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Written by:
Bas Hollenberg


Letter about fiscal motions and promises submitted to Lower House

The Dutch State Secretary for Finance in a letter to the Lower House on the topic of fiscal motions and promises has elaborated on the business succession regime as per the Netherlands Inheritance Tax Act 1956, within the wider context of the current evaluation of the various business succession schemes including that by virtue of said Act.

Since its original introduction in 1984 as a business succession payment facility for small and medium-sized businesses, the business succession regime has evolved into a (virtually) fully fledged provisional exemption of company capital in terms of estate or gift tax, which has created considerable disparity between company capital and other kinds of assets. Comprehensive exemption applies for just over one million euros where the value of the business in question is concerned, with the surplus enjoying 83% exemption. This differentiated exemption came about as a result of the Lower House’s adoption of an amendment to draft legislation providing for undifferentiated exemption in the amount of 90% for the company capital having been inherited or gifted. According to the State Secretary, a third of the Tax and Customs Administration’s overall inheritance and gift tax capacity is having to be devoted to the implementation of the business succession regime.

A total of five Supreme Court rulings were recently handed down on the theme of the current business succession regime, all of which have confirmed that the regime is not at odds with the ban on discrimination. All the same the State Secretary has decided to check out the scope for adjustment of the business succession regime, either by reducing the exemption rate or by converting the regime into a payment schedule, data compiled by the Tax and Customs Administration data having shown that in 70% of all cases the estate tax charge could have been settled up from the actual estate without resorting to the business succession regime. The State Secretary in the wake of his letter has had to admit that the Cabinet for the remainder of its current term of office has no intentions of making changes to the business succession regime.

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