Netherlands

Dutch corporate law permits inbound and outbound re-domiciliations and cross-border mergers if the jurisdiction on the other side is an EU Member State or EEA State; re-domiciliations and cross-border mergers are not permitted in relation to third States.

Cross-border mergers of Dutch resident entities to third States may nevertheless be achieved by means of two-step cross-border mergers via, for example, Luxembourg. But the tax treatment of such two-step transactions is outside the scope of this publication.

The following section covers the Dutch tax treatment of re-domiciliations and cross-border mergers only to the extent undertaken within the EU/EEA. In this context, the Dutch tax consequences will be dependent on whether a Dutch PE is retained.

The following Q&As cover the tax treatment first of re-domiciliations and then of cross-border mergers, in each case for inbound and outbound movements.

KEY CONTACTS

Wiebe Dijkstra
Partner
[email protected]

Henk van Ravenhorst
Partner
[email protected]

re-domiciliations

Inbound re-domiciliations

1. Are any transfer taxes payable in your jurisdiction on an inbound re-domiciliation, i.e. where a company re-domiciles to your jurisdiction?

In general terms, an inbound re-domiciliation does not give rise to any Dutch taxes or stamp duty being payable.

Given that the type of re-domiciliation discussed here does not result in a deemed liquidation of the re-domiciling company from a Dutch corporate law perspective, no RETT should become due (as there would be no transfer of Dutch real estate assets).

2. Does the re-domiciling company automatically become tax resident in your jurisdiction following the inbound re-domiciliation?

A re-domiciling company does not automatically become tax resident in the Netherlands following an inbound re-domiciliation. It will only become a tax resident if its place of effective management is situated in the Netherlands.

In answering the following questions, it is assumed that the re-domiciling company becomes Dutch tax resident.

3. When a company re-domiciles to your jurisdiction, are its assets revalued for tax purposes?

Irrespective of the level of taxation in the departure state, the re-domiciling company must value its assets and liabilities at fair market value for CIT purposes and will therefore receive a step-up (or step-down, depending on the then current book and market values) in respect of all assets and liabilities.

4. Does a company’s re-domiciliation to your jurisdiction restart the clock for any holding period requirements that must be met to access tax exemptions or reliefs in your jurisdiction?

No, the Dutch participation exemption does not have a holding period, and there are no other holding periods in Dutch national law that could be relevant in this respect. As regards tax treaties concluded by the Netherlands, there may be applicable holding periods that must be met to be entitled to the treaty benefits.

5. Are there any other points to note in respect of your jurisdiction’s tax treatment of inbound re-domiciliations?

The re-domiciling company will not get a step-up in its fiscally recognised capital for Dutch dividend withholding tax purposes up to the fair market value of the company. As a consequence, profits realised before the re-domiciliation would become subject to Dutch dividend withholding tax.

Outbound re-domiciliations

6. Are any transfer taxes payable in your jurisdiction when a company leaves your jurisdiction by way of an outbound re-domiciliation?

Given that the type of re-domiciliation discussed here does not result in a deemed liquidation of the re-domiciling company from a Dutch corporate law perspective, no RETT should become due (as there would be no transfer of Dutch real estate assets).

No stamp duty or similar taxes are levied in the Netherlands on an outbound re-domiciliation.

7. What are the CIT consequences when a company leaves your jurisdiction by way of an outbound re-domiciliation? Does it make a difference whether the company retains a PE in your jurisdiction after the re-domiciliation?

Generally, on re-domiciliation, we would expect the company to cease to be Dutch tax resident and become tax resident in the country to which it has re-domiciled. Different considerations would apply if, following the re-domiciliation, the re-domiciling company continued to have its place of effective management in the Netherlands (this would, in principle, not trigger any CIT consequences as has been recently confirmed by the Dutch Tax Authorities).

Within the context of the CIT consequences in respect of a re-domiciliation where the re-domiciling company ceases to be Dutch tax resident, it is relevant whether a PE is retained in the Netherlands. To the extent that, following the re-domiciliation, assets are attributable to a Dutch PE for Dutch CIT purposes (assuming the Netherlands has the right to tax such assets under applicable tax treaties), no Dutch CIT will be due in respect of these assets in connection with the re-domiciliation. If assets are not attributable to a Dutch PE for CIT purposes after re-domiciliation, such assets will be deemed to have been disposed of for fair market value. Consequently, the latent capital gains in respect of these assets will be crystallised and be subject to Dutch CIT. Upon request and subject to conditions, the CIT can be paid in five equal instalments.

8. Could any obligation to withhold tax be triggered when a company re-domiciles to leave your jurisdiction? Does it make a difference whether the company retains a PE in your jurisdiction after the re-domiciliation?

No Dutch dividend withholding tax will be due on re-domiciliation.

A legislative proposal is pending before the Dutch Parliament pursuant to which Dutch dividend withholding tax would be levied if (deferred) profit reserves of Netherlands-based headquarters of multinational companies are transferred to either of the following two types of jurisdiction as a result of a cross-border reorganization. The types of jurisdiction are States that do not have a dividend withholding tax comparable to the Dutch one, and States that consider the (deferred) profit reserves as paid-in capital upon entry (generally referred to as "step-up countries"). The legislative proposal also includes retrospective aspects. It was originally introduced in 2020 and has been repeatedly and significantly amended. It is unclear whether, and in what form, it will be enacted.

