THE HAGUE – In a significant ruling with implications for tax relations within the Kingdom of the Netherlands, the Dutch Supreme Court has sided with a Curaçao-based holding company in a case concerning alleged dividend tax avoidance. The verdict, delivered on April 25, 2025, clarifies how Dutch anti-abuse tax laws should be interpreted in line with European Court of Justice (ECJ) standards—even when applied outside the EU.
The case revolved around a Dutch national who, in 2011, moved his personal residence and private holding company (H BV) from the Netherlands to Curaçao. The move was motivated by personal reasons, as family members were already living on the island. H BV later received a dividend of proceeds from the 2015 sale of shares in a Dutch operational company via an interposed Dutch holding company, C BV.
The tax dispute arose in 2016, after H BV—then residing in Curaçao—received a dividend from C BV. Although a 2016 amendment to the Tax Agreement for the Kingdom of the Netherlands had exempted such dividends from Dutch tax, Dutch authorities argued that the structure had been set up to avoid tax and that the exemption should not apply in cases of abuse.
However, the Supreme Court rejected the Dutch tax inspector’s position, concluding that there was no evidence that the structure had been artificially created to exploit the Tax Agreement. The Court emphasized that while H BV lacked physical presence or business activity in Curaçao, the relocation occurred years before the tax rules were amended and was based on personal motives unrelated to tax planning.
The Court ruled that the anti-avoidance clause in Article 17, paragraph 3(b) of the Dutch Corporate Income Tax Act must be interpreted consistently with EU law, particularly the General Anti-Abuse Rule (GAAR) in the EU Parent-Subsidiary Directive. This includes a two-part test: whether there was a tax avoidance motive and whether the arrangement was artificial.
In this case, the Court found no deliberate tax avoidance. It noted that in 2011, neither the individual nor his holding company could have anticipated the 2016 changes in the Tax Agreement. Moreover, the use of holding structures was considered standard practice in Dutch corporate planning at the time.
The ruling also highlights the complexity of enforcing tax rules within the Kingdom of the Netherlands, where different jurisdictions—such as Curaçao and the Netherlands—operate under shared treaties but diverging legal interpretations. Since 2018, dividend tax avoidance is now addressed under the Dividend Tax Act rather than through corporate income tax assessments.
Implications for Curaçao and the Netherlands
The decision is being closely watched in both Curaçao and the Netherlands, as it reinforces the legitimacy of cross-border family and corporate relocations within the Kingdom—so long as they are not solely designed for tax advantages. For Curaçao, which has positioned itself as an attractive jurisdiction for returning Dutch nationals and entrepreneurs, the verdict may provide reassurance against aggressive Dutch tax enforcement.
Legal experts note that the ruling upholds the principle that tax laws—even when aimed at combating abuse—must be applied fairly and in accordance with established European legal standards, including the taxpayer’s right to provide counter-evidence.
As climate, lifestyle, and family factors continue to drive Dutch nationals to Caribbean parts of the Kingdom, the Supreme Court’s message is clear: moving to Curaçao is not, in itself, a tax abuse—provided the structure has a genuine basis and wasn’t designed to sidestep tax rules retroactively.
