The Dutch Ministry of Finance has opened a public internet consultation for a legislative proposal amending the Dutch dividend withholding tax act. Basically, all structures in which foreign investors invest in Dutch entities will need to be reviewed to determine what the impact of the proposals will be. Taxand Netherlands explains the proposal.

 

The background of this legislative proposal lies in the different Dutch dividend withholding tax position of Dutch corporate entities. Compared to cooperatives (generally exempt), companies with a capital divided into shares (NVs and BVs) are generally subject to Dutch dividend withholding tax. The current proposal intends to eliminate this difference.

 

The proposed domestic full exemption of Dutch dividend withholding tax will apply if the shareholders/members are active investors and are resident in a jurisdiction with which the Netherlands has concluded a tax treaty (irrespective of the dividend withholding tax rate in that treaty). Dutch dividend withholding tax will however apply in passive investment structures and artificial structures.

The consultation includes a draft Bill and is intended to gather comments by interested parties. The consultation closes on 13 June 2017. After the consultation, a (potentially amended) proposal will be presented to Parliament. The final legislative proposal is expected on Budget Day (19 September 2017) and it is envisaged that the changes will become effective on 1 January 2018.

 

Discover more: Proposal to broaden exemptions of Dutch dividend withholding tax

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Taxand's Take

Current structures involving Dutch entities, and especially cooperatives, should be reviewed in order to ensure that the dividend withholding tax exemption applies. Changes may need to be made to the structure if the shareholders/members of the Dutch entity are located in a non-treaty country or it concerns a passive/artificial structure. It is expected that current rulings (ATR’s) with regard to holding/coop structures will need to be updated in order to reflect the proposed new rules.

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International Tax | Netherlands

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