Dutch government maintains dividend withholding tax

Under current Dutch legislation dividends distributed by Dutch companies to its shareholders are subject to a withholding tax of 15%. On 18 September 2018 the Dutch government released its Tax Plan for 2019. Important measure was the abolishment of this withholding tax. Simultaneously, of a conditional withholding tax on dividends to low tax jurisdictions would be introduced.

Recently the Dutch government has announced to maintain the current dividend withholding tax and to stimulate the investment climate in other ways. The implementation of the conditional withholding tax on dividends to low tax jurisdictions is also postponed.

Instead, the Dutch government has decided to use the funds that were reserved for the abolition of this measure for other tax measures that benefit the investment climate. Most important compensatory measure is the further reduction of the corporate tax rate. The corporate tax rate will gradually be reduced from 25% to 23.9% in 2020 and finally 20.5% in 2021. The 20% rate (for profits less than EUR 200,000) will gradually be reduced to 19% in 2019 to 17.5% in 2020 and to 15% in 2021.