Disposal of Shares by Foreign Shareholder
The gain on the disposal of a Dutch company by its foreign corporate shareholder may be exempt from taxation in The Netherlands if it satisfies the participation exemption criteria (see below for definition).
The gain on the disposal of a Dutch company by its foreign individual shareholder is exempt from taxation in The Netherlands unless it is derived from a substantial shareholding (i.e. over 5%), in which case it is taxed at a flat rate of 25%.
Capital gains are included in ordinary taxable profits and are taxable under corporation tax.
However, capital gains from the disposal of qualifying participations (see below) are exempt from taxation in The Netherlands.
The participation exemption applies to dividends and capital gains derived from qualifying participations.
A participation needs to satisfy the following criteria in order to qualify for the exemption:
- Shareholding of at least 5%; and
- The subsidiary is not held as a portfolio investment; or
- The subsidiary is subject to a statutory tax rate of at least 10% in its country of residence; or
- Less than 50% (on a fair market basis) of the subsidiaries assets are "passive" assets i.e. portfolio investments.
There are no specific provisions for capital losses. Capital losses are deductible under normal taxable income unless they arise from the disposal of a qualifying participation (see below).