Netherlands: Tax treatment, holding cooperatives | KPMG | GLOBAL

Netherlands: Bill on tax treatment of profits by holding cooperatives

Netherlands: Tax treatment, holding cooperatives

On “budget day” (19 September 2017), a bill presented to the Lower House would repeal the difference in tax treatment when there are profit distributions by holding cooperatives—in principle, not subject to dividend withholding tax—and profit distributions by private limited liability companies (BVs) or public limited companies (NVs) that are, in principle, subject to tax.

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The bill generally reflects a draft bill that was opened for public consultation in May 2017, and if passed and enacted, the bill would be effective 1 January 2018. 

Reason for legislation

The Cabinet has observed that the structure of a cooperative is increasingly being used in international structures, and the bill proposes eliminating the difference in the tax treatment of profit distributions made by BVs/NVs and those made by holding cooperatives, partly in light of the state aid risk. 

A basic assumption is that within the EU/EEA and in treaty situations, no dividend withholding tax ought to be levied in participation structures. Also, tax restrictions within a business structure need to be avoided as much as possible. This is subject to a precondition that real cooperative businesses are not affected.

The measures are in line with a strategy in the Netherlands to take a proactive approach on international tax avoidance and, on the other hand, retain an attractive tax and business climate.

Main features

The bill contains three key elements: 

  • The expansion of the withholding obligation for qualifying interests in holding cooperatives
  • The extension of the withholding exemption to third countries 
  • Bringing the current national anti-abuse provisions in line with EU law and treaty anti-abuse provisions. 

 

Read a September 2017 report prepared by the KPMG member firm in the Netherlands

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