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Dutch Bill Softens Exit Tax Rules

by Ulrika Lomas, Tax-News.com, Brussels

17 December 2012


The Dutch Second Chamber has recently approved a bill submitted by Financial State Secretary Frans Weekers amending existing legislation pertaining to exit tax.

The bill provides companies electing to relocate abroad with the choice as to when to settle their final tax bill with the Dutch tax authorities.

In accordance with the bill, the final tax bill must not now have to be paid immediately upon departure. Corporations may opt for deferred payment of the so-called “exit tax”, provided that a bank guarantee is in place. Interest will also be charged. Taxpayers also have the option of paying the tax due in ten equal instalments.

Exit tax is payable by companies relocating their actual headquarters to another European Union (EU) member state and is based on the value of assets at the point of departure.

Changes to the existing legislation within the framework of the bill follows a ruling from the European Court of Justice (ECJ) in 2011. The ECJ recognised that although an exit tax may be justified, immediate payment of the tax is a disproportionate measure, as businesses often lack sufficient cash to immediately pay the tax assessment.

The ECJ ruled that an arrangement offering a taxpayer the choice between paying the tax immediately and deferring payment would be suitable, with member states of departure allowed to demand a bank guarantee.

TAGS: tax | business | interest | legislation | exit tax | European Union (EU) | Europe

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