Dividend withholding tax for Dutch cooperatives
A Dutch cooperative is not subject, in principle, to dividend withholding tax on profit distributions. In 2012 rules were introduced by virtue of which cooperatives could be brought within the scope of Dutch withholding tax. This rule aims to prevent that the cooperative is used to avoid dividend withholding tax otherwise payable.
This anti abuse provision is now limited to situations where the member of the cooperative does not hold this investment as a business asset and where the cooperative itself does not have a material economic relevance. Like the changes in the substantial interest regime in the corporate income tax the condition that ‘the investment is not held as a business asset’ is abolished, hence all participations in a cooperative will become subject to the same anti abuse test. As a result the cooperative must withhold Dutch dividend withholding tax if the main objective, or one of the main objectives, of the structure is to avoid taxation and the structure lacks adequate business reasons that reflect the economic reality.back to overview