Netherlands: Proposed dividend withholding tax changes | KPMG | GLOBAL

Netherlands: Changes proposed, withholding tax on dividends, interest and royalties

Netherlands: Proposed dividend withholding tax changes

A coalition agreement includes measures for the partial repeal of the Dutch dividend withholding tax and the introduction of a partial interest and royalty withholding tax.

1000

Related content

Withholding tax on dividends

Today’s announcement reveals that the four coalition parties negotiating the coalition agreement for the new Cabinet intend to repeal the Dutch dividend withholding tax (except for in “abuse situations” and in instances of dividend distributions to “low tax” jurisdictions). 

Although the coalition agreement itself does not state when this would be effective, according to the underlying documents, the repeal is set to be introduced as of 2020. 

Withholding tax on interest, royalties

In addition to the proposed (partial) repeal of the dividend withholding tax, a withholding tax on interest and royalty payments made to low tax jurisdictions would be introduced for “letterbox constructions.” These new withholding taxes apparently would be introduced as of 2023. 

What’s next?

The new withholding tax proposals are apparent from the coalition agreement that was presented earlier today by coalition negotiator (informateur) Mr. Gerrit Zalm. It is expected that on 12 October 2017, a final report will be discussed in the Lower House of Parliament and that current Prime Minister Mark Rutte will be appointed as the cabinet formation negotiator (formateur). The new Cabinet will then be assembled and will probably be sworn in during the week of 23 October 2017. The agreement itself does not contain the text of proposed legislation or further explanatory remarks. Consequently, the exact scope and impact of the measures are still unclear.

The “caretaker” Cabinet previously presented a bill on Budget Day 2017 under which distributions by holding cooperatives would, in principle, be subject to dividend withholding tax, while distributions (by capital companies or holding cooperatives) to parent companies established in treaty countries would, in principle, be exempt. At present, it is not known whether this bill, in whole or in part, will be withdrawn. If the bill is not withdrawn, the changes proposed on Budget Day may only be relevant until the measures intended by the new government take effect.

The coalition agreement is not—in essence—expected to affect the substantial interest rules for corporate income tax purposes of non-resident taxpayers or the proposed changes that form part of the bill.

 

Read an October 2017 report prepared by the KPMG member firm in the Netherlands

The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

Connect with us

 

Request for proposal

 

Submit