Are you a director and major shareholder and planning to relocate to Germany? If so, you will receive a so-called preserving assessment from the Dutch tax authorities. The Netherlands imposes an exit tax on the value of your shares. You will have to pay the preserving assessment in the future if you have dividends paid out after you emigrate to Germany or if you sell the shares.
Relocation to Germany: Preserving assessment
A preserving assessment is an assessment by which the Dutch tax authorities secure a tax claim on (future) income that arose or accrued during your stay in the Netherlands. As a result of relocation, the Netherlands will no longer be able to levy tax on certain income and claims in the future. After all, the new country of residence will also want to levy tax. By means of a preserving assessment, Dutch rights are reserved.
Upon relocation, no income is realised by the taxpayer from which he or she can pay the income tax due. The Dutch tax authorities will therefore automatically grant unconditional and interest-free deferral of payment upon relocation within the European Union.
Preserving assessment and Dutch tax claims
A resident of the Netherlands will receive a preserving assessment when emigrating abroad. If you hold a substantial interest, emigration is considered a notional sale of your shares. You have a substantial interest if you hold at least 5% of a certain type of shares in a company (e.g. a B.V.). You are then also called director and major shareholder or “dga” in Dutch.
In addition, the tax authorities can also impose a preserving assessment for:
- notional income from capital sum insurance, savings account or investment account associated with homeownership;
- accrued pension rights;
- accrued annuity entitlements.
Emigration of a substantial interest holder (director and major sharheholder) to Germany
A major shareholder who emigrates to Germany will owe 26.9% substantial interest tax in Box 2 of income tax in 2023. A preserving assessment is imposed to prevent the Netherlands from losing tax due to the relocation of a substantial interest holder from the Netherlands.
Case study:
- Jasper is an entrepreneur and owns a marketing agency called Jasper Marketing B.V.
- Jasper Marketing B.V. was founded by Jasper in 2020 with a share capital of €5,000. He is a 100% shareholder.
- Jasper emigrates to Germany on 1 January 2024. The company remains in the Netherlands. The value of the shares is €250,000 at the time of emigration.
- The deemed disposal of the shares results in a taxable income of €245,000 (value minus acquisition price).
- Jasper owes 26.9% income tax in Box 2 and thus faces a Dutch exit tax of €65,905.
- Jasper receives a preserving assessment from the tax authorities establishing the tax liability. He automatically receives unconditional and interest-free deferral of payment.
Preserving assessment and time period
In the past, when a substantial interest holder emigrated, deferred payment was granted for a period of 10 years. After this period, the preserving assessment could be remitted upon request. Since 15 September 2015, a preserving assessment is valid for an unlimited period of time. For emigration within the European Union, the Tax Authorities are in principle not allowed to demand collateral from the emigrating director and major shareholder.
Netherlands-Germany tax treaty and recovery of a preserving assessment
Our practice regularly shows a Dutch director-major shareholder emigrating to Germany. Paying dividends or disposing of shares after emigration triggers the recovery of the preserving assessment. The Netherlands will then want to collect the conserved tax debt. In the above example, from a Dutch perspective, this will result in Jasper having to pay (part of) the preserving assessment.
However, depending on the situation, the tax treatment of a dividend distribution or share alienation will always have to be considered. The Netherlands-Germany tax treaty also includes substantial interest reservations. In addition, the German tax authorities’ perspective on a dividend distribution or disposal of shares must be taken into account.
Are you a director and major shareholder planning to emigrate to Germany? We would be happy to help you make the right tax choices to guide your emigration in the best possible way. If you fill in our contact form, we will contact you as soon as possible.
