Scrapping dividend tax will cost €2bn a year, sources tell the AD

The government’s controversial decision to scrap the tax on dividends will cost the economy €2bn a year rather than the earlier estimate of €1.4bn, the AD reported on Thursday.

That means the treasury will have to find a further €600m to balance its 2020 spending plans, sources have told the paper. The government wants to scrap the tax in 18 months time.

The move to abolish the tax will only benefit foreign firms and was not included in any of the manifestos of the four parties which form the current coalition government.

Prime minister Mark Rutte believes the move may encourage more foreign firms to set up operations in the Netherlands.

Opposition parties, however, have claimed that scrapping dividend tax is an economically unproductive measure and that the government bowed to threats from multinational companies such as Shell and Unilever to move their headquarters out of the Netherlands.

In March Unilever announced it was closing its joint headquarters in London and basing its operations solely in Rotterdam.