Exemption from Dutch dividend withholding tax for cooperatives abolished

The state secretary of Finance has announced that he will issue a legislative proposal to abolish the difference in treatment between Dutch cooperatives and other companies (BVs/NVs). Currently, the cooperative is exempt from Dutch dividend withholding tax on its profit distributions, unless the situation qualifies as abuse/avoidance. BVs/NVs are normally subject to Dutch dividend withholding tax on their profit distributions, although exemptions exist for qualifying participating interest (i) within the EU/EEA and/or (ii) due to application of tax treaties. The government finds that there is no reason to continue this difference in treatment.

On so-called Prinsjesdag (third Tuesday in September) the government will issue a legislative proposal to abolish the favourable treatment of cooperatives. The government finds it important that no dividend withholding tax will be due in genuine business links, as is safegarded for BVs/NVs today as described above. Furthermore, the government wants to make sure that the new legislation doesn’t harm the genuine cooperative businesses (e.g. farming cooperatives).

If you make use of a Dutch cooperative, we advise to review your structure taking into account this announcement. Naturally, we would be happy to assist with such a review.

Should you have any further questions or comments, please do not hesitate to contact us.

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Martijn van der Kroon
+31 (0) 6 11 51 03 85

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