Fundamental Tax Reform in the Netherlands

S. Cnossen*, A.L. Bovenberg

*Corresponding author for this work

Research output: Contribution to journalArticleAcademic


The Netherlands has abolished the tax on actual personal capital income and has replaced it by a presumptive capital income tax, which is in fact a net wealth tax. This paper contrasts this wealth tax with a conventional realization-based capital gains tax, a retrospective capital gains tax with interest on the deferred tax, and a mark-to-market tax which taxes capital gains as they accrue. We conclude that the effective and neutral taxation of capital income can best be ensured through a combination of (a) a mark-to-market tax to capture the returns on easy-to-value financial products, and (b) a capital gains tax with interest to tax the returns on hard-to-value real estate and small businesses.
Original languageEnglish
Pages (from-to)471-484
JournalInternational Tax and Public Finance
Publication statusPublished - 1 Jan 2001


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