Business Valuation upon Immigration to the Netherlands: How to Maximise Your Box 2 Step-up

• When you immigrate to the Netherlands, the Dutch tax authority increases the tax cost base of your substantial-interest shares to their fair market value (waarde in het economische verkeer — WEV) on the date of immigration — the so-called step-up (article 4.25 Dutch Income Tax Act 2001).
• That step-up directly determines how much Box 2 tax (24.5% / 31% in 2026) you will pay on a future sale or dividend distribution.
• A well-substantiated business valuation can save millions of euros — in our worked example, € 1,426,000.
• Actively request a beschikking verkrijgingsprijs (a formal ruling fixing the cost base; article 4.36 Dutch Income Tax Act 2001) so you avoid surprises years later.
• Important exceptions apply to returning Dutch residents and to entities that are already effectively resident in the Netherlands.

Anyone who relocates to the Netherlands as an entrepreneur or director-major shareholder (DGA — directeur-grootaandeelhouder) often brings more with them than just a moving van. In most cases, a substantial interest in their own company travels along — sometimes a holding entity that, after a decade of growth, is now worth millions. The moment you establish residency in the Netherlands, the Dutch tax system in principle grants you a step-up in Box 2: the tax cost base of your shares is uplifted to fair market value (waarde in het economische verkeer, WEV) on the date of immigration.

What many clients only realise later: the size of that step-up depends almost entirely on the business valuation prepared at that moment. A few percentage points in valuation can translate into hundreds of thousands of euros in eventual tax.

In this article we explain how the Box 2 step-up works legally, when it does and does not apply, and — most importantly — why a robust business valuation is the fiscal instrument that turns the step-up into a maximum benefit.

The substantial interest in Box 2

You hold a substantial interest if you, possibly together with your tax partner, directly or indirectly own at least 5% of the issued capital of a Dutch or foreign company (article 4.6 Dutch Income Tax Act 2001). Both ordinary income (such as dividends) and disposal gains (sale proceeds) from that interest are taxed in Box 2.

Box 2 rates in 2026

For a DGA selling their company, this means that effectively the entire gain is taxed at 31%. The rate looks straightforward, but the actual tax burden ultimately depends on the tax base itself: the difference between the sale proceeds (or dividend out of reserves) and the tax cost base of the shares. The higher that cost base, the lower the taxable amount. On immigration, that base is not the old historical cost — it is the current value of your company.

The step-up at immigration: the main rule

A step-up at immigration is the uplift of the tax cost base of your substantial-interest shares to fair market value (WEV) on the day you become a Dutch tax resident. The legal basis is article 4.25 of the Dutch Income Tax Act 2001 ('Tax cost base on commencement of domestic tax liability').

The rationale is that the Netherlands may only tax the value growth that arises during the period in which the shareholder is a Dutch resident. Value growth accumulated abroad before immigration falls within the tax sovereignty of the former country of residence.

In practice this works as follows: from the date of immigration onwards, the WEV on that date becomes your new tax cost base. If you sell your company several years later, the difference between the sale price and the uplifted cost base is taxed — not the difference with the original (often much lower) historical cost.

Beschikking verkrijgingsprijs (formal ruling fixing the cost base)

The exact cost base resulting from the step-up is normally established by means of a beschikking verkrijgingsprijs — a formal ruling by the tax authority (article 4.36 Dutch Income Tax Act 2001). We strongly recommend actively requesting this ruling. Without one, the burden of proof rests with you and the discussion is only triggered at the moment of disposal — an unfavourable moment to be reconstructing what the WEV was years earlier.

When the step-up does not (fully) apply

The main rule is generous, but subject to important exceptions. Three situations deserve particular attention.

1. You previously lived in the Netherlands (re-immigration)

For returning residents, the step-up is in principle limited. The legislator wants to prevent a DGA from creating a higher cost base via a brief stay abroad. Under article 4.25(2) of the Dutch Income Tax Act 2001, the original tax cost base is in principle restored, with corrections for what happened during the foreign period.

On 20 September 2024, the Dutch Supreme Court (Hoge Raad, ECLI:NL:HR:2024:1243) confirmed that the step-up upon re-immigration is also limited by the vestigingsplaatsfictie (deemed-residence fiction) of article 7.5(6) of the Dutch Income Tax Act 2001: to the extent the returning resident was — directly or via that fiction — subject to Dutch non-resident taxation on the substantial interest during the foreign period, the value growth in that period is not added to the step-up. Tailored analysis and careful fact-finding are essential here.

