The Netherlands Opens Consultation On Dividend Withholding Tax For Holding Cooperatives

The Dutch Government published a draft law containing new obligation to withhold withholding taxes for so-called holding cooperatives. The Dutch Government invites interested parties to provide their feedback on the draft law.

Holding Cooperatives

A holding cooperative is a cooperative the activities of which consist for 70% or more of holding participations in subsidiaries or directly or indirectly financing related parties. A qualifying participation in a holding cooperative is a participation that entitles the holder thereof to 5% or more of the holding cooperative's annual profits or 5% or more of the holding cooperative's liquidation proceeds.

A Withholding Exemption

The letter of the Dutch Deputy Minister of Finance from December 2016 clarifies the proposed rules saying that holding cooperatives will be brought in scope for Dutch dividend withholding tax purposes. Based on this, members in a holding cooperative will be subject to withholding similar to shareholders in a Dutch company with a capital divided into shares such as the BV or NV. 

Both for cooperatives and companies with capital divided into shares, a withholding exemption will be applicable under two cumulative conditions:

  • The first condition is that the parent company, to which the dividends are distributed, is established in an EU/EEA Member State or in a country with which the Netherlands has concluded a ‘full tax treaty’.
  • The second condition is that there is no abuse involved.

The deadline for submitting submissions for this consultation is June 13, 2017.

Source: Dutch Government, International Tax Plaza, Tiberghien, Stibbe, RSM

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