Copying and distributing are prohibited without permission of the publisher

New Netherlands agreement could open tax planning opportunities

17 December 2013

Matthew Gilleard

Email a friend
  • Please enter a maximum of 5 recipients. Use ; to separate more than one email address.

The Dutch Ministry of Finance has announced that the Netherlands and Curacao have agreed the text of a new bilateral tax arrangement designed to avoid double taxation. The agreement could create new tax planning opportunities.

The agreement will introduce a 0% dividend withholding tax rate on distributions of profits. At present, the lowest dividend withholding tax rate available is 8.3%, but the zero rate will apply to dividends paid to certain active parent companies if they satisfy a limitation of benefits (LOB) clause.

"The dividend withholding tax rate on dividends paid to parent companies that will not qualify under the LOB provision will be 15%," said Marc Sanders of Taxand Netherlands. "However, this rate will be reduced to 5% up to and including 2019 for distributions by companies to their parent companies which hold a minimum interest of 25%. Furthermore, the Netherlands has confirmed that a frequently used structure to eliminate dividend withholding tax between the Netherlands and Curacao through the use of a Dutch Coop will be respected until at least the end of 2014."

While the 0% dividend withholding tax rate could bring about the birth of new tax planning schemes, Sanders points out that the LOB provision to be contained in the agreement is likely to limit those opportunities.

"Curacao was old-school planning in the 1980s and 1990s with a lot of structures through it. The new agreement may resurrect part of that but anti-abuse clauses are included," said Sanders. "So the new agreement will probably not result in a major resurgence of Curacao as a tax planning location but will certainly offer new opportunities."

The agreement – which will also see the countries engage in automatic information exchange – is subject to parliamentary procedures in both countries and is expected to become effective from January 1 2015.

International Tax Review Profile

Thankyou to all firms and others who have sent us Christmas wishes by email, post and in person. We are very gratef…

Dec 15 2017 02:42 ·  reply ·  retweet ·  favourite
International Tax Review Profile

Congratulations on your inclusion, @FabioDeMasi. It's a recognition of the influence you are having on the tax land…

Dec 15 2017 02:30 ·  reply ·  retweet ·  favourite
International Tax Review Profile

RT @EssentiaGlobal: The recently Dutch coalition agreement has confirmed that there will be an increase in the reduced VAT rate from 6% to…

Dec 15 2017 01:03 ·  reply ·  retweet ·  favourite
International Tax Review Profile

RT @PSaintAmans: US and France signing Joint statement @OECD to ensure CBCR information will be properly exchanged #BEPS #tax

Dec 15 2017 12:42 ·  reply ·  retweet ·  favourite
International Tax Review Profile

@iaincampbell07 @hselftax Hi Iain, I'll get someone from our subscriptions team to look into this for you. The…

Dec 15 2017 11:37 ·  reply ·  retweet ·  favourite
International Correspondents