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Germany – Netherlands Double Tax Treaty

Germany – Netherlands Double Tax Treaty

German businessmen interested in establishing a business presence in Netherlands can benefit from the stipulations of the treaty for the avoidance of double taxation signed between the Netherlands and Germany. The double taxation agreement (DTAwas first signed in 1956, but the representatives of the two states signed a new updated version in April 2012.

The new agreement was established in order to align it with the provisions of the Organisation for Economic Cooperation and Development (OECD). German investors should know that the Netherlands represents the Germany’s largest trading partner and that the tax agreement is favourable for investments; our team of Dutch accountants can provide assistance on the ways in which income taxes are applied to companies. 

Reduced income taxes under the new German – Dutch DTA 

The DTA signed by the two contracting states refers to the taxation of income incurred by tax residents of Germany and the Netherlands

The DTA stipulated, even before the ratification of the new DTA, that the withholding taxes for interest and royalties are set at 0%; the regulation is still applicable. The standard withholding tax for dividends is set out at a rate of 15%, but the new treaty imposed a new provision, referring to the taxation at a rate of maximum 10% for dividends, where the recipient is a Dutch pension fundtax resident in the Netherlands

The new treaty has introduced a lower withholding tax, from the applicable rate of 10% to a smaller value, set out of at 5%, for the participation of a company, which is not incorporated as a partnership; our team of Dutch accountants can offer more details in this sense. 

Provisions of the treaty referring to capital gains 

As a general rule, most of the provisions stipulated under the previous DTA are still applicable, but several changes have been enforced.  The new agreement introduces a new stipulation which refers to real estate rich companies.  

Businessmen interested in receiving more details on the Netherlands – Germany double taxation treaty can receive assistance from our Dutch accounting firm.