Tax treaty between the Netherlands and Ethiopia ratified by the Netherlands
15 July 2014
The Netherlands and Ethiopia signed a tax treaty in 2012. The Netherlands ratified this treaty on 14 June 2014.
The main features of the tax treaty are:
The general withholding tax rate regarding dividends amount:
- 10% of the gross amount of the dividends in case the company paying the dividends is a resident of Ethiopia;
- 15% of the gross amount of the dividends in case the company paying the dividends is a resident of the Netherlands;
- 5% of the gross amount of the dividends, if the beneficial owner of the dividend is I) a company which is a resident of the other state and holds directly at least 10% of the capital of the company paying the dividends or II) a pension fund.
The general withholding tax rate regarding interest is 5%. The general withholding tax rate is reduced to 0% if interest payments are made to the government, a local authority or the Central Bank.
The withholding tax rate regarding royalties is 5%. No reduced tax rates apply.
Capital gains on shares
Capital gains realized with the transfer of shares may be taxed in the source state.
Capital gains can only be taxed in the residence state of the owner of the shares owns less than 50% of the transferred shares, the capital gains on the shares is a result of a reorganization, merger, demerger or similar transactions.
Emigrated substantial shareholders
States could still tax dividend payments to substantial shareholders of 10 years after their emigration.
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