly in stock. “It will become less interesting for employees to work for a Dutch startup and less interesting for startups to settle in the Netherlands,” the investors write.
“Charge taxes only after cashing out”
A review of the wealth tax is needed, because in 2021 the Supreme Court found the previous system, under which notional returns were taxed, to be unlawful. Operator Exchange advocates reforming the way capital is taxed, but is more in favor of taxing shareholders only after they have cashed out. In a debate with the House of Representatives, Secretary of State Van Rij opposed this approach and warned against a ‘lock-in’ effect. Shareholders could keep their stake, or put it at a distance with tax constructions.
The Prince of Orange also engaged in tax lobbying
The urgent letter to Van Rij was signed by forty people, including Jelle Prins (former product manager of Uber), Daniel Gebler (founder and CTO of Picnic) and Hans Ober (CEO of TicketSwap). The company isn’t alone in criticizing the new system. Techleap, the engine of the start-up and scale-up sector of which Prince Constantijn van Oranje has been an ambassador for many years, is also worried about the future of box 3.
Thomas Vrolijk, head of the Government Affairs and Strategy team at Techleap, points to TestGorilla as an example. This recruiting platform raised 70 million investments last year, which significantly increased the company’s value. “If employees who bought shares have to pay taxes while the shares are not yet tradable, they will run into liquidity problems,” says Vrolijk.
Operator Exchange’s Anke Huiskes worries about the Dutch economic climate. “In the short term you will have angry faces, but in the long term it is even disastrous for the entire startup ecosystem in the Netherlands, which is an essential engine for innovation, economic growth and jobs.”
Parliament resistance
Whether the undersecretary’s plans will go ahead remains to be seen, as there is the necessary resistance in the House, even within the coalition. Folkert Idsinga (VVD) is strongly against capital gains tax in general. “Except in the start-up sector, there are many other examples where things can go wrong like this,” says the Member of Parliament. He points out that small investors could see their pensions go up in smoke. “In general, it’s best to tax when an increase in value can be converted into cash,” says Idsinga.