When the tax authorities anticipate profits

Sometimes politicians surprise us, and not just in our country. This week's financial news comes from the Netherlands: capital gains—such as stock market profits—will be taxed at 36% even if they haven't been realized through closing the position. This measure represents a profound change from the traditional system, under which taxes are only paid when assets are sold. Even in Spain, for example, losses can be offset against future profits over a five-year period. The implementation of this new model could generate significant shifts in financial management and investor behavior.

First, one of the main advantages of investment funds is the accumulation of compound interest over time, along with tax deferral until the investment is redeemed. With this measure, that essential benefit disappears or is significantly reduced.

Second, the problem of liquidity arises. We might find ourselves with a portfolio that has appreciated significantly and yet still have to pay taxes without having the necessary liquidity. This situation may seem exceptional, but it's not entirely new: similar cases occur, for example, with VAT for the self-employed, who must pay taxes in advance on income they haven't yet received. This measure could alter investor behavior, favoring more conservative strategies and shorter investment horizons, since holding positions for the long term loses tax efficiency. It could also incentivize the search for alternatives in other countries or capital flight by Dutch investors. Taken to the extreme, what if you pay taxes on December 31st, your portfolio collapses the following week, and then who will help you recover your money? At most, they'll tell you, you'll be compensated.