No more fear of the blue envelope, Sigrid Hemels on the power of tax knowledge

“It always feels a bit nerve-racking,” one of the hosts admits when it comes time for freelancers to pay their taxes. Hemels recognises the feeling. “You can’t help but wonder: did I do something wrong? This type of anxiety often leads people to avoid the issue altogether, sometimes even leaving those dreaded blue envelopes unopened, only making the problem worse. That’s why understanding our tax system really matters.”

The goose, the hissing, and the tax boxes

“You should pluck a goose for as many feathers as possible with as little hissing as possible.” This quote, from Jean-Baptiste Colbert, finance minister under Louis XIV, may be a rather bleak metaphor but it remains surprisingly relevant. According to Sigrid Hemels, this logic partly explains how the Dutch tax system is structured. Employees, who are generally less mobile and receive their income via payslips, are taxed more heavily, largely silently, through Box 1. Capital, on the other hand, is mobile and easy to relocate, so Box 2 and Box 3 are more lenient. “The prevailing idea was: better to tax lightly than not at all,” Hemels summarises.

In the Netherlands, different types of income are taxed under three separate categories or ‘boxes’. Hemels explains:
Box 1 – Income from work and home ownership, such as wages or business profits
Box 2 – Income from substantial shareholdings (5% or more in a company), typically relevant to owner-directors and family business shareholders
Box 3 – Income from savings and investments, such as second homes or investment portfolios

Box 2, which taxes shareholdings of 5% or more, remains notably lenient. Hemels explains that this is exactly where a large portion of the wealth of the top earners resides: 96% of all Box 2 assets are held by the wealthiest 10% of taxpayers. That wealth has long been underestimated. When the previous cabinet proposed increasing inheritance tax for this group, it triggered an immediate and powerful lobbying response. “It shows just how political taxation really is.”

Calls for reform are gaining traction. “This autumn, we expect the first steps toward revising both the tax and benefits system. The aim is to focus on simplicity, fairness, and alignment with today’s labour market,” says Hemels. One caveat: the podcast was recorded before the cabinet collapsed, so it remains to be seen whether that reform proposal will actually materialise.

Tax help from law students

Finally, Hemels highlights an often-overlooked initiative that can make a real difference: the Belastingwinkel (Tax Law Clinic). The Stichting Belastingwinkel Rotterdam, with several branches in Rotterdam and one in The Hague, is the largest of its kind in the Netherlands, and Hemels is proud of it. “Our students help people on low incomes with their tax returns. Sometimes, half an hour of guidance is all it takes to recover hundreds of euros. That can be life-changing for many, and students immediately see the practical impact of their legal knowledge.”