On 19 September 2017, the Dutch Secretary of State published proposed legislation for the Dutch Dividend Withholding Tax (DWT) Act. The legislation contains significant changes for Dutch Co-operatives (Co-ops) as well as a new general exemption from DWT. It will be brought to Dutch congress during the autumn of 2017 and is likely to take effect on 1 January 2018.
The proposed new legislation impacts all Dutch holding structures. This means that each structure should be carefully examined to explore the impact, specifically assessing the most favourable timing of dividend/profit distributions before or after 1 January 2018.
The proposal introduces a new, broadened unilateral DWT exemption for all Dutch resident entities who are subject to Dutch DWT. This includes BV/NV and (Holding) Co-ops with qualifying membership rights. The anti-abuse rules within this new legislation are in line with the principal purpose test as provided in the OECD BEPS project.
Also, on 10 October 2017, the new Dutch Government Coalition agreement presented plans for 2019 and beyond. The coalition agreement states that the Dutch DWT will be abolished, most likely on 1 January 2019. The CIT rate in 2019 will drop in phases to 16% on the first €200,000 of profit and to 21% on profit exceeding €200,000.
Furthermore, the plan is that from 2019 interest and royalties on outgoing transactions to low tax jurisdictions will be taxed. The exact scope and impact of these new withholding taxes will be under discussion during the next few months.
Tax planning on dividends and profits distributions will therefore need to be examined on a case by case basis.
It is highly recommended that Dutch Holding companies with members that are non-residents of the EU or has its business seat in a country that has no tax treaty with the Netherlands, give these matters immediate attention.
Should you wish to discuss any aspect of the above, please contact: