Dutch Dividend Tax Act 1965

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Dutch Dividend Tax Act 1965

  1. 1. Dutch Dividend Tax Act 1965<br />Jeroen van der Linden<br />March 17, 2011<br />
  2. 2. Contents<br />Who are subject?<br />What is subject?<br />Tariff and exemptions<br />Dividendstripping<br />
  3. 3. Who are subject<br />- Who are subject to Dutch dividend tax?<br />Thosewho are entitled to the return of shares in, profitcertificatesorhybridloansfromDutch resident:<br />- NV’s, - BV’s, - Open CV’s and - otherentitieswhosecapital is dividedintoshares.<br />1/3<br />
  4. 4. Who are subject<br />Dutch cooperatives are notmentioned in the Dutch dividend tax act, however…<br />Itshouldby all meansbeavoidedthatcooperatives are comparedwith“otherentitieswhosecapital is dividedintoshares” on the basis of case law.<br />2/3<br />
  5. 5. Who are subject<br />If the entity was incorporatedunder Dutch law, it is deemed to be Dutch resident for Dividend taxpurposes.<br />As a result, Dutch dividend tax claim canremain even if Dutch company was movedabroad.<br />3/3<br />
  6. 6. Example – deemedresidency<br />Ubo (CH)<br />Holding BV Curacao<br />15% or 0% Dutch divtax ?<br />Intermediaty Holding BV<br />Netherlands<br />8.3% Dutch divtax<br />
  7. 7. What is subject<br />- What is subject to Dutch dividend tax?<br />Profits distributions (i.e. dividend);<br />Permanent sharebuy back;<br />Liquidation surplus; and<br />1/2<br />
  8. 8. What is subject<br />- What is subject to Dutch dividend tax (Cont’d)?<br />Bonus shares;<br />Repayment of sharepremium in case of profit;<br />“Interest” paidonhybridloans.<br />2/2<br />
  9. 9. Tariff and exemptions<br />The Domesticrate is 15% to bewithheldby the Dutch company;<br />Credit of 3% is availableforforeign dividend taximposedbyqualifyingsubsidiaries.<br />
  10. 10. Example - credit<br />Holding NV<br />NA<br />8.3% or 5.3% Dutch divtax ?<br />Dutch BV<br />TurkishOpco<br />10% Turkishdivtax<br />
  11. 11. Tariff and exemptions<br />- Exemptions apply:<br />Ifrecipientcanapply the Dutch participationexemption<br />If EU recipientcouldapply the Dutch participationexemption as ifhewouldberesiding in the Netherlands<br />
  12. 12. Example - exemption<br />Luxcoowns<br /> 100% in Dutch BV<br />Luxemburg holding company<br />0% Dutch divtax ?<br />Dutch BV<br />TurkishOpco<br />10% Turkishdivtax<br />
  13. 13. Tariff and exemptions<br />- Exemptions apply (Cont’d):<br />Ifpayingentity and recipientformfiscalunity;<br />Ifrecipient is a qualifyinginvestmentcompanyor (green) fundthatpromotescertainsustainableprojects.<br />
  14. 14. Dividendstripping<br />- What is it? A shareholder<br />withno(orlimited) right forcompensation of dividend tax provides for<br />anotherperson to receive the dividend<br />whodoes have the right to set off dividend tax<br />in the exchange for the equivalent of the dividend<br />
  15. 15. Example - dividendstripping<br />Private individual<br />Abroad<br />15% dividend<br />tax<br />BV<br />The Netherlands<br />Dividend distribution 100 <br />Dividend tax 15<br />Net 85 <br />1/3<br />
  16. 16. Example - dividendstripping<br />Private individual<br />Abroad<br />Sale to another group company <br />BV<br />The Netherlands<br />Sale cum dividend 100<br />Net 100 <br />2/3<br />
  17. 17. Example - dividendstripping<br /> Private individual<br /> Abroad<br />0% dividend<br />tax<br />SRL<br />BV<br />0% dividend<br />tax<br />100%<br /> The Netherlands<br />3/3<br />
  18. 18. Example - dividendstripping<br />Private individual<br />Private individual<br />Abroad<br />Abroad<br />Sale to <br />bank in NL <br />15% dividend<br />tax<br />3%<br />3%<br />Dividend<br />NV<br />NV<br />The Netherlands<br />The Netherlands<br /> Dividend distribution 28 <br /> Dividend tax 3,5 <br /> Net 24,5 <br />Sale cum dividend 128<br />Repurchase ex dividend 100<br />Net 28 <br />
  19. 19. Dividendstripping<br />- Examples of situationswherebydividendstrippingcanberecognised:<br />Sale shares in Dutch listedcompanies to bank<br />Lending of shares<br />Sale and repurchase (call- and putoptions)<br />Hangingwithin concern<br />Intermediate holding company<br />
  20. 20. Example - intermediate holding<br />Canada Ltd<br />0% dividend tax<br />10% dividend tax<br />Cyprus Ltd<br />0% dividend tax<br />NL BV<br />
  21. 21. Example - intermediate holding<br />B<br />CH<br />0% dividend tax<br />Cyprus Ltd<br />15% dividend tax<br />0% dividend tax<br />NL BV<br />
  22. 22. Dividendstripping<br />- Measuresagainstdividendstripping:<br />Introductiondefinitionbeneficialowner<br />Sanction: reversingreductionorexemption to domestictariffof 15% <br />
  23. 23. Dividendstripping<br />- When is a personnotconsidered to be a beneficialowner?<br />Recipientperforms a service which is a part of severaltransactions<br />In exchange for the income<br />Whichincomewillactuallybereceivedby the holder of the restricted right and<br />Thisholderkeepsitspositionin the company<br />
  24. 24. Example – beneficialownership<br />NA NV<br />0%<br />Pleasenote;<br />Whensanctionthen 15% DT<br />Malta<br />8,3%<br />0%<br />BV<br />
  25. 25. NV1<br />COÖP<br />NV2<br />BV<br />sale<br />NV2 loosesit’scurrentposition, consequentlynosanction<br />Example – beneficialownership<br />
  26. 26. Dividendstripping<br />- Bonafide cases<br />Bonafide purchaseron the stock exchange<br />Bonafide withholding agent (basedondeclarationrecipient of dividend)<br />Durablereorganisationcombinedwithanordinary dividend distribution<br />
  27. 27. Dividendstripping<br />- Durablereorganisation<br />Time betweenreorganisation and dividend distribution<br />Type of dividend distribution<br />Durablenessreorganisation<br />Safe Harbour: In case of durablereorganisation in combinationwithanordinary dividend distribution irrespectiveof the time betweenreorganisation and dividend distribution<br />
  28. 28. The End<br />

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