Netherlands: Tax plan 2019 and proposal to replace the dividend withholding tax
On 18 September 2018, Tax Plan 2019 and a bill to abolish the Law on dividend withholding tax were presented to the lower house of the parliament by the Minister of Finance.
This draft Law includes, among others, the following proposals:
- The abolition of the current dividend withholding tax regime as of 1 January 2020.
- The introduction of a new dividend withholding tax at source, as of 1 January 2020 applicable on certain dividends paid to related companies or permanent establishments established in jurisdictions with a statutory profit tax rate of less than 7% or in non-cooperative jurisdictions blacklisted by the EU and in case of an abuse situation.
Related companies are companies receiving the dividends and being considered as having a decisive influence on the business decision of the distributing company (that is, a participation of more than 50% in the capital or voting rights).
The dividend withholding tax rules will also include an anti-abuse provision.
The proposed tax rates for this new dividend withholding tax will be the same as those proposed for the corporate tax, that is 23.9% for 2020 and 22.25% for 2021.
- The government also intends to introduce a tax at source on interest and royalty payments, as of 1 January 2021 comparable to the one proposed for the dividend payments.
This Tax Plan 2019 is subject to changes until its final approval by the Dutch Parliament.
We continue to monitor the situation and will provide further information as it becomes available.
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