The dividend tax in Netherlands is a direct tax levied on those who – directly or through certificates – are entitled to the proceeds of shares, profit shares and loans of a public limited company, private limited company, limited partnership and other companies whose capital is wholly or partly divided into shares.
In the Netherlands, the dividend tax is regulated by the Law on the taxation of dividends issued in 1965. The Law on dividend 1965 (abbreviated DB Act 1965) regulates the dividend income and taxation system that the Dutch government raises regarding income from shares (and similar rights) in companies established in the Netherlands. The rate for the dividend tax is proportional and is 15% of the proceeds, regardless of the amount of the dividend. Our Amsterdam accountant can give you more details about this type of tax.
Each individual or legal person must pay the amount of the tax return within one month after the day on which the dividend is made available. In opposite, any foundation, association or other legal entity exempted from corporate tax can get the Dutch dividend tax withheld back. This can not be applied in case of participation dividend and the dividend tax withheld on dividends participation can only offset your income tax purposes.
The law provides that, in certain situations, there can be obtained a (partial) exemption from the dividend tax in Netherlands. As a company, having 5% or more shares in another company, is considered participation in that company’s shares. This can also be a holding of less than 5%, as the parent company’s shares are not used as an investment. In these case, there is an exemption applied for the dividend tax. The company paying the dividend gives relief to the dividend declaration or deduct the dividend tax withheld on income tax purposes.
The dividend tax in Netherlands shall not exceed 7.5 % if the dividend is received by a company which is wholly or partly divided into shares and which is a resident of other country and at least 25 % of the nominal capital of the company making the dividend is payable. However, the tariff rate previously mentioned can not be more than 5 % if the dividend in the country in which the company activates as a resident is subject to a tax on profits at a rate of at least 5.5%.
The state also charges another tax, separate from the Dutch dividend tax, which consists in 1.2% per year, applied as a flat tax on the total value of the savings and investments. However, this percent is included in the income tax, as a 30% tax on a fixed assumed yield of 4% of the value of the assets.
There are also deductions offered in the Netherlands for the amounts invested in approved green investments.