Dutch Parliament Instructs Gov’t to Work on Exit Tax Plans

The Dutch House of Representatives passed a motion on October 8 calling for the government to explore measures to combat tax avoidance, including a potential exit tax for emigrants.

This motion addresses concerns over high-net-worth individuals (HNWIs) leaving the Netherlands. Members Dassen and Grinwis, who submitted the motion, point out that wealthy Dutch citizens “are moving to low-tax jurisdictions and thus avoiding taxation.”

David Lesperance of Lesperance and Associates provides context, noting that the Netherlands follows a trend in other countries like the UK. He explains that a proposed exit tax would essentially create “a deemed disposition of unrealized capital gains upon becoming non-resident,” aiming to deter taxpayers from leaving the Dutch tax system.

The motion argues it is “reasonable to expect them [Dutch emigrants] to contribute to the public good” even after leaving the country, arguing that these emigrants have already “benefited significantly from public resources” in the Netherlands.

Lesperance highlights exit taxes’ governmental appeal over wealth taxes, noting they require only one-time asset valuations—subject to audit—rather than cumbersome annual assessments.

He notes that this “must be supported by proper valuations as the tax authorities can challenge them in an audit,” contrasting it with the more cumbersome annual valuations that wealth taxes require.

The motion directs the government to develop strategies for combating tax evasion, specifically suggesting a residence-based tax for emigrants as one potential option. It also mandates that the government present its findings to the House by the end of the year.

The House’s adoption of the motion, however, does not guarantee implementation of an exit tax or other measures. It merely initiates a process of exploration and reporting, and any concrete changes will require additional legislative steps.

After the government presents its findings to the House, any proposed changes would follow the standard legislative process. This process typically includes:

1. Members of Parliament debating the government’s proposals
2. Legislative drafters create a bill if lawmakers deem new legislation necessary
3. The House of Representatives debating and potentially amending the bill
4. If the House passes the bill, it moves to the Senate for consideration
5. Upon Senate approval, the bill would require royal assent to become law

Lesperance warns of potential unintended consequences. He points out that Dutch citizens have the right to reside in 26 other EU member states and predicts that “HNW Dutch citizens [will] flee before such a tax becomes reality.”