Dutch |
Print| Introduction |
| Dividends |
| Interest and royalties |
| Dutch artist and sportsman tax |
| International tax planning |
| What can we do for you ? |
When you established your business in The Netherlands and you consider repatriating profits, you may question yourself whether withholding taxes become due on dividend distributions. The same question may rise regarding outbound interest or royalty flows.
The Dutch domestic withholding tax rate for dividend distributions, including interest on certain categories of profit participating loans, is 15%. The rate for inter-company dividends is often reduced, in many cases even to nil percent due to application of tax treaties. For an overview of the Dutch treaty rates for dividends we refer to the page Dutch dividend withholding tax rates for dividends. Dividends paid to qualifying shareholders in the EU are - by virtue of the EU Parent Subsidiary Directive - exempt from the Dutch dividend withholding tax.
Dutch tax law contains a special provision for dividends which originate from dividends received from other countries. In short, if a Dutch company re-distributes dividends which have been subject to a foreign withholding tax, the Dutch company is under certain circumstances allowed a credit on the withholding tax which it is supposed to pay over the dividends it declares itself (indirect tax credit). The credit can amount to 3% of the dividend declared.
The repatriating of profits by a Dutch branch to its foreign head office can take place without the levy of dividend withholding tax. Dividend payments to a Dutch branch by a Dutch company (the Dutch branch functions as holding) can be eligible for an exemption of the Dutch dividend withholding tax at the level of the Dutch company.
The Netherlands do not have a withholding tax on genuine interest payments and royalty payments. However, interest payments to a foreign corporations may become subject to Dutch income tax, and sometimes Dutch dividend withholding tax. However, in many cases Dutch tax treaties prevent the Netherlands to exercise this right on taxation.
Dutch taxation over outbound interest can occur as follows;
A "substantial shareholder" relates to a person (or a related group of persons) who directly or indirectly own more than 5% of issued capital. Please note that the percentage of ownership in this context can include options/warrants.
Dutch artist and sportsman tax
A special tax regime applies for foreign artists and sportsman who perform in the Netherlands, for instance to give a concert or to participate in a sport tournament.
Although this special tax regime is technically part of the wage tax levy, in practice it works as a (final) withholding tax for foreign artists and sportsmen.
In most cases the Dutch promoter has the legal obligation to withhold a 20% tax (for special qualifying events 15%). The taxable basis is basically the total remuneration, including costs reimbursements and benefits in kind. Upon request, the taxable basis can however be reduced with qualifying expenses. For effectuating this reduction advance approval from the tax authorities is required.
The 20% tax is in principle the final tax. The artist or sportsman has however the option to file a tax return. Obviously he/she will only do this, if on the basis of the tax return a tax refund can be expected.
Filing a tax return can normally speaking result in a tax refund if:
For more information about the Dutch tax regime for foreign artists and sportsmen we refer to the page Dutch tax regime for foreign artists and sportsmen.
In international tax planning The Netherlands is frequently used because of its sophisticated tax system (see Investing in the Netherlands - Main features of the Dutch tax system), the possibility to conclude tax rulings and its extensive treaty network that in most cases allows for a reduction of withholding taxes on outbound and incoming payments.
Many corporations structured their international operations via a Dutch holding company, structured their finance operations via a Dutch finance company and or their Intellectual Property by using a Dutch royalty company.
For more information about the possible role of the Netherlands in International Tax Planning we refer to the page International Tax Planning.
| Advice on withholding tax issues |
| International tax planning |
| Deal with refund procedures |
| Deal with exemption procedures |
| Preparation and filing of the dividend withholding tax return |
| Negotiation with tax authorities about withholding tax issues |
| Dealing with the compliance to the special tax for foreign artists and sportsmen |