It has been an interesting year in the Netherlands from a withholding tax perspective. The legislative proposal for the withholding tax on interest and royalties will enter into force as of 1 January 2021, an additional withholding tax on dividends as of 2024 was announced and a member of parliament proposed to introduce an “exit tax” in the dividend withholding tax for certain cross-border reorganisations.
The Dutch government has focussed on payments from Dutch entities to (perceived) tax haven jurisdictions. Whether such entities have substance is not relevant for the withholding tax on interest and royalties and the proposed conditional withholding tax on dividends. This demonstrates that the Netherlands simply wants to end such payments, irrespective of whether the payments are made for genuine business purposes.
In this edition of Quoted we will discuss the introduced and proposed Dutch withholding taxes using cases and questions that have come up in practice. Each topic will be concluded with a summary containing some practical considerations.