Taxes on dividend and other distributions
Distributions of profits are principally taxable in the Netherlands against 15% dividend withholding taxes. This means that e.g. dividends but also liquidation exceeds from a Dutch resident company may be subjected to withholding taxes in Netherlands. This includes distributions in kind but also interest on “loans” (some loans are from a tax point of view not considered as a loan). Until 2021 there is no Dutch withholding tax on interest and royalties paid by Dutch resident companies.
At least 5%
If the shareholder is in fact another company, established in the Netherlands or in another EU country, that owns at least 5% of the shares in the dividend company, an exemption from filing and dividend taxation may apply. Reach out to us if this is the case. Is (one of) the shareholder(s) located outside the EU there can still be an exemptions in place, however often there are limitations as well, all pursuant to the tax treaty applicable between the respective countries.
Regular dividend taxes: filing within 1 month
In the Netherlands regular dividend taxes need to be paid within a month upon the dividend becomes outstanding or payable. The distributing company is the company liable for the withholding and should file the tax return if necessary, also if effectively no dividend taxes are due. There are a few exceptions in place, for example in case the shareholders are located abroad. If the return gets filed or paid too late, almost always a penalty will follow. If your company is not obliged to dividend taxes but in case you have received a dividend tax form invitation, you need to file the return anyway.
Receiving dividend
A Dutch resident shareholder (natural person) who receives a dividend needs to pay income taxes in box 2. These same dividends will be taxed against 26,25% (rate in 2020). It should be noted though that dividend taxes are withholding taxes. The dividend taxes of 15% withheld, can be settled c.q. deducted so the effective rate remains the box 2 rate. This will be arranged via your annual income tax return (always state both the gross payment and if there has been a withholding already).
Example
You own 100% of the shares in Holding Company B.V. and in 2020, your company makes E1500 taxable profits. These profits are principally taxable against 20% corporate income taxes. Then you decide, in the capacity of director/shareholder to distribute E1000 as dividends. You make up a dividend resolution to confirm this in writing. Following you file a dividend tax return for the amount of gross E1000 and the company withholds E150, to be paid to the Dutch Tax Authorities. The company transfers E850 to you privately. When you file your tax return, you will need to declare E1000 against 26,25%. You pay E112,50 (E262,50 minus E150) as income taxes.
Gross dividend: 1000
min Dividend tax 150-
nett dividend 850
min income taxes 112,50-
total net amount 737,50
Turning point?
Do you want to know if and especially when a (holding) company structure is more beneficial for your specific needs? Following the above it also depends on the combined tax rates. Reach out to us, we are happy to assist you with a calculation or guidance.