Netherlands reverses plan to abolish dividend withholding tax, offers new proposals to attract MNEs

by Tim Mulder and Robin Theuns, DLA Piper Nederland N.V.

Following a fierce political and public debate, the Dutch government on October 15 announced that it would no longer recommend abolishing the Dutch dividend withholding tax.

At the same time, the Dutch government amended previous proposals that are part of the 2019 Dutch Tax Budget to further improve to the Dutch investment climate.

The amendments presented by the Dutch government relevant for internationally operating companies with a Dutch company in their corporate structure are:

• A reduction of the corporate income tax rate from 25% to 20.5% by 2021.
• Change of the effective date of the proposed emergency reparatory legislation for the Dutch fiscal unity regime to January 1, 2018, instead of October 25, 2017, as initially proposed.
• The reduction of the term from 8 years to 5 years for the so-called 30-percent facility for certain expats will remain; however, a new transitional measure would maintain the facility for employees whose facility would end in 2019 or 2020 as a result of the reduction in term.

Considering these amendments, the Dutch investment climate will remain attractive and will even become more attractive for a larger group of multinationals.

The new proposals must still be approved by Dutch Parliament. Consideration of the proposals will take place during the next two months.

–Tim Mulder is a Dutch tax adviser at DLA Piper and can be reached at [email protected]; Robin Theuns is a Dutch tax adviser at DLA Piper and can be reached at [email protected].