Netherlands: Update, dividend withholding tax proposal | KPMG | GLOBAL

Netherlands: Update on dividend withholding tax proposal

Netherlands: Update, dividend withholding tax proposal

The Deputy Minister of Finance today addressed concerns of certain members of the Lower House of the Dutch Parliament about a dividend withholding tax proposal.

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The new Cabinet has decided to pursue the bill, in view of state aid risks and the intention to address tax avoidance (the bill is intended to serve as a basis for the new tax on dividends, interest, and royalties paid to low tax jurisdictions and in tax-abuse situations). Thus, it is expected that the parliamentary debate on the proposal would continue, with the dividend withholding tax anticipated to be repealed as of 1 January 2020, except in tax-abuse situations and with respect to dividend distributions to low tax jurisdictions.

Background

The bill concerning the withholding tax obligation of holding cooperatives and for the expansion of the withholding exemption would, if enacted, 

  • Remove the difference in treatment between profit distributions by holding cooperatives (in principle, not subject to dividend withholding tax) and private limited liability companies (BVs) / public limited companies (NVs) (in principle, subject to tax)
  • Extend the withholding exemption in participation situations (now only within the EU/EEA) to treaty situations
  • Align the anti-abuse rules in the Dutch corporate income tax law and the Dutch dividend withholding tax law with EU law (the general anti-abuse rule in the EU Parent-Subsidiary Directive) and treaty anti-abuse provisions (notably the principal purpose test)

 

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

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