In the ECJ's decision in Commission v. Netherlands (C-301/11) of the 31 January 2013, the ECJ held that the exit tax on unrealized gains on companies and entities redomiciling from the Netherlands is in breach of the freedom of establishment. This decision was delivered in the case European Commission vs Netherlands and draws of the proportionality test set out in the ECJ's decision in National Grid Indus reported in this website (National Grid Indus v. Inspecteur van de Belastingdienst Rijnmond, C-371/10).
The ECJ deemed the Dutch exit tax a violation of that freedom in , The ECJ held that while an exit tax may be justified to ensure a balanced allocation of taxing rights between Member States, the immediate imposition, under Dutch law, of an exit tax is disproportional. The tax is triggered by reason of the shift of a businsess' place of management from the Netherlands to another (including another MS or EEA country) and is charged on the unrealized profits attributable to that business. The exit tax rules apply both to legal entities and to individuals that relocate their businesses' place of effective management from the Netherlands to another jurisdiction. Following the National Grid Indus decision, the Dutch Parliament had already passed a bill providing for a deferral of the tax – this bill requires the approval of the Dutch Upper House and is expected to enter into force this year and have retroactive effect as from 2011.
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