The transfer of the registered office: directors, persons being director and major shareholder or the individual charged with the transfer, beware of taxation
When you relocate the place of effective management of a company abroad, this actually means that you are relocating the registered office of the company, while the statutory seat remains in the Netherlands. The company becomes also a tax resident abroad. In and of itself this procedure is not so special, were it not for the fact that the director, persons being director and major shareholder or the individual who is charged with the effectuation of the relocation, could be confronted with remaining tax debts. This includes corporate- and dividend tax that have not been paid by the company. People do not always think about this in first instance. As an example: when the effective management of a company relocates abroad and you are actively involved in the relocation as a director, director and major shareholder or the one who is charged with the relocation, you can be held responsible for the debts that have remained behind in the entity. The Supreme Court (Hoge Raad) has recently expressed her opinion on the matter in a case for which we have acted as representatives.
In this specific case, a director and major shareholder had made the decision to relocate the company abroad. At that time the company was doing very well and there were several branches worldwide. When the crisis arose, it went quickly downhill and the (remaining) corporate tax assessment could no longer be paid. These tax assessments were imposed by the Tax Authorities, before and after the relocation. The directors were subsequently held personally liable for the remaining unpaid assessments. The Supreme Court (Hoge Raad) ruled that not every director is automatically liable. In order to be held liable the director must at least have had a role during the relocation or the supervision of the relocation, however he did need to be the driving force of the relocation. After years of litigation, up to the Supreme Court (Hoge Raad) and back to the Court of Appeal (Gerechtshof), these directors finally were successful in their defence. Unfortunately, it does not always work out that way.
You should be aware of the fact that as a director, shareholder or even the person who is actually in charge of the relocation of the company, you may be confronted with liability for (remaining) tax debts. Even if the situation you are currently in, is or seems to be very different. You can take action in order to minimise your exposure. For example by accurately assessing the debts remaining within the entity. Also, make conscious choices in the way you behave as a director: when you actively participate in the relocation of the place of effective management (for example by deregistering the company at the Chamber of Commerce or by transferring administration & bookkeeping), that could give a certain impression. The duties of a director can be risky, certainly in a time that we see that the Tax and Customs Administration looks closely at the person who has had the effective management during the relevant period and how the relocation of natural persons or the relocation of the place of the effective management of legal forms took place. Therefore, before you take specific action, discuss the matter thoroughly with your accountant or tax attorney. At least then you know what you are saying a clear ‘yes’ or a conscious ‘no’ to.
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