Tax for capital gains. Is it applicable in the Netherlands and if so, in which situations?

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Question:

My understanding is, that in Holland there is no capital gains tax for trading shares or other securities (options, futures). My question: are there any limitations for this regarding the number of traded securities ? With other words: is this also valid for private daytraders trading hundred shares per day?

Answer:

In general an individual will not have to pay tax on capital gains. So if the main residence is sold or shares are sold the profit is not taxable. This is different if the transaction(s) exceed(s) normal asset management. In that case the capital gain is treated as income from other activities or even business income.

Relevant are:

  • the number of transactions -> the more transactions the sooner it is assumed that activities exceed normal asset management
  • specific knowledge of the individual -> if the individual is a professional trader, the personal transactions will be seen as taxable income sooner than if the individual doesn‘t have specific knowledge or experience. In case of share trade specific knowledge is not a leading issue to determine whether the trade can be seen as a business since it is also difficult for professional traders to predict the future value of shares etc. An individual trader can’t influence the value of the share because of his specific knowledge but really depends on the market developments.
  • work which is invested in the asset -> if maintenance of a property is taken care of by an external party the activitities may be seen as normal asset management, if the owner does all the maintenance himself and even the renovations the tax authorities will argue that this is no longer normal asset management.
  • number of assets owned -> owning 10 properties can still be seen as an investment or even more, but on the other hand 3 huge properties may not if again a lot of personal time is invested to maintain these properties.

So it depends on the actual facts and circumstances how the capital gain is treated. Even judges do not always decide the same.