The private member’s bill for an exit levy dividend tax from Groen Links is being amended for the fourth time. The aim of the bill is to secure the Dutch dividend tax claim on a company’s profit reserves as much as possible when a company leaves the Netherlands. This is done by imposing a dividend tax assessment on a company established in the Netherlands that departs for a qualifying state. This company is deemed to have distributed all its profit reserves before the transfer of registered office, insofar as these amount to more than €50 million. The bill has been widely criticized. This criticism prompted a thorough review of the bill. The main adjustments are:
- The exit levy withholding tax will only be levied on investors in non-EU/EEA states with which the Netherlands has not concluded a tax treaty. A withholding exemption applies to other investors. The company must provide the tax authorities with a statement within one month of departure showing the extent to which the proposed withholding exemption has been complied with.
- The exit levy withholding tax is due if a company leaves for a non-EU/EEA state, which has no dividend tax or which gives a step-up upon entry. This avoids conflict with the European-law freedom of establishment.
- Instead of by means of a protective additional assessment, the proposed exit levy with regard to dividend tax will be levied via a regular assessment, without the possibility of deferral of payment or remission. Under the existing law on dividend tax, the company is authorized to recover the dividend tax due on the exit dividend from the shareholder.
- An additional measure is proposed whereby a company incorporated under foreign law is considered to be established in the Netherlands for ten years after the transfer of effective management for tax purposes. This is a variant of the domicile fiction for companies incorporated under Dutch law.
- The retroactive effect of the bill will be limited to Wednesday, December 8, 2021, 09:00 AM.
The proposed withholding exemption for certain portfolio shareholders should limit the risk that the exit tax will be deemed by the courts to be in conflict with tax treaties concluded by the Netherlands.
Source: Ministry of Finance | bill | 35 523 | 07-12-2021
