Leiden professors warn that EU tax package has a price tag
In the media image: Alex Shuper on Unsplash
A proposal by European Commissioner Wopke Hoekstra to reform European tax rules could cost the Dutch treasury as much as €8 billion a year in lost revenue. One consequence may be the abolition of the dividend tax in its current form.
This is the conclusion reached by Leiden tax law professors Jan van de Streek and Jan Vleggeert in an article due to appear next week in a leading journal for tax professionals. The findings also received extensive coverage on RTL Nieuws this week.
The proposal, which forms part of a broader EU package aimed at making investment within the European Union easier and less costly, contains three provisions that, according to the professors, would place a significant burden on the Dutch budget.
Under the proposal, the Netherlands would no longer be allowed to levy tax on dividends distributed by Dutch listed companies to companies in other EU Member States. Conversely, the corporate income tax that Dutch companies currently pay on dividends received from other EU countries would be abolished. In addition, companies would be permitted to deduct substantially more interest expenses from their taxable profits.
According to Van de Streek and Vleggeert, the first measure would result in a structural loss of around €4 billion a year to the Dutch treasury. The reform of the tax treatment of dividends received would also significantly undermine the government's plans for the new Box 3 tax regime, leading to an additional estimated loss of €1 billion. The more generous interest deduction rules are expected to cost a further €2 to €3 billion. From 2037, when all measures have been fully implemented, the total annual cost is projected to rise to €8 billion.
Read about the research on Leiden University's website or the article on RTL Nieuws (both in Dutch)