A New Tax on Income from Capital in the Netherlands

The Dutch income tax is until now based on the source theory. As a consequence capital gains are not taxed; this principle forms the basis of many schemes for tax avoidance. To cope with this problem the Government proposes an analytic income tax at a rate of 30% assuming a fixed annual yield of 4%. According to critics the proposal will lead to a modest taxation on capital gains but also to various forms of tax arbitration and a tax justice deficiency.