- Proposed Changes to Dutch Dividend Withholding Taxation
- September 30, 2016 | Authors: Suzanne Hop; Reinier van de Steenoven; Thomas van der Vliet
- Law Firms: Greenberg Traurig, LLP - Amsterdam Office; Greenberg Traurig, LLP - New York Office
Currently, dividend distributions from corporations such as NVs and BVs that are residents of the Netherlands are generally subject to a 15 percent Dutch dividend withholding tax. This rate may be reduced under an applicable tax treaty. A Dutch cooperative is, however, not subject to Dutch dividend withholding tax on profit distributions to its members, except in so-called abusive tax structures. This difference in tax treatment has been a topic of discussions within the Dutch government for some time now.
Last week, the Dutch Ministry of Finance sent a letter to the Dutch Parliament containing proposals to eliminate the difference in tax treatment of (i) corporations and (ii) cooperatives. This letter is not yet a legislative proposal and is likely to be followed by a draft bill. The Ministry of Finance aims for the changes to become effective as of 1 January 2018, at the latest.
The letter holds two proposals:
1. It is proposed that Dutch resident corporations such as NVs and BVs will also be exempt from Dutch dividend withholding tax, if:
- such corporations are part of an active business structure;
- the parent company receiving the distribution owns an interest of at least 5 percent; and
- the parent company receiving the distribution is a resident of a country with which the Netherlands has a tax treaty.
- such cooperatives are part of an active business structure; and
- the member receiving the distribution is a resident of a country with which the Netherlands has a tax treaty.
We will closely follow further developments in relation to this suggested legislative change and will keep you up to date on any more definitive changes.