A policy statement from the Ministry of Finance clarifies how the Dutch tax authorities will deal with requests by non-resident shareholders for a refund of Dutch dividend withholding tax. In addition, non-resident individuals who own real estate in the Netherlands may also benefit from this treatment because they will now be entitled to the tax-free amount.
The policy statement (DGB 2016/1731M, published 29 April 2016) provides the government’s position following the Dutch Supreme Court’s decision in the Miljoen, X, and Société Générale cases.
The three cases concerned the Dutch dividend withholding tax levied on dividends distributed to foreign shareholders (two Belgian individuals and a French bank) that all held portfolio shareholdings in a Dutch company. The Dutch Supreme Court asked the Court of Justice of the European Union (CJEU) for a preliminary ruling, and following that ruling of the CJEU in September 2015, the Dutch Supreme Court held in March 2016 that the Dutch dividend withholding tax amount to a restriction of the free movement of capital to the extent that the dividend withholding tax burden of foreign shareholders was greater than the individual or corporate income tax burden of non-resident shareholders owning the same shares.
The policy statement provides rules for regulating the treatment of refund requests filed by non-resident taxpayers, for the refund of dividend withholding tax levied in breach of EU law. In order to determine whether such refunds are to be made, a comparative analysis is to be made on a case-by-case basis. In this analysis, a comparison is to be made between the tax burden of the non-resident shareholder on the dividends received from their Dutch portfolio shares against the tax burden of a hypothetical resident shareholder whose assets would only consist of the shares held by the non-resident taxpayer.
Based on the policy statement, non-resident shareholders that own portfolio shareholdings in Dutch companies and non-resident individuals of the Netherlands who own Dutch real estate need to review their tax position to determine whether they could apply for a (partial) refund of Dutch tax. This refund can be claimed upon request for the past five years (for non-resident individual taxpayers) or three years (for non-resident non-individual taxpayers) and must include detailed information.
Read an April 2016 report prepared by the KPMG member firm in the Netherlands: New policy statement on requests for the refund of Dutch dividend withholding tax and personal income tax on Dutch real estate
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