Netherlands: Proposed changes to Dutch dividend withholding tax regarding cooperatives

Proposed changes to dividend withholding tax

On "budget day"—20 September 2016—the Deputy Minister of Finance of the Netherlands sent a letter to Parliament with proposed changes to the Dutch dividend tax law. These changes include a withholding obligation for holding cooperatives, and the extension of an exemption for both shareholders and members of cooperatives in active business structures.

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The letter will be followed by a bill, most likely preceded by a public internet consultation, with the changes intended to be effective as from 1 January 2018, at the latest.

In order to prevent improper use and to better address tax abuse, the government intends to require holding cooperatives to deduct dividend withholding tax. Such cooperatives are used in international structures and are involved with the holding of participations, asset investment, and the financing of related entities. Holding cooperatives also often have a limited number of members. 

The government proposes introducing a withholding obligation if a member has an interest of 5% or more in the holding cooperative. For dividend withholding tax purposes, the cooperative would be treated as a company with share capital by equating the membership rights with shares. In active business structures when there is no abuse, a withholding exemption would however apply.

 

Read a September 2016 report prepared by the KPMG member firm in the Netherlands: Proposed changes to Dutch dividend withholding tax regarding cooperatives

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