Dutch Court Blocks €4 Million Tax Claim on Gifted Company
A Dutch court has ruled that a man who received a family business as a gift does not have to pay €4 million in income tax, rejecting the tax authority’s claim that the transfer should be treated as salary.
The man worked at the family company in northern Netherlands from 2000 and gradually rose to become its director. In the summer of 2022, the company’s owner decided to hand over the business to him as a gift, believing he was the best person to preserve the more than 100-year-old company and protect it from being broken up by larger competitors.
To avoid forcing the company into heavy debt through a takeover, the owner chose to donate the business instead. The transfer came with one condition: the director must later pass the company on to his own successor, ensuring continuity of ownership and management.
In 2024, the new owner received a tax bill from the Belastingdienst demanding income tax on more than €8 million, treating the gifted company as part of his wages. This would have meant a tax charge of around €4 million instead of tax on his actual annual salary of €234,000. After his objection was rejected, he took the case to court.
The Rechtbank Noord-Nederland ruled in his favor, stating that the gift came from the company’s owner, not from the employer itself, and therefore could not be classified as salary. The court also noted that the shares were not freely transferred, as the man only holds full control and profit rights while he remains director and must later donate the company onward. The tax authority was ordered to tax only his regular salary and to reimburse his legal and court costs.