Setback for asset tax plan as BBB threatens to force senate vote

The cabinet’s wealth tax reforms are in jeopardy after the farmers’ party BBB threatened to block them in the senate unless the coalition parties agree to a major overhaul.

MPs voted in favour of a new “box 3” tax on assets earlier this year, but the vote in the senate was postponed amid speculation that the centre-right coalition partners, VVD and CDA, were poised to vote against the plans in the upper house.

The cabinet wants to change the income tax system so that investors and savers are taxed on the growth of their assets each year, a system favoured by D66 and backed by VVD and CDA in the lower house.

But the two parties’ senators want to replace box 3 with a capital gains tax, which would be paid on the actual profit made from selling shares or other assets such as real estate.

Right-wing opposition parties, including the BBB and JA21, also favour this option, meaning the bill in its current form would almost certainly be voted down.

The BBB has said it will force a vote in the upper house unless finance minister Eelco Heinen withdraws the plan altogether, which would mean starting from scratch.

Withdraw or vote

“It can’t be up to the cabinet whether or not we examine a law in the Senate,” BBB senator Bart Kroon told the upper house’s finance committee. “Withdraw it or we’ll put it to the vote.”

Heinen had hoped to amend the bill as part of the current budget settlement so that it could be passed and enacted before 2028.

The finance minister has already torn up the plans once after the proposed new system attracted international criticism amid concern that investors would be forced to sell shares in order to pay tax on unrealised returns.

A new bill would not make it onto the statute book before 2029, costing the Dutch treasury an estimated €3 billion a year in lost revenue in the meantime.

The cabinet has been trying to reform the mechanism since the Supreme Court ruled in 2021 that the current system, which taxes assets based on a notional growth rate, breached European human rights laws.

Since then it has implemented a stopgap system that still taxes assets at a fictional rate but gives savers the option of declaring their actual growth rate instead. They can still pay the fictional rate if it works out lower.