Bill on a conditional dividend withholding exit tax

Tax Blogs

15 December 2020

On Friday 11 December, several members of the House of Representatives asked questions about the Bill on a Conditional Dividend Withholding Exit Tax (Spoedwet conditionele eindafrekening dividendbelasting or the "Bill"). Many concerns about the Bill's compatibility with EU and tax treaty law were expressed, particularly by the coalition parties (e.g. VVD and CDA). As a result, it remains to be seen whether the Bill will have enough support in the House of Representatives.

We have selected two matters raised by the members which we think are relevant. The Bill's initiator has been asked to address the following concerns:
  • The Council of State (Raad van State), Professor Peter Kavelaars (Erasmus University Rotterdam) and Professor Dennis Weber (University of Amsterdam) are very critical of the Bill. Because of this, the coalition parties have asked whether the initiator is still planning to proceed with the Bill.
  • The members expect that the Bill will severely impact the Dutch business climate for both Dutch and foreign investors. It is also expected that profitable companies will exit the Netherlands when the EUR 50 million threshold is within reach and that the Bill will decrease the value of shares of Dutch companies, including listed companies. This may negatively impact investments in the Netherlands.

We will update you as soon the Bill's initiator addresses these questions and keep you informed on any further developments.

Please find the link to the various questions here.

1 December 2020

The Bill on a Conditional Dividend Withholding Exit Tax (Spoedwet conditionele eindafrekening dividendbelasting or the "Bill") was discussed yesterday in the Standing Committee on Finance (Vaste commissie voor Financiën or "Committee"). In short, the Bill introduces an exit tax for Dutch dividend withholding tax purposes for certain cross-border reorganisations (e.g. cross-border mergers, migration). The Bill should have retroactive effect from 18 September 2020. The Committee invited various specialists and stakeholders, including Jan van der Streek (a professor of law at the University of Amsterdam, who had previously provided input to the Bill's proposer) and Dirk Jan Sinke, a representative of the largest employers association of the Netherlands (VNO/NCW), to give their views on the Bill.

In short, the various invitees stated that it remains uncertain whether the Bill is compatible with EU law and applicable tax treaties. Case law from the European Court of Justice and Dutch Supreme Court provides arguments that can be made both for and against the Bill's compatibility with EU and tax treaty law. Furthermore, the Committee also discussed the fact that the Council of State (Raad van State) and the Dutch Association of Tax Advisers (Nederlandse Orde van Belastingadviseurs) are very critical of the Bill (e.g. regarding scope, impact on the investment climate and basic principles). It remains to be seen whether the Dutch legislator is willing to take a calculated risk that the Bill could get overruled by the Dutch Supreme Court. A number of taxpayers have already undertaken actions that may be targeted by the Bill, so it will be interesting to closely monitor the discussion in Parliament in the coming weeks. On 10 December 2020, the Bill will be discussed in the House of Representatives.

Read more about the Bill in our Tax News Update. We will keep you informed of any further developments through this dedicated Houthoff Tax blog.