Netherlands drops wealth tax plans amid exodus fears

The Dutch government has abandoned plans for a contentious wealth tax, citing fears that it could trigger an exodus of investors. Initially, the government had proposed taxing any increase in the value of shares, bonds or cryptocurrency, regardless of whether the assets were sold, after receiving criticism for the idea. The government faced strong opposition, with former Wall Street executive Andrew Lokenauth calling the plan "insane" and Elon Musk liking a social media post that criticized it.

A petition demanding the government reconsider the plan garnered 50,000 signatures within a week. The scrapped scheme could have compelled investors to sell assets to pay the tax if they lacked sufficient cash. In response, Prime Minister Rob Jetten and Finance Minister Eelco Heinen have opted for a capital gains tax, which will be implemented from 2028.

The new tax will levy a 36 percent rate on gains when investments are cashed in. The tax will apply to most financial instruments, including shares, bonds, and options, covering around 90 percent of assets by 2028. Remaining assets will be included two years later. To fund the transition, the government plans to set the tax-free income on savings and investments at €1,000 from 2028, attracting small investors into the net.

The proposed amendment must still be approved by the upper house of the Dutch parliament before the end of the year.