Jimmy Cox

The first of January 2018 was the effective date of expansion of the Dutch dividend tax withholding regime. It was also the date of duty notification being imposed regarding the application of the taxation exemption in respect of dividends paid out to non-Dutch based recipients. This blog discusses said newly introduced duty of notification by elaborating on the following themes: “Dividend withholding tax specification”, “Dividend withholding tax exemption conditions”, “Abuse of dividend withholding tax exemption” and “Artificial construction in connection with dividend withholding tax”.

Dividend Withholding Tax Specification

It is compulsory within one month of the dividend payment date to notify the Dutch Tax Authorities accordingly – using the designated “Dividend withholding tax specification” form – where use is being made of the dividend withholding tax exemption. The Tax Authorities use the relevant information in assessing whether the distributing company or holding cooperative has rightly availed itself of withholding exemption. Please note that the tax authorities are authorized to impose default surcharges of up to € 5,278 each for tardy notification or failure altogether to effect notification, as well – worse still – as negligence penalties for intent or gross culpability, in amounts of up to 100% of the outstanding taxes. (Whether or not the tax service’s practice in this respect is entirely EU proof remains to be seen. Then again the institution of proceedings to find out can be a costly affair.)

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Jimmy Cox _ Dividend Withholding Tax Exemption

The first of January 2018 was the effective date of expansion of the Dutch dividend tax withholding regime. It was also the date of duty notification being imposed regarding the application of the taxation exemption in respect of dividends paid out to non-Dutch based recipients. This blog discusses said newly introduced duty of notification by elaborating on the following themes: “Dividend withholding tax specification”, “Dividend withholding tax exemption conditions”, “Abuse of dividend withholding tax exemption” and “Artificial construction in connection with dividend withholding tax”.

Dividend Withholding Tax Specification

It is compulsory within one month of the dividend payment date to notify the Dutch Tax Authorities accordingly – using the designated “Dividend withholding tax specification” form – where use is being made of the dividend withholding tax exemption. The Tax Authorities use the relevant information in assessing whether the distributing company or holding cooperative has rightly availed itself of withholding exemption. Please note that the tax authorities are authorized to impose default surcharges of up to € 5,278 each for tardy notification or failure altogether to effect notification, as well – worse still – as negligence penalties for intent or gross culpability, in amounts of up to 100% of the outstanding taxes. (Whether or not the tax service’s practice in this respect is entirely EU proof remains to be seen. Then again the institution of proceedings to find out can be a costly affair.)

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Jimmy Cox On Taxes In The Netherlands

According to a majority of the members of the European Parliament, the Netherlands is, just like Malta, Cyprus, Ireland and Luxembourg, a fiscal paradise and it is demanding (without any underlying jurisdiction, incidentally) that the European Commission place these five countries on its list of tax havens.  This list is, of course, is more akin to a pillory than an honor roll.

Does the Netherlands merit being designated as a tax haven?  Most inhabitants of the Netherlands would not experience this as being the case; after all, the VAT on shopping, for crying out loud, has increased by 50% this year alone, and the highest bracket in income taxation (over EUR 68,508) remains at 51.75%:  a solid deduction indeed.  It is true that taxation on company profits has decreased from 20 to 19%, but this latter figure is still considerably higher than in Ireland (12.5%) or Bulgaria (10%), for example.  Furthermore, companies making profits higher than EUR 200,000 continue to pay 25% over this threshold.

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