The bill introducing an additional withholding tax on dividend flows to low-tax countries from 2024 was submitted to the House of Representatives at the end of March 2021.
With the additional withholding tax, dividend payments to countries that levy too little or no tax are taxed by the Netherlands. The measures will apply to dividend flows to countries with a corporate tax rate of less than 9% and to countries that are on the European Union’s list of non-cooperative jurisdictions for tax purposes.
State Secretary Vijlbrief of the Ministry of Finance: “The Netherlands has made a major turnaround this cabinet period when it comes to tackling tax avoidance. Withholding tax on interest and royalties is one of the main measures. This tax will also apply to dividends. Financial flows channeled from or through our country to another country where they are not taxed, will no longer go untaxed. It is now important to make even better agreements on this internationally to prevent tax avoidance through other countries. The Netherlands can take on a leading role in this aspect over the coming years.”
The withholding tax is in addition to the withholding tax on interest and royalties that entered into force on 1 January 2021. The bill that has now been tabled to House of Representatives has been designed in the same way. The measure will take effect from 2024 so that the Tax And Customs Administration has enough time to prepare.
These measures aim to address a flow of money to low-tax countries. The Dutch Central Bank estimated this amount at 37 billion euros in 2018. The government expects that with this bill there will no longer be dividend flows from the Netherlands to countries with a low tax rate. Therefore, no revenue has been estimated.
Income flows from the Netherlands to low-tax countries are monitored annually. In 2023, an initial impact measurement of withholding tax on interest and royalties can be made on this basis.