In the Dutch Supreme Court's ruling of July 18 2025 in the Belgian holding case, the court confirmed that even where a Belgian holding company meets the Dutch substance requirements and incurs charges from two employees of Belgian group entities, the dividend withholding tax exemption can still be denied if the specific Dutch shareholding cannot be functionally attributed to the Belgian holding company.
However, a recently published knowledge group ruling by the Dutch tax authorities suggests that the anti-abuse rule in Article 4 of the Dutch Dividend Withholding Tax Act 1965 may be less strict than the Belgian case implied.
The Belgian case
The Belgian holding case involved a Belgian holding company that held interests in 17 entities, including a stake in a Dutch entity that in turn invested in a private equity fund. Although the Belgian holding company was deemed to have a business enterprise, the court considered that there was no direct involvement in the management of the Dutch BV and decision-making was ultimately at the level of the shareholders of the Belgian holding company.
The Supreme Court qualified the shareholding in the Dutch BV as a passive investment, meaning the functions of the Belgian holding could not be attributed to the shareholding. The Dutch dividend withholding tax exemption was, as a result, denied.
The knowledge group position
The new knowledge group position published on September 14 2026 provides the following example. An individual is the sole shareholder of X, an entity that is resident in the same jurisdiction as the shareholder. X in turn holds the shares in Y BV, a Dutch company with a business enterprise.
Unlike in the Belgian holding case, X has, per the knowledge group, genuine involvement with its Dutch subsidiary:
A is employed by X and serves as its statutory director, earning a salary of €75,000 per year;
X is involved in strategic oversight of Y BV’s operations;
A sets Y BV’s annual budget and financial targets, and is responsible for the annual accounts; and
X is implied to meet the (other) substance requirements.
The knowledge group concluded that these facts and circumstances, taken together, indicate that no abusive structure exists. The dividend withholding tax exemption may therefore be applied.
One surprising aspect of this publication is that the salary costs of €75,000 fall below the (regular) €100,000 threshold set out in the Dutch substance requirements. However, the knowledge group apparently did not consider this decisive. What mattered was the genuine economic activity and involvement with Y BV.
Key takeaway: functional attribution
The contrast between the outcomes of the two cases highlights that the functional attribution of activities at the level of a shareholder entity to the Dutch subsidiary is key. In the Belgian case, there was a holding company with no involvement in its Dutch shareholding, whereas in the knowledge group publication, there was active involvement.
This suggests that where a foreign holding company can demonstrate genuine strategic and managerial involvement with its Dutch subsidiary, the exemption should remain available even when the substance requirements are not fully met or the remuneration of the employees and directors of the holding company is relatively limited.
For multinationals with Dutch subsidiaries held through intermediate holding companies, the recommendation is to involve the intermediate holding company in decision-making and ensure that this is documented from a burden of proof perspective. In addition, there should be attention to ensuring that the activities of the holding company and the Dutch subsidiary reflect commercial reality.