9. Are there any other points to note in respect of your jurisdiction’s tax treatment of outbound re-domiciliations?

At present, the CIT consequences of an outbound re-domiciliation by means of a conversion are not explicitly addressed. It has been announced that a legislative proposal will be published in 2025 that would explicitly address the CIT consequences of an outbound cross-border conversion (as well as outbound mergers and demergers). This proposal is expected to be published in Q2 2025 with an expected entry into force of 1 January 2026.

Cross-border mergers

INBOUND MERGERS

1. Are any transfer taxes payable in your jurisdiction on an inbound cross-border merger where a foreign transferring company merges into a receiving company in your jurisdiction?

In general terms, no transfer taxes are payable upon an inbound cross-border merger. Only if the foreign transferring company were to hold Dutch real estate assets that were transferred in connection with the merger could RETT be due. If RETT could be due, certain exemptions may apply subject to conditions.

No stamp duty or similar taxes are levied in the Netherlands on an inbound cross-border merger.

2. On an inbound cross-border merger, are the assets received by the receiving company in your jurisdiction revalued for tax purposes?

The Dutch receiving company must value the acquired assets and liabilities at fair market value for Dutch CIT purposes and will therefore receive a step-up (or step-down, depending on the then current book and market values), unless a specific anti-abuse rule applies that eliminates double non-taxation through “transfer pricing” mismatches. For instance, in the case of a transfer of assets and liabilities on a cross-border merger, this anti-abuse rule states that the tax value (for Dutch CIT purposes) of the acquired assets and liabilities must be equal to the value used for CIT purposes in the transferring company’s jurisdiction of residence upon disposal of these assets and liabilities as a result of the merger. As such, if the CIT value in the transferring company's jurisdiction of the assets transferred was lower than the tax value for Dutch CIT purposes, no step-up for those assets would be provided for. This specific anti-abuse rule does not apply if roll-over relief applies on the merger because then the assets and liabilities remain subject to CIT in the transferor's jurisdiction (e.g. as a result of a PE retained there).

3. Where access to tax exemptions or reliefs is subject to a holding period requirement, from which date would the holding period be calculated for assets received by a receiving company in your jurisdiction from a foreign transferring company in an inbound cross-border merger?

The Dutch participation exemption is not subject to a holding period, and there are no other holding periods in Dutch national law that could be relevant in this respect.

4. Are there any other points to note in respect of your jurisdiction’s tax treatment of inbound cross-border mergers?

The receiving company will receive a step-up for Dutch dividend withholding tax purposes for the fair market value of the assets and liabilities of the transferring company (to the extent not consisting of shares in Dutch tax resident companies), unless the merger is aimed at the avoidance or deferral of taxation.

outbound mergers

5. Are any transfer taxes payable in your jurisdiction on an outbound cross-border merger where a transferring company from your jurisdiction merges into a foreign receiving company?

In general terms, no transfer taxes are payable upon an outbound cross-border merger. Only if the Dutch resident transferring company were to hold Dutch real estate assets that were transferred in connection with the merger could RETT be due. If RETT could be due, certain exemptions may apply subject to conditions.

No stamp duty or similar taxes are levied in the Netherlands on an outbound cross-border merger.

6. What are the CIT consequences for the transferring company in your jurisdiction when it merges into a foreign receiving company?

The CIT consequences of the merger will differ depending on whether the receiving company retains a PE in the Netherlands.

To the extent that, following the cross-border merger, assets are attributable to a Dutch PE for Dutch CIT purposes (assuming the Netherlands has the right to tax such assets under applicable tax treaties), no Dutch CIT will be due in respect of these assets in connection with the cross-border merger. If assets are not attributable to a Dutch PE for CIT purposes after the cross-border merger, such assets will be deemed to have been disposed of for fair market value. Consequently, the latent capital gains in respect of these assets will be crystallised and subject to Dutch CIT. Upon request and subject to conditions, the CIT can be paid in five equal instalments.

7. Could any obligation to withhold tax be triggered by an outbound cross-border merger?

No Dutch dividend withholding tax will be due in respect of the merger.

A legislative proposal is pending before the Dutch Parliament pursuant to which Dutch dividend withholding tax would be levied if (deferred) profit reserves of Netherlands-based headquarters of multinational companies are transferred to either of the following two types of jurisdiction as a result of a cross-border reorganization. The types of jurisdiction are States that do not have a dividend withholding tax comparable to the Dutch one, and States that consider the (deferred) profit reserves as paid-in capital upon entry (generally referred to as "step-up countries"). The legislative proposal also includes retrospective aspects. It was originally introduced in 2020 and has been repeatedly and significantly amended. It is unclear whether, and in what form, it will be enacted.

8. Are there any other points to note in respect of your jurisdiction’s tax treatment of outbound cross-border mergers?

It has been announced that a legislative proposal will be published in 2025 that would explicitly address the CIT consequences of an outbound cross-border merger (as well as outbound conversions and demergers). This proposal is expected to be published in Q2 2025 with an expected entry into force of 1 January 2026.

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This material is provided for general information only.
It does not constitute legal or other professional advice.