Direct taxation: Commission requests The Netherlands to change discriminatory tax laws
European Commission - IP/10/1252 30/09/2010
Brussels, 30 September 2010
The European Commission has today decided to send four separate requests to The Netherlands to change discriminatory tax rules. The discriminatory tax regimes in question concern succession and gift duties on country estates, taxation of real estate income for non-resident charities, taxation of interests held by non-resident charities and substantial interests held by foreign companies. In all cases, the Commission considers the tax rules in question to breach EU rules on the free movement of capital (Article 63 of the Treaty on the Functioning of the European Union - TFEU). The requests are in the form of "reasoned opinions" under EU infringement procedures, giving The Netherlands two months to comply. In each of the four cases, if there is no satisfactory reply within this deadline, the Commission may refer The Netherlands to the EU's Court of Justice.
Succession and gift duties on country estates
The Commission has formally requested the Dutch authorities to change the rules which full or partially exempt country estates located in The Netherlands from succession or gift duties, but which impose 100% duties on inherited or gifted country estates in other Member States and EEA countries. The Commission considers such provisions to be discriminatory and contrary to EU rules on the free movement of capital.
Taxation of real estate income for non-resident charities
The Commission has formally requested The Netherlands to change its tax rules which discriminate against foreign charities that have real estate in The Netherlands. Under the Dutch rules in question, domestic charities and church organisations, which are not involved in any enterprise, are exempt from taxation on income from real estate in The Netherlands. However, non-resident foreign charities and church organisations are subject to tax on any income from property they may have in The Netherlands. The Commission considers these rules contrary to EU law on the freedom of movement of capital.
Taxation of interests held by non-resident charities
The Commission has formally requested The Netherlands to change its tax rules under which resident charities which do not run an enterprise are exempt from corporation tax, whereas similar non-resident charities are not. Dutch companies which are not engaged in an enterprise but which receive income from substantial interests in Dutch companies or from debt claims on companies in which they hold shares, are exempt from corporation tax. However, foreign charities have to pay tax on such income received from Dutch companies. The Commission considers these rules contrary to EU law on the free movement of capital.
Substantial interests held by foreign companies
The Commission has also requested The Netherlands to change legislation that exempts domestic companies from tax on their income from substantial interests, but which taxes companies established elsewhere in the EU and EEA on income from substantial interests not forming part of the business capital. The Commission considers this rule contrary not only to EU law on the freedom of movement of capital, but also to EU law on the freedom of establishment (Article 49 of the TFEU), and to the Parent-Subsidiary Directive (2003/123/EC).
For the press releases issued on infringement proceedings in the area of taxation or customs see:
For the most up-to-date general information on the infringement proceedings initiated against Member States, see: http://ec.europa.eu/community_law/index_en.htm
For more information on EU infringement procedures, see MEMO/10/457