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New Dutch – Japanese Tax Treaty Signed Benefits Investors


For more than 400 years Japan and the Netherlands have had a very good trade relationship. The tax treaty between Japan and the Netherlands is of great importance due to significant inward and outward investment to and from Japan through Dutch companies. Representatives of Japan and The Netherlands have now signed a new treaty to avoid of double taxation in Tokyo. Taxand Netherlands reviews the new treaty and impact on investments going forward.

The new treaty replaces the one concluded between Japan and the Netherlands in 1970. The most important changes of the new tax treaty are that it will significantly reduce the withholding tax rates applicable to dividends and royalties. This will ensure that the Netherlands will remain one of the most important trading partners of Japan. The treaty will also introduce new provisions aimed at preventing tax evasion and abuse of the treaty.

The main changes of the new treaty compared to the current treaty detail:

  • Reductions or exemptions of withholding tax
  • Limitation on benefits
  • Mutual agreement procedure
  • Transfer pricing adjustments
  • Tokumei Kumiai (TK) structures
  • Entry into force

Taxand's Take

The current Dutch - Japanese tax treaty stems from 1970. Given the many Japanese investments in the Netherlands, there is a clear need to update the treaty to ensure that the Netherlands continues to be one of the most attractive investment and holding locations for Japanese multinationals. The proposed new treaty introduces welcome changes to sustain current investment and attract future trading by Japanese companies. Current structures should be reviewed in order to determine whether the new lower withholding tax rates apply and whether the limitation of benefits requirements are met. Current TK structures for investments in Japan may need to be changed once the treaty enters into force. The delay in the ratification procedure in the Netherlands is unfortunate.

Your Taxand contact fir further queries is:
Marc Sanders
T. +31 20 757 09 05

Read the full article and details surrounding the new treaty from Taxand Netherlands here:

Taxand's Take Author