On December 15, 2021 the Dutch Government opened a public consultation regarding possibilities to strengthen measures to avoid dividend stripping. The Dutch Ministry of Finance is consulting the public regarding 6 alternative measures to more effectively tackle dividendstripping. The consultation will run until Januari 26, 2022.
Main goal of the consultation
The government wants to map out what impact the alternatives will have in practice. In addition, the government says it believes that it is important to use this consultation to offer parties the opportunity to propose alternatives that fit within the preconditions, but that have not yet been identified at this stage. In addition to fiscal measures, this may also include non-fiscal options. Only in this way can a careful assessment be made about the follow-up process.
The six suggested alternatives
The following 6 alternatives are suggested in the consultation document:
1. Introducing the requirement that the party that request a reduction, credit or refund of dividend withholding tax proves that he/she/it has full juridical and economic ownership of the shares;
2. The introduction of a minimum holding period (for example 10 days before and after record date, or a longer period from for example 2-4 months before and after record date);
3. The introduction of a net return/base approach for a dividend tax credit or refund;
4. The introduction of certain documentation requirements;
5. Codification record date; and
6. Expansion with related entities.
Regarding alternative 4
To arrange that only 1 party is entitled to a credit, refund or reduction of dividend withholding tax one can for example think of a system in which:
I. verifiable only one dividend note is issued per dividend payment;
II. it is required that dividend notes are registered with the Dutch tax authorities; and
III. shareholders are obliged to show a dividend note in order to be entitled to a credit, reduction or a refund of dividend withholding tax.
Regarding alternative 6
The introduction of a legal provision that arranges that economic ownership of shares only exists if a person, either indepently, or together with related entities (for example as meant in Article 10a, Paragraphs 4 or 5 of the Dutch corporate income tax Act) posses the full economic ownership of the shares.
In its consultation the Dutch Ministry of Finance raises 14 specific questions.
The consultation document can be downloaded here (only available in the Dutch language).
If you would like to provide your input for this consultation you can do that here on the consultation website of the Dutch Government.
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