The Dutch government has released an attractive proposal to fully exempt withholding tax on dividends paid to non-resident shareholders in treaty countries provided certain conditions are met. Many multinational enterprises should be able to benefit from this exemption. In addition, the proposal brings certain Dutch cooperatives into the scope of the Dutch dividend withholding tax rules.
On May 16, 2017, the Dutch government released a public consultation for the previously announced legislative proposals. The Dutch government intends to have the new changes to the Dutch Dividend Withholding Tax Act (DWTA) enter into force on January 1, 2018.
Expansion of full dividend withholding tax exemption
The Dutch government proposes to expand the withholding tax exemption for dividends distributed by Dutch companies where their non-resident shareholder is an entity that: 1. holds an interest of at least 5 percent in the Dutch company and resides (for tax treaty purposes) in a jurisdiction that has concluded a tax treaty including a dividend clause with the Netherlands. 2. In addition, a new anti-abuse rule will be introduced in the DWTA, according to which the exemption will not apply if: the interest is held with the principal purpose, or one of the principal purposes, of avoiding dividend withholding tax from being levied and 1. the interest is part of an artificial structure or transaction or series of transactions, which will be the case if there is no valid business reasons.
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| Ersin Nazalı Managing Partner, Attorney, SFA |
Mükerrem Yanar Partner, SFA |
Our explanations are not in the nature of a legal opinion and recommendation, rather they contain general information regarding the subject. Therefore, before taking an action about these issues, we recommend you to consult to an expert. No claim of responsibility can be made against NAZALI due to results deriving from the content of the document.