The European Commission has formally proposed that the Netherlands should abolish its corporate tax exemption granted to Dutch public undertakings. The Commission says that public companies carrying out economic activities in competition with private companies should be subject to corporate tax as the exemption gives them a competitive advantage which cannot be justified under EU State Aid rules.

While numerous publically owned Dutch corporates cannot avail of the tax exemption available in principle under Dutch Corporate Tax Law, many economic activities by public bodies and many publicly owned companies do avail of the tax exemption. Such companies apparently include the port of Rotterdam and the airport at Maastricht. These companies compete directly with private players in the Netherlands and in the EU Single Market who do not benefit from the same treatment.

The Commission has given the Netherlands one month to agree to amend this tax exemption. Failing an agreement, the Commission may open a formal State Aid investigation.