2. The company is already effectively resident in the Netherlands

If the company in which you hold the substantial interest is already effectively resident in the Netherlands at the moment you immigrate, there is no reason for a step-up: the value growth of your shares was already within the Dutch tax claim. This also applies to companies incorporated under foreign law whose place of effective management was already in the Netherlands. Pay close attention to the timing of any seat relocation in relation to your own move.

3. The deemed-residence fictions

The Dutch Income Tax Act 2001 contains two separate fictions that can apply here:

• Article 7.5(6) Income Tax Act 2001 — a company that has moved its place of effective management out of the Netherlands is deemed to remain Dutch-resident for ten years for purposes of non-resident taxation on the substantial interest.
• Article 4.35 Income Tax Act 2001 — a comparable deemed-residence fiction within Chapter 4 (substantial interest).

For immigrants whose company was once Dutch, this can mean that no step-up — or only a partial one — is granted. A prior conserverende aanslag (preservation assessment) issued on emigration plays an important role here.

In all of these situations, the underlying facts and proper documentation make the difference. See also our article on tax residency and residency investigations, because the moment you become a Dutch tax resident is often less clear-cut than it appears.

Tax treaties: the link you cannot skip

Whether a step-up has full effect also depends on the tax treaty between the Netherlands and your departing country. Article 13 (capital gains) and Article 4 (residence) of the OECD Model Convention determine which country has the primary right to tax disposal gains on shares. Some treaties grant the Netherlands an additional taxing right for a defined period after immigration. Always align the Dutch step-up with the applicable treaty — otherwise a benefit that looks attractive on paper can be partially or wholly eroded by treaty override.

The flip side: the conserverende aanslag on emigration

The step-up has a fiscal mirror image — the conserverende aanslag (preservation assessment). If you leave the Netherlands holding a substantial interest, that moment is treated as a deemed disposal (article 4.16(1)(h) Dutch Income Tax Act 2001). The tax authority issues a preservation assessment based on the difference between the WEV on the emigration date and your tax cost base.

You do not have to pay the assessment immediately:

• Within the EU/EEA: automatic, interest-free deferral of payment.
• Outside the EU/EEA: deferral only against security, for example a bank guarantee or a pledge over the shares.

Three points often underestimated in practice

• Indefinite validity. Since 15 September 2015, the ten-year limit has been abolished. The assessment now hangs over your head indefinitely rather than being automatically waived after ten years.
• Triggering events. Since 2015, ordinary dividend distributions can also lead to (partial) collection on a pro-rata basis — the old 'substantial distribution' criterion no longer applies in the same form. Disposing of the shares or relocating the corporate seat can also trigger collection, sometimes many years after departure.
• The valuation determines the claim. The amount of the assessment follows directly from the WEV on the emigration date. The lower the commercially defensible valuation, the smaller the latent claim the Netherlands retains.

Immigration vs emigration: the paradox in one table

The valuation is the same instrument in both directions — and in both cases it must be commercially substantiated and defensible.

Why a sound business valuation is decisive

This is the core of the matter. The law states that the cost base equals the WEV; it does not state what amount that WEV is. That has to be substantiated — and, if disputed, proved.

Maximising the step-up

The higher the commercially substantiated WEV on the immigration date, the higher the tax cost base, and the lower the Dutch Box 2 tax on a future dividend or sale.

Evidentiary position vis-à-vis the tax authority

The inspector can challenge a valuation or even fix it at a lower amount — colloquially a 'step-down' — which would leave you with a lower cost base than you assumed in your tax return. A robust valuation report, prepared on or as close as possible to the immigration date, is the anchor for your position.

Avoiding double taxation

Many countries levy some form of exit tax on emigration. France, Belgium, Germany and the United Kingdom each have their own variants. If your former country of residence has settled the tax on a particular value, that value should in principle also be the starting point for the Dutch step-up — otherwise economic double taxation arises on the same slice of value growth. Aligning the foreign exit value with the Dutch entry value requires active coordination.

Strategic planning

The valuation lays the groundwork for later restructurings, dividend policy, business succession (BOR — Dutch business succession scheme) and any co-investments. A valuation that seems painlessly low at the moment of immigration can become an expensive brake on a transaction ten years down the line.

A practical rule of thumb: every additional percentage point of valuation on a € 10 million company represents approximately € 31,000 of latent Dutch Box 2 tax in the top bracket. For larger interests, the amounts quickly run into seven figures.

