Relocation of the effective management of a limited company and operations to foreign countries

Relocating a limited liability company and/or activities from the Netherlands abroad can have all sorts of tax implications. It can lead under certain circumstances to a substantial saving (or increase) in the income tax payable.

If a limited company or activities move abroad from the Netherlands, this could have the following tax consequences:

  • A Dutch company is deemed to be resident in the country where the real (effective) management is established and the effective decisions are taken by the management for tax purposes. The location of the effective management is assessed on the basis of the facts and circumstances. The law under which the company was founded is not decisive.
  • If the company and all activities have effectively moved from the Netherlands, the company will generally be subject to revenue tax in the country of effective residence and no longer Dutch corporation tax. Because the company was established under Dutch law, it will in principle be required to make a tax return in the Netherlands.
  • Dutch corporation tax remains payable if the company still has a permanent establishment, such as an office, branch or permanent representative in the Netherlands. The profits of a Dutch permanent establishment remain liable to Dutch corporation tax.
  • The (effective) relocation of a limited company to another country leads to a final settlement for purposes of Dutch corporation tax on the tacit reserves and goodwill "relocated" abroad. A deferral of payment can be obtained. Often the Netherlands will also lose its right to dividend tax when the company and its headquarter activities are relocated. The tax consequences are often dependent on the country where the company is effectively established after the relocation. Is it a country with which the Netherlands has a tax treaty or not? This also applies to the collection of dividend tax.

If you move the effective management, all or part of the commercial activities, goods etc from one to the other country, then this may have implications for sales tax. You must think about the registration obligation in the other country. This also applies to salary taxes. These consequences could have a huge impact on your company. So make sure you know about them in advance. 

Would you like to learn more?

Would you like to know what options you have to effectively relocate your BV abroad? Then talk to Erik Stroeve (tax consultant) by e-mail or by phone: +31 88 277 24 55. He will be happy to assist you.

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