Not all members of Dutch Cooperatives become subject to the withholding of Dutch dividend withholding tax. A potential withholding obligation is only introduced for "qualifying membership rights in Holding Cooperatives residing in the Netherlands."
A "qualifying membership right" requires the entitlement to at least 5% of the annual profits of the Cooperative or at least 5% of the liquidation proceeds. For assessing this minimum threshold of 5% not only the membership rights held by the tax payer (member) count, but also the membership rights held by certain related parties (entities or individuals).
A "Holding Cooperative" is defined as a cooperative which actual activity in the year preceding the year in which the profits are distributed, mainly (for at least 70%) consist of the holding of participations or the direct or indirect financing of certain related parties.
In daily practice the introduction of the liability to withhold dividend withholding tax for cooperatives will have limited impact as a consequence of available exclusions (see below), but will at the same time create a significant administrative burden for Cooperatives.
Still excluded from the withholding obligation are (amongst others):
It is noted that regardless the liability to withhold Dutch dividend withholding tax (or the exemption thereof), the Dutch Corporate Income tax Act does provide for an anti-abuse rule which can result in the levy of Dutch corporate income tax from the income (including dividends and capital gains) earned by foreign corporate shareholders of Dutch corporations and/or members of a Dutch Cooperative. Also this anti-abuse rule had been sharpened per 1 January 2018, in particular by the introduction of concrete substance requirements for foreign shareholders. This anti-abuse rule can also apply to foreign members of a Dutch cooperative.