Announcement of proposal law for adjustment of withholding tax on corporate tax
Entities, resident in the Netherlands which are subject to corporate income tax can set off in full withheld (foreign) withholding taxes on dividends (or gambling tax) against the corporate tax payable in the Netherlands in the relevant year. A refund is granted for dividend tax withheld back case of a loss situation.
However, foreign entities in a loss position which are in a similar position as entities subject to corporate income tax in the Netherlands, cannot reclaim the Dutch dividend tax.
Recently, the European Court of Justice ruled in a case, in which two Belgian loss-making shareholders received dividends from France but could not recover the dividend withholding tax, as not in accordance with EU law. The government expects the comparable Dutch scheme to be in conflict with European law. That is why a measure is now being taken. From now on, the settlement of withholding taxes with corporate income tax will be limited to the corporate income tax due in the relevant year. Withholding taxes that cannot be offset, in case of a loss situation, are transferred to a later year for settlement purposes.
In order to avoid situations in defiance with European law pending the change of the Dutch law, a temporary decree will be issued in which the inspector may grant a refund of dividend withholding tax or gambling tax to foreign entities under certain conditions.
Would you like more information on the settlement of withholding taxes in corporate tax? Then contact Vincent Wanningen, senior tax advisor at ABAB International, on telephone number 013-4647209 or send Vincent an e-mail.