On 2 September 2013, the State Secretary for Finance submitted to the parliament a legislative proposal to codify the so-called "compartmentalization" of income derived under the participation exemption regime. The new legislation would be contained in (new) articles 28c and 34b of the Dutch Corporate Income Tax Law 1969 (CITL). The legislation would have retroactive effect to 14 June 2013. Transitional measures are also provided for cases where the treatment of share income changes from taxable to exempt (or vice versa) before that date. The proposed article 28c of the CITL, which covers the compartmentalization reserve itself, is structured as...