How to not pay your taxes legally, apparently

For start-up founders: There are countries, like the Netherlands, where there is no capital gains tax. Move to such a country.

No thanks, I'm OK paying taxes at home.

Doesn't the Netherlands have a wealth tax in lieu of capital gains?

Technically, if you move to Netherlands, that becomes your new home, so you'd be OK with paying taxes there too then :)

From what I understand, you are taxed on the unrealized gains from your assets, so you are effectively paying ~2% of the value of all your assets every year. Even if you simply own a stake at a startup, you still have to pay the wealth tax regardless of whether your stake ends up having any real value at all (most likely it won't).

They don't have an additional capital gains tax, but they still tax you on capital gains. In fact they even tax you specifically on capital gains from savings and investments, but using a fixed assumed percentage gain irrespective of whether your actual gains were lower or higher than that percentage. And they are also going to change that law by 2028 so that it works like any normal capital gains tax. So if you can 10x an investment in the next 2.5 years you might save a bit, but after that it hits you like everywhere else.

If you are a US citizen then US tax will apply to you wherever you are. People form other countries switch off their home tax if they do not meet residency requirements.

There is no capital gains or wealth tax at all in New Zealand, but only for domestic investments. For offshore investments there is a deemed return that you treat as income, so if your wealth is tied up in illiquid stock then it can be dire.

It depends. I have been in this situation several times. The benefit of the current regulation is that you can pay 0 income tax over stock options if you exercise them at the value of FMV. This is extremely beneficial for early employees. The disadvantage is that the tax service treat them as any other asset and if the company valuation skyrockets your shares might worth more than the 100k or so threshold they have for Box 3 tax. Ecen in that case you do pay a fractional tax over potential income they calculate over this. This might be tough but a very privileged position to be in as a good lawyer can come to an agreement with the tax service if the prospects are looking good (a potential IPO or acquisition). You will not pay ANY income tax over the profit you made in this scenario.

The same applies to house ownership too for example. I did pay 0 income tax over 150k profit I made over my previous house when I sold it. When the money was on my account the wealth tax started to kick in, but it is after you make the capital gains not at the moment you make it.

It works differently as it is after you make the gain, not at the moment. You can have a start up, buy the inital shares for 1k, sell it for 1M, pay no weakth tax (or close to 0) if your valuation during filing a tax return wasn't above a certain amount, get the cash and move somewhere else. If you stay here you will be taxed slowly every year but the rich doesn't do that as they put their money in LLCs etc.

Yeah so your offshore investment ruling is applicable for domestic investment in the Netherlands too.

It's effectively a 1.2% wealth tax that's based on a 30% tax on assumed capital gains of 4%. The thing is, the assumed gains are generally far lower than reality, and the tax is also much lower than regular income tax.

> If you are a US citizen then US tax will apply to you wherever you are.

I just learned about this fact this year or so and it's absolutely bananas how people are just accepting this as a normal thing. In what world does it make sense to pay taxes to a country based on citizenship rather than actual location/residency?

The assumed yield varies by asset. For capital gains from investments it is >6% (roughly the expected return on the stock markets for the last century), for cash it is <1% (real returns used to be a bit higher but currently are extremely low, effectively overtaxing by a lot). But as already said above they are currently changing the law to use the actual yield instead, so the top level comment advice doesn't really matter anymore.