In context

Dutch government gives guidance on dividend withholding tax refund for foreign shareholders

June 15, 2016
In context

The Dutch State Secretary of Finance has issued, in his executive capacity, a decree outlining his views on the Dutch dividend withholding tax refund for foreign corporate and individual portfolio shareholders of Dutch companies. The decree follows the rulings of the Dutch Supreme Court and the European Court of Justice in Miljoen, Société Général and X. For our article about these rulings. click here. The decree allows foreign shareholders under specific conditions to claim a Dutch dividend withholding tax refund. Foreign corporate and individual portfolio shareholders should investigate whether they can claim a Dutch dividend withholding tax refund based on the decree.

The Dutch Supreme Court rulings were silent on a number of important questions regarding how to draw a comparison between domestic shareholders and foreign shareholders. Unfortunately, the decree does not provide a practical and general solution to these unresolved questions either. Rather, it sets out the Dutch State Secretary of Finance’s views on a number of topics, many of which are debatable from an EU law perspective. Hence, this decree may not put an end to pending cases because taxpayers may continue to pursue diverging positions on these topics.


The decree’s highlights include:

  • Each refund request requires a comparative analysis on a case-by-case basis. The decree does not offer fixed refunds to groups of foreign shareholders. The reference period is a calendar year for individual shareholders and a tax year for corporate shareholders.
  • Refunds may be claimed by residents of the EU, the EEA, and third countries that have entered into a tax exchange agreement with the Netherlands.
  • No refund will be provided if the excessive Dutch dividend withholding tax is neutralised in full in the country of residence based on a tax treaty. In the State Secretary’s view, it does not matter that tax treaties typically only provide for an ordinary credit rather than a full credit, as long as the ordinary credit results in full neutralisation in a specific case.
  • For foreign individual shareholders, no debts are taken into account when calculating the Dutch tax that these shareholders would have been subject to had they been taxed as Dutch residents. This is a disadvantage because these debts would otherwise have reduced the Dutch tax liability in the comparative calculation. The tax-free threshold of approximately EUR 25,000 (twice the amount for partners) that applies to Dutch individuals is taken into account, which is advantageous to foreign shareholders. This conclusion follows explicit language in the court rulings.
  • For foreign individual shareholders, only portfolio shares in Dutch companies are taken into account in the comparative calculation. This benefits shareholders that also hold Dutch real estate. If Dutch real estate had been taken into account, it would have increased the Dutch taxation due if the shareholder had been a resident of the Netherlands, leading to a reduction in the refund.
  • For foreign shareholders, no costs and expenses – such as financing costs and negative currency exchange costs – are taken into account in the comparative calculation, except for costs directly related to the collection of dividends. This calculation is required by the court rulings.
  • According to the decree, foreign individual portfolio shareholders must file a refund request within five years after the calendar year in which they received the dividends. Foreign corporate shareholders must file the request within three years after the tax year in which they received the dividend payment.


Unrelated to Dutch dividend withholding tax, the decree also provides that foreign individuals who are subject to Dutch income tax on their Dutch portfolio investments – mainly Dutch real estate – are eligible for the tax-free threshold of approximately EUR 25,000 (twice the amount for partners) even though Dutch statutory tax law does not provide for this. In looking at the ECJ rulings, the State Secretary has concluded – in our view correctly – that Dutch statutory tax law violates the EU treaty freedoms in this respect.

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