Netherlands: Refund opportunity, dividend withholding | KPMG | GLOBAL

Netherlands: Refund opportunity, dividend withholding tax for non-resident shareholders

Netherlands: Refund opportunity, dividend withholding

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.


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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.

April 2016 policy statement

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.  

  • The policy statement confirms that when comparing the tax burden of non-resident individual taxpayers with the tax burden of resident taxpayers, a reference period of one calendar year must be taken into account. In the comparison, the shares in Dutch companies as a whole must be taken into account. Furthermore, the entire tax-free amount (heffingvrije vermogen) can be deducted. Debts related to the acquisition of the shares, however, are not deducted from the non-resident taxpayer’s shares.
  • In comparing the tax burden of non-resident companies with that of resident companies, only costs that are directly related to the collection of the dividends, such as bank charges, are to be taken into account. The policy statement explicitly states that foreign exchange results and financing costs cannot qualify as costs that are directly related to the collection of the dividends. Also pre-acquisition dividend (meegekocht dividend) and costs that relate to other activities of the non-resident company are not to be taken into account in the comparison.
  • In line with EU case law, the policy statement states that the Netherlands, as source state, will not refund Dutch dividend withholding tax if the apparently discriminatory dividend withholding tax is fully neutralized by the shareholder’s state of residence via a tax treaty credit. Such neutralization can also result from an ordinary credit. According to the policy statement, neutralization can also occur if the shareholder’s state of residence allows any excess credit to be carried forward.
  • Under the Dutch individual income tax law, non-qualifying foreign individual taxpayers are only subject to tax in the Netherlands with respect to a limited tax base. The tax-free amount (heffingvrije vermogen) is not taken into account when determining this tax base. However, the policy statement provides that non-qualifying foreign individual taxpayers with “Box 3 income” (i.e., income from savings and investments such as real estate located in the Netherlands) are to take the tax-free amount into account.

KPMG observation

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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