Pursuant to the statement declared by state officials on 29 May 2020, the Dutch Government plans to introduce a withholding tax on dividends paid to low-tax jurisdictions starting in 2024, as being another action plan within the scope of the fight against tax avoidance. It is informed that the measure would apply to dividends paid to countries on blacklist or with corporate income tax rate below 9%.
Netherlands has already announced that a conditional withholding tax on interest and royalty payments to low-tax countries will be implemented in 2021.
The Dutch blacklist (lastly updated on 30 December 2019) composed of following countries:
Anguilla, Bahama's, Bahrein, Barbados, Bermuda, British Virgin Islands, Guernsey, Isle of Man, Jersey, Cayman Islands, Turkmenistan, Turks- and Caicos Islands, Vanuatu and the United Arab Emirates.
In addition to Dutch blacklist, there is another list announced by European Union, officially known as 'EU list of non-cooperative tax jurisdictions'. The EU list is composed of following countries:
American Samoa, Cayman Islands, Fiji, Guam, Oman, Palau, Panama, Samoa, Seychelles, Trinidad and Tobago, U.S Virgin Islands, Vanuatu.
As known, The Netherlands has currently applying a local rate of 15% withholding tax on outgoing dividend payments to non-residents, which the government tried to abolish in the year of 2018 prior to withdrawal of the draft law due to the strong local opposition. This step-back had been a fall of expectations of the multinationals, in whose structures Dutch companies play a significant role in reaching out a tax-optimal structure.
It is indicated that the proposed dividend withholding tax measure would also be applied in low-tax countries that have a tax treaty with the Netherlands, but the details have not been finalized yet. The Dutch government indicated that the intention to finalize this dividend withholding tax measure as of the end of March'21.
As per information provided by Government officials, total payment in the nature of dividend, royalties and interest flowed through the country to low-tax jurisdictions amounted to EUR 37billion in 2018.
State Secretary for Finance Hans Vijlbrief underlined that "Financial flows channelled from or through the Netherlands to another country where they are not or not sufficiently taxed, will soon no longer go untaxed". Such measures in the world's one of the most popular holding jurisdictions would lead to an inevitable review on the actual international structures and upstream dividend flows.
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