One of the measures proposed during the General Financial Considerations is taxing the purchase of own shares by listed companies. According to Christian Union MP Pieter Grinwis, a logical step, but according to the cabinet, an extremely bad plan.
Grinwis acknowledges that increasing tax burdens for businesses also has disadvantages. “But from our conviction we support this measure,” he said during the discussions. The criticism of the plan is not only coming from the cabinet. Rients Abma, director of investor advocacy group Eumedion, also has objections. ‘What happens here is that the tax does not end up with the ultimate shareholder, but the companies have to pay that tax at a rate of 17.65 percent. While they don’t pay taxes now. That is a huge step.’
Big Five | Rients Abma (Eumedion): ‘Good and sustainable governance is necessary to accelerate the energy transition’
According to Peter Kavelaars, professor of fiscal economics at Erasmus University, the measure is mainly politically motivated. ‘The general rule in dividend tax is that the purchase of shares is taxed. This is an exception and we want to remove that exception.’
‘This is an exception and we want to remove that exception’
This scheme is only intended for companies with a head office in the Netherlands. This means that Shell and Unilever are out of the picture, as they have their head offices in London. But ASML is affected by the measure. ‘This means they can invest less money in research.’
The intention is that the measure can generate around 800 million euros annually. ‘Not realistic,’ Abma thinks. ‘A tax rate of 17.65 percent is the death knell for the repurchase of own shares by Dutch listed companies. They’re not going to do that anymore.’ According to the Eumedion leader, it is more realistic if a rate of 1 or 2 percent is imposed, as in the United States.
”A tax rate of 17.65 percent is the death knell”
It is unclear whether the plan can go ahead. Outgoing State Secretary Marnix van Rij and outgoing Minister Micky Adriaansens of Economic Affairs and Climate think it is a ‘terribly bad idea’. This will be further debated in the coming days and a vote will follow at the end of October.
