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Substantial interests

Under Dutch law, income that you acquire from shareholdings of 5% or greater – termed substantial interests – is taxed separately, at a rate of 25%.

Both the regular income, such as dividends, and income from disposing of your shares, for example, are taxed in the Netherlands.

The central factor here is the acquisition price for tax purposes that you paid for the shares. Effectively, this acquisition price is the basis for calculating your taxable income. If you sell your shares, only the income that exceeds the acquisition price will be taxed. If you discontinue (wind up) the company, again only the income that exceeds the acquisition price is subject to 25% income tax.

The acquisition price for tax purposes is calculated (or recalculated) at the moment that you move or return to the Netherlands. The higher the calculation is of the acquisition price for tax purposes when you move to the Netherlands, the less tax you will pay on your income when you sell or otherwise dispose of the shares further down the road: in that case a smaller sum will be subject to 25% tax.

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Calculation of the acquisition price for tax purposes

The calculation of the acquisition price for tax purpose is very important, and is governed by a highly complicated set of regulations. Some of the general rules are described below.

For newly incorporated companies, the acquisition price is the paid-up capital upon formation. For share purchases, the point of departure is the amount payable upon purchase, i.e. the cost basis (opgeofferd bedrag).
With non-Dutch companies, the acquisition price is set at the value when you first move to the Netherlands.
With share acquisitions that are not based on arm’s length conditions, for example gifts, the acquisition price is calculated by adjusting the transaction to arm’s length conditions.
However, if you owned shares in a Dutch company during a previous period of residence in the Netherlands, the historic cost price will revive.
In addition, certain past legal acts are disregarded for purposes of calculating the acquisition price for tax purposes.

Advice on determining the acquisition price upon entering the Netherlands

The trick lies in navigating the maze of rules and exceptions and accurately determining your starting position when you move or return to the Netherlands. You might need to take steps before you move in order to maximise the acquisition price. Let Van Oers International map out your situation and determine how your acquisition price will – or should – be calculated when you move or return to the Netherlands.

Step-up in the acquisition price for tax purposes

If the acquisition price when you move or return to the Netherlands is calculated at less than the fair market value at that moment, you will need to take action. In many cases, you can as yet obtain a step-up, as it is called, to achieve fair market value if you act in time. This will help you avoid a 25% income tax claim on your shares when you move or return to the Netherlands.

Substantial interests: further information

Considering the amounts potentially involved, it is important to eliminate any possible risk. If you are moving or returning to the Netherlands and hold a substantial interest, you should contact Van Oers International for expert advice.