The European Commission issued a reasoned opinion to the Netherlands for not aligning its tax levy reduction scheme with the free movement of capital under EU and EEA agreements.
The European Commission issued a reasoned opinion to the Netherlands in its July 2025 infringements package, urging the country to align its investment fund taxation rules with EU law.
On 17 July 2025, the European Commission decided to send a reasoned opinion to the Netherlands (INFR(2024)4017) for failing to bring its tax levy reduction scheme (afdrachtvermindering) in line with the free movement of capital guaranteed by Article 63 of the Treaty on the Functioning of the European Union and Article 40 of the Agreement on the European Economic Area.
Dutch law provides for a reduction of the dividend tax paid by investment funds on dividends they receive from companies in which they hold shares. That reduction is granted on account of the due dividend tax (and similar foreign taxes). Unlike Dutch investment funds, foreign investment funds cannot offset the dividend tax paid by Dutch companies on dividends they distribute to foreign investment funds and which the latter subsequently redistribute to their own investors.
Therefore, the Dutch tax levy reduction scheme makes it less attractive for foreign investment funds to provide their services to Dutch investors and to invest in shares of Dutch resident companies. This creates a difference in treatment to the detriment of investment funds of other EU and EEA Member States, thereby hindering cross-border investment in the internal market.
In their reply to the letter of formal notice of 25 July 2024, the Dutch authorities did not acknowledge the existence of a restriction and considered the measure to be justified by an overriding reason of general interest. They therefore refuse to amend the Dutch legislation.
Therefore, the Commission has decided to issue a reasoned opinion to the Netherlands, which now has two months to respond and take the necessary measures. Otherwise, the Commission may decide to refer the case to the Court of Justice of the European Union.
