Budget Day 2015: Step-up for cross-border legal merger and legal split-up

The Budget Memorandum, the National Budget and the Fiscal Package for 2015 were presented to the Second Chamber of Parliament on 'Prinsjesdag', Tuesday the 16th of September. This year's Fiscal Package includes changes to the Dividend Witholding Tax Act, which might be of interest to foreign companies doing business in the Netherlands. The changes are as follows:

In the Dividend Withholding Tax Act a step-up is arranged for a cross-border legal merger and legal split-up, as it is currently the case with a cross-border share exchange. In brief, this implies that the paid capital on the assigned shares is put at the value in the economic transactions of the capital that is passed on as a result of the merger or split-up, except in the event that the capital consists of shares in a Dutch company. The step-up insures the Netherlands does not impose a tax claim on retained earnings and hidden reserves generated in a foreign country.