A proposed taxation reform within the European Union, supported by European Commissioner Wopke Hoekstra, could lead to the Dutch government facing a significant annual revenue reduction of approximately €8 billion by 2037. This projection comes from an analysis conducted by tax law professors at Leiden University. The reform’s primary goal is to simplify and reduce the costs associated with cross-border investments within the EU by revising rules on dividend taxation and corporate interest deductions.
Under the new proposal, a notable adjustment would involve expanding the exemption from Dutch dividend tax to encompass all cross-border shareholdings between EU companies, regardless of whether they fall below the existing 5% ownership threshold. This change alone is projected to cut Dutch government revenue by an estimated €4 billion each year. Additionally, the reform suggests allowing companies to deduct a higher portion of their interest expenses from taxable profits, which could further diminish corporate tax revenues.
Experts have raised concerns that these changes might incentivize wealthy Dutch individuals to transfer assets from personal savings into private limited companies, potentially lowering their tax obligations under the national wealth-tax system. Such a shift could have implications for government tax collections, although the extent of its impact remains uncertain.
Despite these warnings, Commissioner Hoekstra has dismissed fears of a widespread reallocation of private assets into companies, suggesting that facilitating easier cross-border investments could yield broader economic advantages for the European Union. He argues that the potential for economic growth and cohesion within the EU outweighs concerns over potential tax revenue losses.