• Service: Tax, International Tax
  • Type: Regulatory update
  • Date: 2/12/2014

Netherlands - Dividends withholding tax when companies located on Curaçao  

February 12:  The Advocate General of the Court of Justice of the European Union (CJEU) issued an opinion in two joined cases that involve profit distributions made by Dutch companies to their parent companies that are residents of Curaçao.

At issue was a dividend distribution made by a Dutch company to a 100% parent company (a public limited company incorporated under Netherlands Antilles law and established on Curaçao) from which the 8.3% dividend withholding tax was withheld and remitted pursuant to the Dutch tax rules (Belastingregeling voor het Koninkrijk).

In both cases, the parent companies asserted that the dividend withholding tax liability was contrary to the free movement of capital standard under the EU Treaty (that is, subject to certain conditions, the standard also applies to capital transactions from and to third countries).

It was claimed that the withholding exemption that applies if the dividend is paid to a Dutch or EU parent company could possibly also apply to a parent company resident in the former Netherlands Antilles. In both cases, this argument was rejected by the Haarlem District Court and the Amsterdam Court of Appeals.

The Advocate General of the CJEU issued an opinion advising the CJEU to conclude that the 8.3% tax is not permissible in every situation.

Read a February 2014 report prepared by the KPMG member firm in the Netherlands: Important advice by Advocate General at CJEU on the dividend withholding tax on dividends distributed to a parent company resident on Curaçao

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