dutch dividend tax act 1965
TRANSCRIPT
Dutch Dividend Tax Act 1965
Jeroen van der LindenMarch 17, 2011
Contents
• Who are subject?• What is subject?• Tariff and exemptions• Dividendstripping
Who are subject
- Who are subject to Dutch dividend tax?
• Those who are entitled to the return of shares in, profit certificates or hybrid loans from Dutch resident:- NV’s, - BV’s, - Open CV’s and - other entities whose capital is divided into shares.
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Who are subject
• Dutch cooperatives are not mentioned in the Dutch dividend tax act, however…
• It should by all means be avoided that cooperatives are compared with “other entities whose capital is divided into shares” on the basis of case law.
2/3
Who are subject
• If the entity was incorporated under Dutch law, it is deemed to be Dutch resident for Dividend tax purposes.
• As a result, Dutch dividend tax claim can remain even if Dutch company was moved abroad.
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Example – deemed residency
Ubo (CH)
Holding BV Curacao
Intermediaty Holding BV
Netherlands
8.3% Dutch div tax
15% or 0% Dutch div tax ?
What is subject
- What is subject to Dutch dividend tax?
• Profits distributions (i.e. dividend);• Permanent share buy back;• Liquidation surplus; and
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What is subject
- What is subject to Dutch dividend tax (Cont’d)?
• Bonus shares;• Repayment of sharepremium in case of profit;• “Interest” paid on hybrid loans.
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Tariff and exemptions
• The Domestic rate is 15% to be withheld by the Dutch company;
• Credit of 3% is available for foreign dividend tax imposed by qualifying subsidiaries.
Example - credit
Holding NV
NA
Dutch BV
Turkish Opco 10% Turkish div tax
8.3% or 5.3% Dutch div tax ?
Tariff and exemptions
- Exemptions apply:
• If recipient can apply the Dutch participation exemption
• If EU recipient could apply the Dutch participation exemption as if he would be residing in the Netherlands
Example - exemption
Luxco owns
100% in Dutch BVLuxemburg holding
company
Dutch BV
Turkish Opco10% Turkish div tax
0% Dutch div tax ?
Tariff and exemptions
- Exemptions apply (Cont’d):
• If paying entity and recipient form fiscal unity;• If recipient is a qualifying investment company or
(green) fund that promotes certain sustainable projects.
Dividendstripping
- What is it? A shareholder
• with no (or limited) right for compensation of dividend tax provides for
• another person to receive the dividend• who does have the right to set off dividend tax• in the exchange for the equivalent of the dividend
Example - dividendstripping
The Netherlands
Abroad
15% dividend
tax
Dividend distribution 100 Dividend tax 15Net 85
Private individual
BV
1/3
Example - dividendstripping
Sale cum dividend 100Net 100
BVThe Netherlands
AbroadSale to
another group
company
Private individual
2/3
Example - dividendstripping
0% dividendtax
The Netherlands
Abroad
100%
Private individual
BV
SRL
3/3
0% dividendtax
Example - dividendstripping
The Netherlands
Abroad
3%
15% dividendtax
Dividend distribution 28 Dividend tax 3,5 Net 24,5
Sale cum dividend 128Repurchase ex dividend 100Net 28
NVThe Netherlands
Abroad
3%
Sale to bank in NL
Dividend
Private individualPrivate individual
NV
Dividendstripping
- Examples of situations whereby dividendstripping can be recognised:
• Sale shares in Dutch listed companies to bank• Lending of shares• Sale and repurchase (call- and putoptions)• Hanging within concern• Intermediate holding company
Example - intermediate holding
NL BV
Canada Ltd
10% dividend taxCyprus Ltd
0% dividend tax
0% dividend tax
NL BV
B CH
15% dividend tax
Example - intermediate holding
Cyprus Ltd
0% dividend tax
0% dividend tax
Dividendstripping
- Measures against dividendstripping:
• Introduction definition beneficial owner• Sanction: reversing reduction or exemption to
domestic tariff of 15%
Dividendstripping
- When is a person not considered to be a beneficial owner?
• Recipient performs a service which is a part of several transactions
• In exchange for the income• Which income will actually be received by the holder
of the restricted right and• This holder keeps its position in the company
Example – beneficial ownership
NA NV
BV
8,3%Malta
0%
0%
Please note;When sanction then 15% DT
NV1
COÖPNV2
NV2 looses it’s current position, consequently no sanction
BVsale
Example – beneficial ownership
Dividendstripping
- Bonafide cases
• Bonafide purchaser on the stock exchange• Bonafide withholding agent (based on declaration
recipient of dividend)• Durable reorganisation combined with an ordinary
dividend distribution
Dividendstripping- Durable reorganisation
• Time between reorganisation and dividend distribution
• Type of dividend distribution• Durableness reorganisation
Safe Harbour: In case of durable reorganisation in combination with an ordinary dividend distribution irrespective of the time between reorganisation and dividend distribution
The End