Published on: 3 February 2012
The Dutch Supreme Court recently on the compatibility of an exit tax on capital gains on portfolio shares for companies with the EU free movement of capital upon the transfer of the seat of a company from the Netherlands to the Netherlands Antilles.
Dutch law provides for an immediate exit (corporate income) tax on non realised capital gains upon the transfer of the place of effective management of the company to a third country. The Dutch Supreme Court took as an assumption that EU law would apply. Even if that was the case, the Dutch Supreme Court ruled, the EU free movement of capital would not prohibit the levy of the exit tax, due to the fact that the exit tax already existed on 31 December 1993 (grandfather clause).
Interestingly, the Dutch Supreme Court did not ask the EU Court of Justice (ECJ) whether EU law applies in a situation of a transfer from an EU Member State (the Netherlands) to one of its overseas countries or territories (the Netherlands Antilles). After the Prunus Case, it is still unclear whether such a transfer is, for EU purposes, is regarded as an internal situation to which EU law does not apply.
In the National Indus Grid case, ECJ ruled that the immediate taxation in a similar case of transfer between EU Member states, was a disproportionate. An interestingly different outcome compared to the case at hand.