Global

Details

  • Service: Tax, International Tax
  • Type: Regulatory update
  • Date: 12/31/2013

Netherlands - Withholding tax on dividends distributed to foreign shareholders 

December 31: The Dutch Supreme Court filed with the Court of Justice of the European Union (CJEU) requests for preliminary rulings in three cases concerning the imposition of Dutch withholding tax on dividends distributed to Belgian shareholders and withholding tax on dividends distributed to a French bank.

Background

Under Dutch tax law, a 15% dividend withholding tax is payable on dividends actually distributed by Dutch resident companies to foreign shareholders. In contrast, a Dutch investor’s shareholding is taxed in box 3 at 1.2% (the deemed fixed return of 4% is taxed at 30%).


Also, Dutch investors are effectively not subject to dividend withholding tax because they can credit the withheld dividend withholding tax or request a tax refund.


The issues involving the French bank case are similar. A French bank is subject to Dutch dividend withholding tax on the dividends it receives. A comparable Dutch bank would be subject to corporate income tax on the dividends it receives. Even though the Dutch tax to which the French bank is subject is lower than that of a comparable Dutch bank, the Dutch bank can deduct its costs.

KPMG observation

The ability of EU Member States to levy withholding tax on dividends paid to foreign shareholders is an issue throughout Europe. By requesting these preliminary rulings, the Dutch Supreme Court is apparently seeking greater clarity on the comparability factor as applied by EU law and how this is relevant to Dutch dividend withholding tax.


Read a December 2013 report prepared by the KPMG member firm in the Netherlands: The Supreme Court requests preliminary rulings on the levying of dividend withholding tax




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