What a defensible valuation looks like

There is no statutorily prescribed valuation method. The Dutch tax authority and the tax courts in principle accept any methodology that has been applied commercially and consistently and that fits the nature of the business. In practice, three main approaches are seen, often in combination.

Discounted Cash Flow (DCF)

The standard for operating companies with a reasonably predictable earnings model. Key elements are a substantiated multi-year forecast, a defensible WACC (Weighted Average Cost of Capital) and a realistic terminal value.

Market approach / multiples

Comparison with transaction or stock-market multiples of comparable companies (EV/EBITDA, EV/Sales). This method is most often used as a second opinion alongside a DCF.

Asset approach / NAV

Used for pure holding entities, real-estate companies and investment vehicles. Here too, assets must be valued at WEV and not at book value.

Technical points alongside the methodology

• Discounts and premiums: a minority stake justifies a minority discount; a controlling stake may warrant a control premium. For illiquid shares, a marketability discount may be appropriate.
• Valuation date: the WEV must be determined as of the immigration date, not at a conveniently chosen year-end. With volatile valuations, precision is essential here.
• Documentation: forecasts, assumptions, peer group, market data and later confirming events (such as a transaction within a reasonable period after immigration) should all be recorded reproducibly.

Worked example: with vs without a substantiated step-up

A French entrepreneur (Madame X) is the sole shareholder of her SAS. She originally paid in € 400,000 of share capital. On 1 March 2026 she relocates to the Netherlands with her family; the place of effective management of the SAS moves on the same date — not earlier. On the immigration date, a substantiated DCF valuation puts the company at € 5,000,000. In 2030 she sells the SAS to a strategic buyer for € 8,000,000.

Scenario A — no step-up requested, no valuation report

The tax authority works from the historical cost base of € 400,000. The taxable amount in Box 2 is € 7,600,000 (€ 8,000,000 - € 400,000). At the Box 2 rates, the tax comes in at approximately € 2,351,525.

Scenario B — substantiated step-up to € 5,000,000 on the immigration date

The taxable amount is € 3,000,000 (€ 8,000,000 - € 5,000,000). The Box 2 tax comes in at approximately € 925,525.

Difference: € 1,426,000 — about 61% of the original claim. Not avoided, but allocated correctly to the country in which the value growth actually occurred.

Watch out — timing of the seat relocation
If the place of effective management of the SAS had been moved to the Netherlands before the immigration date, the SAS would already have been Dutch-resident at the moment of Madame X's immigration. The step-up would then be limited or unavailable (see exception 2 above). The timing of the seat relocation and the immigration is critical here.

This example is a simplification and abstracts from any French exit tax, the participation exemption at holding level, and interest effects.

Practical steps before, during and after immigration

Before immigration

• Map out the structure: which entities, which places of residence, which historical cost base?
• Identify any exit-tax consequences in the departing country and align with a local advisor.
• Have a valuation report prepared with the planned immigration date as the reference date.
• Assess whether transferring the shares to a personal holding before immigration is fiscally favourable (note: it can also work against you).

At the moment of immigration

• Document the change of tax residency (de-registration, new registration, date of physical move and seat relocation).
• Record the financial and operational state of the company on that date (balance sheet, pipeline, contracts).

After immigration

• Apply for a beschikking verkrijgingsprijs (the formal ruling fixing the cost base) with the Dutch tax authority under article 4.36 of the Income Tax Act 2001.
• Retain the valuation report and all underlying documents for the entire holding period plus the additional assessment period.
• Combine where possible with other expat instruments such as the 30% ruling. Note: that scheme has been amended several times since 2024 — always check the current conditions.

How Port Sight Tax can help

At Port Sight Tax we regularly guide DGAs, expats and international entrepreneurs through their move to the Netherlands. An immigration valuation touches on international tax law, fiscal valuation theory, treaty application and procedural tax law — four disciplines we combine on a daily basis. We support you with, among other things:

• Drafting and reviewing a defensible business valuation on the correct reference date.
• Coordination with your foreign advisor on exit tax and step-up.
• Filing a request for the formal cost-base ruling and managing any substantive process with the inspector.
• Broader tax planning around your immigration, including the 30% ruling, residency determination and holding structuring.

Our approach is personal and discreet. We combine deep knowledge of the Dutch substantial-interest regime with international experience, so the step-up works at its maximum not only on paper but also in practice.