The current DDWT exemption for EU and EEA shareholders has per 1 January 2018 been extended to third countries where the non – resident shareholder is an entity that has an interest of at least 5 percent in the Dutch company or resides (for tax treaty purposes) in a jurisdiction that has concluded a tax treaty, including a dividend article, with the Netherlands. The dividend article does not necessary has to minimize the dividend withholding tax to 0%.  The extended DDWT exemption may also apply to distributions to a hybrid entity (an entity which is considered transparent in one country and non-transparent in the other).

Hybrid Entity

There are two possible situations:

A hybrid entity is non – transparent for Dutch tax purposes but is transparent under its local tax legislation;
A hybrid entity is transparent for Dutch tax purposes but is non – transparent under its local tax legislation.
We will discuss the application of the DDWT exemption in both situations below.

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