The income from the alienation of a substantial shareholding

The income resulting from the alienation of a substantial shareholding is subject to tax in the Netherlands as income from substantial shareholding (Box 2 income). The income of the alienation of shares is the difference between the sales price and acquisition price of the shares. Special rules apply to determine the exact income in specific situations.

In addition to the actual sale of shares the following events are treated as a deemed alienation of a substantial shareholding:   

• the purchase of own shares/profit shares;
• lump sum payments as compensation for the cancellation of profit shares;
• the declaration of liquidation proceeds;
• acquiring shares/ profit shares in another corporation as a consequence of a merger;
• acquiring shares/ profit shares under general legal title and under specific legal title as a consequence of inheritance;
• if the substantial shareholding is transferred (i.e. allocated) to the equity of an enterprise or if the substantial shareholding is going to be allocated to the income from other sources (in Dutch: 'resultaat uit overige werkzaamheid');
• if a substantial shareholding no longer exists (like in the event of dilution);
• if the taxpayer is no longer considered a Dutch tax resident, other than as the consequence of death, including the situation that the taxpayer is considered the tax resident of another state as a consequence of application of a tax treaty;
• if the taxpayer grants a(n) (call-)option on elements of the substantial shareholding;
• no longer allocate shares which belong to a secluded private wealth (in Dutch: 'APV' or 'afgezonderd particulier vermogen') to a taxpayer.

For determining the income from substantial shareholding a corporation incorporated under Dutch law is always considered to be a Dutch resident corporation.

The law provides for various exceptions to the above, amongst others for the transfer of ownership of shares/profit shares in the context of a divorce, inheritance or gift.

As referred to above, an emigration of the taxpayer is considered a taxable event. A special assessment will be levied to protect the Dutch tax claim; a so-called provisional assessment (in Dutch: 'conserverende aanslag'). Extension for payment of the provisional assessment can be obtained for a maximum period of 10 years. If during this 10 year period no 'prohibited event' (as defined by law) takes place, , the provisional assessment will lapse when the 10 year period expires. If within the 10 year period a prohibited event takes place (such as the sale of the shares), the extension for payment will no longer apply and the provisional assessment will directly become payable (partly or entirely). After 10 years, the Dutch tax claim will still exist, albeit as a potential tax claim of a non-resident taxpayer. Non-resident taxpayers can under circumstances alienate shares in a Dutch BV tax free, by application of a tax treaties.

The aforementioned emigration rules are under certain circumstances not applicable to taxpayers with a substantial shareholding in a non-Dutch company, who immigrated to the Netherlands but left the Netherlands also within a period of 8 years (in Dutch: 'Passantenregeling').