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The European Union outlaws exit taxes

April 9, 2010

The European Commission has sent reasoned opinions to Belgium, Denmark and the Netherlands, requesting that they change their exit tax rules on companies that transfer their seat or assets to other member states. 

The Commission considers these provisions to be incompatible with the freedom of establishment provided for in Article 49 of the Treaty on the Functioning of the European Union (TFEU). A similar case against Sweden has been closed, following compliance by the Swedish authorities. 


The Commission has called on the aforementioned countries to amend the following provisions:  

  • Belgium – Article 208, 209 and 210, paragraph 1, point 4 of the Income tax code (CIR92), that provides for the immediate taxation of capital gains where the company switches fiscal residence to outside Belgium;
  • In Denmark, Section 7A of the Danish Corporate Tax Act provides for immediate taxation of capital gains on assets transferred outside Denmark; and
  • In the Netherlands, articles 3.60 and 3.61 of the Income Tax Law 2001 and articles 15c and 15d of the Corporate Tax Law 1969, which provide for exit taxation of non-incorporated businesses and companies.

The Commission considers that such exit tax rules are likely to dissuade businesses and companies from exercising their right of freedom of establishment and constitute restrictions of Article 49 TFEU.

The Commission’s opinion is based on the Treaty as interpreted by the Court of Justice of the European Union in De Lasteyrie du Saillant, Case C-9/02 of March 11, 2004, and in N, Case-470/04 of September 7, 2006, and on the Commission’s Communication on exit taxation of December 19, 2006. The immediate taxation of accrued but unrealized capital gains at the moment of exit is not allowed if there would be no similar taxation in comparable domestic situations. It follows from the case-law that the member states have to defer the collection of their taxes until the moment of actual realization of the capital gains.


The Commission had already referred Spain and Portugal to the Court of Justice for similar exit tax rules, and sent a reasoned opinion to Sweden,

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