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The Netherlands Update continued
8 September 2011 the following amendments for the expat
regime:
transferred assets. The decision of the EU Court is
expected in the spring of 2012.
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the criterion for “specific expertise” is only considered to
be applicable if the employee obtains a minimum gross
salary (€ 50.619 in 2011 if the employee is aged 30
years or older and € 37.121 per year in 2011 if the
employee is younger than 30 years)
access to the expat regime for foreign PhD students
who studied in Dutch universities and thereafter decide
to start working in the Netherlands, taken into account
that a lower minimum gross salary standard is applicable
for them (2011: €26.605)
the current reference period of 10 years is to be
extended to 25 years
employees who live within a radius of 150 kilometres
from the Dutch border are excluded from access to the
expat regime.
Real Estate Transfer Tax
Dutch Supreme Court upholds exemption from
real estate transfer tax
The Netherlands levy 6% Dutch real estate transfer tax
(DRETT) upon the acquisition of (certain rights to) Dutch real
estate. This equally applies when a company acquires at
least one third of the shares in a Dutch real estate company.
A company qualifies as a real estate company if the entity’s
assets at the time of the acquisition and during the preceding
year consist for 50% or more of real estate of which at least
30% is Dutch real estate (asset test) which real estate is held
mainly (70% or more) for acquisition, sale or exploitation
(purpose test).
International and EU
Dutch exit taxation violates EU law
Dutch tax law contains an exit charge in the event that a
taxpayer ceases to be a Dutch tax resident. National Grid
Indus Company (NGIC) challenged this exit charge. NGIC
transferred its place of effective management to the United
Kingdom. Under Dutch corporate law, NGIC does not lose
its legal personality because the Netherlands apply the
“incorporation principle” and not the “seat principle”.
The assets of NGIC solely consist of receivables
denominated in GB Pound with unrealised currency gains.
The transfer of the effective management triggered -
according to the Dutch tax authorities - taxation on the
unrealised currency gains.
The Appeals Court in Amsterdam presented the case to the
EU Court and, on 8 September, the Advocate General of
the European Court of Justice issued her opinion. According
to the Advocate General, the Dutch exit taxation on
companies that transfer their place of effective management
to another EU Member State violates EU law. Regarding
this matter, the Advocate General of the European Court of
Justice argued that there is no justification, based on the
freedom of establishment in the EU, to levy exit taxes
without the possibility of postponing the payment and to
take into account later losses on the hidden reserves of the
The sale and purchase of Dutch real estate is exempt from
Dutch Value Added Tax (VAT), except if (i) it is new real
estate or (ii) it qualifies as a building premise. If the acquisition
is subject to VAT, no DRETT is payable except if the (i) new
real estate is used as a business asset and the purchase is
within two years of taken into use and (ii) the purchaser is
entitled to recover the VAT (in whole or in part).
In a recent court case, the question was whether the DRETT
exemption was also applicable if shares in a real estate
company were purchased whose asset was a building
premises; i.e the exemption would have been applicable if
the building premises would have been purchased directly
instead of the shares. On 10 June 2011, the Dutch
Supreme Court ruled in favour of the taxpayer and decided
that the DRETT exemption applies regardless of whether
the real estate property was acquired directly or by the
acquisition of shares in a Dutch real estate company.
For more information please contact:
Jan Roeland
Partner
PKF Wallast, the Netherlands
T: +31 20 653 1812
M: +31 6 20 414 629
E: jrd@pkfwallast.nl
30 // PKF International Tax Alert All Regions
Issue 8 November 2011