On 16 May 2017, the Dutch Secretary of Finance released a draft legislative proposal regarding changes to the Dutch dividend withholding tax rules for holding cooperatives and BVs/NVs (the "proposal"). The proposal – subject to public consultation until June 13, 2017 – is largely in line with the dividend withholding tax changes already announced in the letters of the Dutch Secretary of Finance to Dutch Parliament in September 2016 and December 2016. The proposal contains some new aspects in addition to the letter announced earlier. The final version of the proposal is expected to be submitted to Dutch Parliament in September 2017 and could then enter into effect as per 1 January 2018.
In relation to cooperatives, under the proposal only distributions by holding cooperatives will become subject to dividend withholding tax at the standard 15% rate in the same way as distributions by limited liability companies such as the B.V., unless the proposed (extended) exemption from dividend withholding tax applies.
The dividend withholding tax exemption applies in case of qualifying participations in holding cooperatives and limited liability companies that are part of an active business enterprise of the shareholder/member and not abusive, provided that the shareholder/member is located in an EU/EEA or tax treaty jurisdiction. Shareholders/members located in jurisdictions that are not EU/EEA jurisdictions and with which the Netherlands has only concluded a treaty on the exchange of information or a treaty that does not contain a dividend provision, do not qualify for purposes of the proposed dividend withholding tax exemption.
To avoid tax driven structures without substance in the applicable jurisdictions, the proposal introduces anti-abuse rules. As the implications of this anti-abuse rules can be substantial, we advise to discuss the possible effects with your tax advisor.