Exemption for Dutch Dividend Withholding Tax
Regarding dividend distributions to a shareholder (company), which is a resident of a country outside the EU/EEA, the exemption for Dutch Dividend Withholding Tax has been broadened. Until January 1st 2018, the exemption, if mentioned in the applicable Tax Treaty, could be accomplished by filing a request to the Dutch Tax authorities. This request had to be filed in accordance with specific Dutch regulations and instructions. This request is no longer needed as of January 1st 2018.
The exemption regarding the withholding of dividend tax on dividend distributions to a shareholder, which is a resident in a country outside the EU/EEA, is now regulated by Dutch Law regarding the dividend taxation. This is an important change compared to previous years, where the exemption could only be realized, by request, if the exemption was mentioned in the applicable Tax Treaty/Tax Convention. The exemption is now effective if the shareholder (a company) holds at least 5% in the distributing Dutch company (a so-called ‘deelneming’). In addition, a Tax Treaty/Tax Convention between the Netherlands and the shareholder’s country, including a paragraph regarding dividend, has to be in place.
Instead of a request in advance, the Dutch company has to inform the Dutch Tax Authorities within a month after the dividend distribution has been made. The company should also state that the exemption has been used rightfully. If this form is not filed in time, a penalty of € 5,278 (maximum) can be imposed by the Dutch Tax Authorities.
The exemption of Dutch Dividend Withholding Tax will be denied in the case of abuse. If the holding company is established with the main purpose, or one of the main purposes, of avoiding Dutch (Income) Tax, and an artificial structure or transaction or a series of artificial arrangements or transactions has been constructed, this is considered abuse.