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Dividend exit tax for companies proposed


This item was last updated on 2 November 2021.

On Friday 10 July 2020, the Dutch leftwing political party ‘GroenLinks’ published a bill to counter the loss of the Dutch dividend withholding tax claim, which may occur when companies/head offices are relocated from the Netherlands to certain other jurisdictions.

On 18 September, the bill was amended by means of a Letter of Amendment (“Nota van Wijziging”). These amendments and some announced amendments are incorporated in the summary below. In addition, another set of amendments and additions that have been announced by the initiator of this legislation, have been incorporated, among other things amendments and additions in response to recommendations of the Council of State (“Raad van State”), published on 9 October 2020.

On 26 October 2021, a Second Memorandum of Amendment was submitted by which the initiator removed the retroactive effect to 18 September 2020, 12:00 a.m. from the bill. The bill no longer has retroactive effect and will enter into force in the usual manner, namely on the day following the day of publication in the Bulletin of Acts, Orders and Decrees (“Staatsblad”). The reason for this is that the bill was submitted more than a year ago and there is no view yet on its further consideration and the possible date of entry into force. The initiator does not find it appropriate to leave companies in uncertainty for a longer period of time with regard to the retroactive effect of the bill.

By proposing this bill, GroenLinks aims to discourage companies that are considering relocating their headquarters. The relocation to e.g. the United Kingdom, where no dividend withholding tax is levied, is specifically mentioned. 

Dutch addiional withholding tax on dividens announced

What does this possibly mean for your company?


The proposed bill is important for two groups. The first group concerns companies involved in a relocation of their registered office, or in a cross-border legal merger, division or share merger. The second group concerned are the shareholders of companies. The exit tax concerns, in particular, relocations to foreign jurisdictions that do not levy a dividend withholding tax or where a so-called “step-up” is granted. In addition to relocations, cross-border legal mergers, divisions or share mergers are also brought under the scheme. It has been announced (for the sake of efficiency) that the bill will be supplemented with a franchise of EUR 50 million of the available profit reserves.

The original bill provided for a limitation of this scheme to group companies with a consolidated net turnover of at least 750 million euros. With the Letter of Amendment of 18 September 2020, this quantitative limitation has been removed, so that the proposal now includes all relocations and cross-border mergers, demergers and share mergers within scope of the dividend exit tax, however subject to the above-mentioned franchise. 

Taxable event

The proposed bill is aimed at various ways in which a head office can be relocated, as a result of which the existing Dutch dividend withholding tax claim could be forfeited. In particular, the bill introduces the following four cases as a taxable event:

  1. Cross-border relocation of the registered office of a Dutch company;
  2. Cross-border legal merger of a Dutch company;
  3. Cross-border division of a Dutch company, and
  4. Cross-border share merger of a Dutch company.

Taxable base

According to the proposed bill, if one of these situations occurs, the company must declare dividend withholding tax. The basis on which the withholding tax is levied, is the so-called "pure profit" of a company. The “pure profit” includes not only the profit reserves of a company but also the latent profit reserves. The amount of the (recognized) paid-up capital may be deducted.

In principle, dividend withholding tax is calculated on the amount of a company's “net profit”. However, the withholding tax exemptions which apply in relation to the participation exemption, may be taken into account. The obligation to a final settlement therefore relates in particular to the dividend withholding tax claim that rests on the profit reserves to which the portfolio shareholders of a listed company are entitled. 

Exception: the proposed exit tax is "conditional"

A condition for the tax proposed, is that the dividend withholding tax claim is due as a result of one of the four cases described above. If the Dutch dividend withholding tax claim is replaced with a comparable foreign tax claim, the proposed Dutchtax will not be levied. The proposed bill therefore stipulates that in all four cases described above, a “qualifying foreign jurisdiction” must be involved. 

The bill defines the term “qualifying foreign jurisdiction” as a jurisdiction that does not levy a dividend withholding tax comparable to the Dutch dividend withholding tax, or a jurisdiction that on entry of a company recognizes the (deferred) profit reserves as paid-up capital (i.e. gives a “step-up”).

Deferral of payment 

The withholding agent may file a request for deferral of the payment of the dividend withholding tax due, just as it can do with regard to its own corporate income tax claim upon emigration. The deferral will be terminated if and insofar as dividends are actually paid out.

Insofar as shareholders are entitled to a refund of the dividend withholding tax, it is arranged that the right to a refund arises when the deferral of payment with respect to the deemed profit distribution is terminated.

In addition, insofar as shareholders are entitled to a credit of the dividend withholding tax, it is arranged as well that the right to a credit arises when the deferral of payment with respect to the deemed profit distribution is terminated.

The original proposal provided for the possibility for the company to pay the dividend tax due immediately upon relocation, merger, demerger or share merger. It has been announced that this possibility will be revoked. Based on the proposal, deferral of payment will become the rule.

Statutory right of recourse against the shareholder

In the original bill there was debate as to who would actually be the subject of the dividend exit tax. For regular dividend withholding tax this is not the distributing company, but the shareholder. It has been announced that the proposal will be amended to reflect more clearly that the dividend exit tax will be levied at the company but (at the expense) of the shareholder. Among other things, it has been announced that the bill will provide a statutory right of recourse for the company against the shareholders who actually receive the dividend. (All these aspects have not yet been included in the Letter of Amendment.)

Step-up in basis upon immigration 

The bill not only introduces a final settlement for relocation from the Netherlands, but conversely also arranges a step-up in basis when a foreign company is relocated into the Netherlands. This is an extension of the already existing step-up scheme for cases of cross-border divisions, mergers or share mergers. In this respect, the bill considers immigrations into the Netherlands and emigrations from the Netherlands in a broadly neutral manner.

Deemed corporate residence

In addition, a deemed corporate residence clause is introduced for legal entities incorporated under foreign law, but which have been resident in the Netherlands for at least two years. These legal entities are considered to be resident in the Netherlands for ten years after their relocation from the Netherlands. This clause applies to both dividend withholding tax and corporate income tax.


Please note that the bill will become law provided that both the House of Parliament and the Senate agree to it. During the parliamentary process, adjustments to the bill may be made.

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Michel van Dun

Michel van Dun

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Mariska van der Maas

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Maarten van Brummen

Maarten van Brummen

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Maarten de Wilde

Director, PwC Netherlands

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