Home > Legal articles > Beware: China – Netherlands tax treaty has impact on income as of 1 January 2015
A new double taxation treaty was signed by China and the Netherlands in May 2013 and has been in force since August 2014. Because the new treaty only applies to income received after 1 January 2015, it is only now having a real impact. The aim of the new treaty is to further improve economic ties between China and the Netherlands. The principal means to achieve that aim is to tax dividend distributions by a subsidiary in one country to a parent company in the other country at a reduced rate of 5% if the parent company holds at least 25% in the subsidiary.
The new tax treaty provides a favourable basis for Dutch companies to start or expand activities and direct investments in China. At the same time, the treaty – combined with the Dutch participation exemption regime and extensive tax treaty network – makes the Netherlands a tax-efficient gateway into Europe and the rest of the world for Chinese companies and individuals.
Distinctive features of the new treaty are:
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