Plans for a new wealth tax could lead to employees of Dutch startups succumbing to the tax burden. This can lead to a brain drain, lawyer Techleap warns in a report released today.
The report, commissioned by Techleap from Archipel Tax Advice’, is highly critical of State Secretary Marnix van Rij’s (CDA) plans to introduce a so-called ‘asset growth tax’ in the Netherlands. In this system, startup owners pay taxes as their company grows in value. However, this increase in value can usually only be realized in the event of a sale. Employees, who are often paid in stocks, suffer relatively more from this paper wealth tax.
Archipel Tax Advice used historical data to examine how much employees of well-known and successful Dutch start-ups would have had to pay under this tax regime. The report mentions Adyen, Picnic and BUNQ, among others. “In many cases, people had to pay more than double their salary in taxes,” says Thomas Vrolijk, government affairs manager at Techleap.
According to Vrolijk, the question is whether these start-ups would have been as successful if the Dutch state had put so much tax burden on the brakes during their growth phase. Internationally, even the Netherlands is lagging behind such an approach, the report shows. ‘United States, United Kingdom, Canada, France, Germany. Everyone charges a capital gains tax,’ says Vrolijk.
Box 3 needs to be reviewed because the Supreme Court declared the former wealth tax illegal in 2021. In the old system, taxes were paid on fictitious declarations that had too little to do with reality. Since then, the Ministry of Finance has been thinking about a new box-3. Van Rij had previously expressed a preference for capital gains tax.
More and more criticism of the new box-3
However, this variant is now increasingly criticized. Investor collective Operator Exchange previously sent an urgent letter to the Secretary of State warning of the consequences this tax would have for Dutch startups. In response, CDA MPs Inge van Dijk and Mustafa Amhaouch have already asked their state secretary critical questions about his plans. The VVD has also spoken out against the plans through Folkert Idsinga at the BNR.
The secretary of state defended his choice before the House of Representatives by focusing on the ‘lock-in’ effect. Taxing cash-in only could mean investments would rarely be sold. “Tax-based behavior,” says Van Rij.
Techleap, an organization that campaigns for Dutch start-ups and has Prince Constantijn as its ambassador, sees opportunities for a better system in the current crisis surrounding box-3. The report lists a number of suggestions, including a partial exemption for qualifying startups and putting startup interests in Box 2. Techleap wants to “encourage the reinvestment of proceeds into new startups,” according to Vrolijk.
Source: BNR
Fernando Dowling is an author and political journalist who writes for 24 News Globe. He has a deep understanding of the political landscape and a passion for analyzing the latest political trends and news.
