• Service: Tax, Global Compliance Management Services, International Tax
  • Type: Regulatory update
  • Date: 6/6/2014

Netherlands - Withholding tax on dividends to Curaçao parent company 

June 6: The Court of Justice of the European Union (CJEU) yesterday rendered its judgment in cases concerning withholding tax imposed on profit distributions made by Dutch companies to their parent companies resident on Curaçao.


The issue in both cases was a dividend distribution made by Dutch companies to their parent companies (both, public limited companies incorporated under Netherlands Antilles law and established on Curaçao), from which 8.3% dividend withholding tax was withheld and remitted pursuant to the tax regulations for the Kingdom of the Netherlands (Belastingregeling voor het Koninkrijk, BRK).

The parent companies argued that imposition of the dividend withholding tax was contrary to the free movement of capital (i.e., under the EC Treaty, the standard also applies to capital transactions from and to third countries). The Dutch high court referred question to the CJEU.

On the basis of this, the withholding exemption should be granted to both parent companies. To obtain assurance about the accuracy of this statement, the Supreme Court submitted a number of questions to the CJEU.

CJEU judgment

The CJEU concluded that restrictions on dividend payments between the European Union and “overseas countries and territories” (OCT), including Curacao, are in principle prohibited.

The CJEU did not, however, examine the free movement of capital argument, but rather looked to the prohibition of restrictions on the movement of capital in the OCT decree—including an exclusion clause that relates to the prevention of tax evasion. By virtue of this clause, the CJEU determined that 8.3% dividend withholding tax may be levied, provided that the tax is indeed intended to prevent tax evasion and that the goal is effectively and proportionately pursued with the 8.3% tax rate.

Read a June 2014 report prepared by the KPMG member firm in the Netherlands: Important decision by CJEU on the dividend withholding tax on dividends distributed to a parent company resident on Curaçao

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