The proposal was already announced some time ago (see our previous Tax Flash) and is a re-introduction of a previous proposal that was never adopted (see our 2018 Tax Flash). The current proposal includes less restrictive measures than the previous proposal.

The proposal entails an additional withholding tax on dividend payments to certain low-taxed jurisdictions and/or jurisdictions included on the EU-blacklist (jointly referred to as LTJs). Contrary to the existing dividend withholding tax (DWT), the additional withholding tax (the Additional WHT) would only apply in relation to dividends to shareholders that have a “controlling interest” (in general: >50% of the voting rights). Furthermore, the Additional WHT will apply to payments by all cooperatives (currently only distributions by so-called holding cooperatives are subject to DWT). The Additional WHT will in principle only apply to direct dividend distributions to LTJs, although there are certain exceptions (e.g. in situations considered “abusive” or for payments to hybrid entities). The rate of the Additional WHT will be the main corporate income tax rate (currently: 25%).

Three important changes have been included compared to the previous proposal:

  • In case Additional WHT is due, DWT on the same distribution may be credited.
  • Repayments of share capital and share premium are, subject to certain conditions, not subject to the Additional WHT.
  • Capital gains are not covered by the Additional WHT.

The draft proposal is open for consultation until 23 October 2020. The formal legislative proposal is expected in Q1 2021.


We will keep you updated on further developments. Should you have queries, or would you like us to assist you in submitting a response to the consultation document, please contact your trusted adviser at Loyens & Loeff.