Tax Treaty Case Law around the Globe 2016

S. 321Chapter 28 Netherlands: Exit Taxation of a Substantial Shareholder: Tax Treaty Override?

Eric C.C.M. Kemmeren

28.1. Introduction

Exit taxes in various fields have been introduced in many countries. In globalizing economies, people move their residence more frequently and therefore the relevance of exit taxes is likely to increase with the same pace. The introduction of exit taxes may give rise the various questions. In a European context, the consistency of exit taxes with the fundamental freedoms may be challenged. In respect of tax treaties, the question arises whether the introduction of an exit tax after the conclusion of a tax treaty constitutes tax treaty override. This question is also the subject of this paper. In 1997, the Netherlands introduced an exit tax on substantial shareholders. Does the introduction of this exit tax constitute tax treaty override in respect of tax treaties concluded before 1997? Since quite a number of countries introduced exit taxes, the answer to this question may not only be relevant for the Netherlands, but may have a wider impact. Therefore, the answer to this question given by the Supreme Court (Hoge S. 322Raad, HR), both from an academic and practica...