• Service: Tax, Global Compliance Management Services, International Tax
  • Type: Regulatory update
  • Date: 5/2/2013

Netherlands - EC urges end to public company tax exemption 

May 2:   The European Commission today formally proposed that the Netherlands repeal a corporate tax exemption made available to certain Dutch public undertakings.

According to today’s EC release (IP/13/395), the EC considers that public companies that conduct economic activities in competition with private companies ought to be subject to corporate tax—just as private companies are. Exempting certain companies merely because they are publicly owned gives them a competitive advantage, which cannot be justified under EU state aid rules, the EC concluded.

The Netherlands now has one month to inform the EC whether it agrees with the proposed amendments. If not, the EC may open a formal state aid investigation.

Read a May 2013 report prepared by the KPMG member firm in the Netherlands: European Commission asks the Netherlands to end the exemption from corporate income tax for public sector companies


Under the Dutch corporate tax law, economic activities by public bodies—either as part of the public administration or in the form of publicly owned companies—are, in principle, exempted from corporate tax.

While there are a number of exceptions from this tax exemption—including certain economic activities (like farming or mining) and certain publicly owned companies (like Schiphol airport in Amsterdam or the National Lottery)—there are many economic activities by public bodies (including all services) and many publicly owned companies that remain exempted, including the port of Rotterdam, the Holland Casino, Maastricht's airport, several development agencies, Bank of Industry LIOF, and Twinning Holding.

In July 2008, the EC informed the Dutch authorities of its preliminary view that these tax measures distorted competition in the internal market, and that the different tax treatment of publicly and privately owned companies pursuing an economic activity gives publicly owned enterprises a selective advantage.

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