On 31 January 2013, the Court of Justice of the European Union (CJEU) gave its decision in the case of European Commission vs. Kingdom of the Netherlands (Case C-301/11).

The European Commission had referred the Netherlands to the CJEU on 24 November 2010.

The court held that the Netherlands had not fulfilled its obligations under article 49 of the Treaty on the Functioning of the European Union (TFEU) (freedom of establishment) on the grounds that its legislation imposes an exit tax, i.e., a tax on unrealized gains, on businesses that cease to be resident.

A more substantial report containing details of the CJEU decision will be published subsequently in the CJEU Case Law collection.

Note. The Netherlands did not contest the incompatibility of its legislation with article 49 TFEU in the proceedings. In light of the similarities with National Grid Indus (Case C-371/10), the Netherlands acknowledged that the consequences of that judgment also apply mutatis mutandis (the necessary changes having been made) to the case at hand.

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