Emigrating as a Dutch director major shareholder: more than just a change of address

As a director-major shareholder (“directeur-grootaandeelhouder”, “DGA”), you are the director of a legal entity, and you own at least 5% of that company's shares with voting rights. An increasing number of director-major shareholders are exploring the possibility of relocating abroad. Changes to the taxation of private wealth in the Netherlands, combined with uncertainty about future tax developments, are prompting many director-major shareholders to consider whether another country may offer a more favorable environment.

While emigration can create tax opportunities, it is important not to underestimate the complexity of such a move. For owner-managed businesses and privately held companies, emigration affects much more than an individual's place of residence. Questions surrounding tax residency and the Dutch tax claim on a substantial shareholding can have significant consequences, both at the time of departure and for years thereafter.

In our experience, successful emigration starts with careful planning. Two aspects deserve particular attention: ensuring that Dutch tax residency is effectively terminated and understanding the impact of the Dutch protective assessment that may arise upon emigration.

Practical emigration is only the first step

Anyone planning to leave the Netherlands permanently will need to deal with various practical formalities.

These may include:

• Selling or renting out your home in the Netherlands

• Deregistering from the Dutch Personal Records Database (BRP)

• Cancelling subscriptions and memberships

• Informing banks, insurers and pension providers

• Arranging healthcare insurance

• Opening bank accounts in your new country of residence

• Registering with local authorities abroad

• Reviewing wills and other legal documents

While these practical steps are important, they do not automatically determine your tax position.

For tax purposes, an emigration is only effective if your personal circumstances support the conclusion that your connection with the Netherlands has genuinely shifted abroad.

When do you cease to be a Dutch tax resident?

A common misconception is that deregistration from the BRP automatically means that you are no longer a Dutch tax resident.

This is not the case.

Under Dutch domestic tax law, tax residence is determined based on all relevant facts and circumstances. The key question is whether a durable personal connection with the Netherlands continues to exist.

In practice, this assessment is often more complex than expected. Factors that may indicate that a durable connection remains include:

• Having a home available for personal use in the Netherlands

• Regularly spending time in the Netherlands

• Having a partner or children who continue to live in the Netherlands

• Maintaining substantial business activities in the Netherlands

• Maintaining strong family or social ties in the Netherlands.

No single factor is decisive. The Dutch tax authorities and courts assess the overall picture based on the individual's personal and economic circumstances.

One tax treaty does not always provide the complete answer

Even where a person is treated as a tax resident of another country under an applicable double taxation treaty, this does not necessarily mean that Dutch tax exposure has come to an end.

Tax treaties primarily determine which country may levy taxes on income and, often, taxes on wealth. However, treaty protection does not extend to other taxes not covered by the relevant treaty.

As a result, a person may be regarded as resident in another country for income tax treaty purposes, while still being subject to other Dutch taxes based on Dutch domestic legislation.

This is particularly relevant for Dutch gift tax and inheritance tax. Compared with income tax treaties, the Netherlands has concluded relatively few treaties covering these taxes. Consequently, the outcome under an income tax treaty does not automatically apply to gifts and inheritances.

In addition, Dutch domestic legislation contains specific deeming provisions. For example, Dutch nationals may remain subject to Dutch gift and inheritance tax rules for a period of up to ten years after emigration.

If an emigration has not been carefully structured and the Dutch tax authorities subsequently conclude that a durable connection with the Netherlands was never fully broken, the risk of unexpected taxation or even double taxation may arise.

For individuals with significant private wealth or substantial business interests, the financial consequences can be considerable. This is why the tax implications should be reviewed before the emigration takes place, rather than afterwards. A thorough assessment of living arrangements, family circumstances, business activities and international treaty positions allows potential risks to be identified and addressed before irreversible steps are taken.

The protective assessment: an important part of emigration planning

For director-major shareholders, the Dutch protective assessment is often one of the key tax considerations when planning an emigration.

Why does a protective assessment arise?

When a director-major shareholder emigrates from the Netherlands, the Dutch tax authorities generally treat the substantial shareholding as if it had been disposed of at the time of departure.

As a result, the Netherlands establishes a tax claim (exit tax) on the unrealised value increase that accrued while the individual was a Dutch tax resident. This tax claim is laid down in a protective assessment.

For companies that have increased significantly in value, the amount involved can be substantial. Although payment is not necessarily due immediately, the assessment remains highly relevant for future tax planning.

Particular attention is required outside the EU/EEA

The practical impact of a protective assessment depends in part on the country to which an individual emigrates.

For emigrants moving to another EU or EEA country, deferral of payment is generally available under the applicable rules. Different conditions may apply when relocating outside the EU and EEA. Depending on the circumstances, a request for deferral may be required and the Dutch tax authorities may ask for security before granting it.

For this reason, the intended (ultimate) destination country should be considered as part of the emigration planning process from the outset.

Looking beyond the emigration date

For a director-major shareholder, emigrating from the Netherlands is much more than an administrative relocation.

The question of where you are considered a tax resident and which Dutch tax claims remain after departure can have consequences for many years.

In our experience, these issues should be assessed together rather than separately.

A decision about your home, family arrangements or business activities may affect your tax residence. At the same time, your shareholding and future plans for your company may influence the consequences of the protective assessment.

It is also important to consider the tax rules in your new country of residence. What may appear advantageous from a Dutch tax perspective does not necessarily produce the same outcome when foreign tax obligations are taken into account.

This is why early coordination between Dutch and foreign tax advisers is so important.

Emigration planning: look beyond the moving date

For a director-major shareholder, emigrating from the Netherlands is much more than an administrative relocation.

The question of where you are considered a tax resident and which Dutch tax claims remain after departure can have consequences for many years.

In our experience, these issues should be assessed together rather than separately.

A decision about your home, family arrangements or business activities may affect your tax residence. At the same time, your shareholding and future plans for your company may influence the consequences of the protective assessment.

It is also important to consider the tax rules in your new country of residence. What may appear advantageous from a Dutch tax perspective does not necessarily produce the same outcome when foreign tax obligations are taken into account.

This is why early coordination between Dutch and foreign tax advisers is so important.

How Bol International can help with director-major shareholder emigration

At Bol International, we understand that emigration decisions involve both personal ambitions and complex tax considerations.

We help director-major shareholders assess the Dutch tax consequences of moving abroad, including their tax residence position, substantial interest and protective assessment.

Through our international network of trusted partners, we can also coordinate with advisers in the intended country of residence. This allows us to consider the implications on both sides of the border and help ensure that the various aspects of an emigration are properly aligned.

Our approach is personal, proactive and focused on the bigger picture. By identifying potential tax consequences at an early stage, we help you make informed decisions and avoid unnecessary surprises.

Considering emigrating from the Netherlands as a director-major shareholder?

Involve our international tax specialists well before your intended departure date. Together, we can assess your situation and help you prepare for the next chapter, with a clear understanding of the Dutch and international tax implications.