Tax Lawyers / Fiscalisten

Thursday, 22 December 2016

Further clarifications published on proposed amendments to Dutch dividend withholding tax act

In addition to our recent news alert in relation to the proposed amendments to the current Dutch dividend withholding tax position of Dutch Cooperatives (currently not being subject to Dutch dividend withholding tax) and BVs/NVs, we hereby provide you with an update based on last week’s letter from the Dutch Deputy Minister of Finance.

Holding cooperatives become subject to Dutch dividend withholding tax

Holding cooperatives become in principle subject to Dutch dividend withholding tax. A definition of ‘holding cooperative’ will be included in the law and defined as ‘a cooperative which activities mainly (>70%) consist of holding shares in participations or directly or directly financing related parties and persons. However the obligation to withhold only applies to qualifying members, i.e. members that have an interest of 5% or more in these (international) holding cooperatives. So-called real cooperatives (i.e. cooperatives not qualifying as holding cooperatives) should not be affected by the proposed amendments and distributions by these real cooperatives remain not subject to Dutch dividend withholding tax.

The future anti-abuse provisions, contrary to the current anti-abuse provision, will no longer be focused on the obligation to withhold for Cooperatives but will be included in the exemption to withhold for both capital companies as well as holding cooperatives in treaty situations

Extension of the Dutch dividend withholding tax exemption to treaty situations

For both holding cooperatives and BVs/NVs, the current withholding exemption for participation dividends under the Parent Subsidiary Directive (i.e. for parent companies within the EU/EEA with an interest of 5% or more) will be extended to parent companies established in countries with which the Netherlands has concluded a full double tax treaty. It is proposed, in both the event of a holding cooperative (with qualifying members) and capital company, to levy dividend withholding tax in non-treaty situations.

Based on the afore, it is the intention of the Netherlands to achieve that in treaty situations the exemption of dividend withholding tax applies on dividends distributed to corporate shareholders owning 5% or more, except for abusive situations. Therefore, a principal purpose test (or similar test) will be included in the provisions.

The Dutch government intends to publish a proposal for draft legislation during the first half of 2017.

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