The European Commission on October 19 asked the Netherlands to amend the limitation on benefits clause in its tax treaty with Japan.
The treaty, which entered into force on January 1, 2012, inappropriately grants greater benefits to companies that have shareholders resident in the Netherlands or that have shares listed on the Netherlands’ stock exchange than to companies that have shareholders or that are traded in other EU nations, the Commission said.
Entities excluded from the benefits of the tax treaty “suffer higher withholding taxes on dividends, interest, and royalties received from Japan than similar companies with Dutch shareholders or whose shares are listed and traded on ‘recognised stock exchanges,'” the Commission said. Such stock exchanges include the exchanges of some but not all EU nations.
The Commission said it may refer the Netherlands to the European Court of Justice if a satisfactory response is not received within two months.
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