The Dutch Cabinet plans to implement the EU’s FASTER Directive through a new, separate tax act and to offer relief at source for dividends on publicly traded shares.
The Dutch House of Representatives has received a letter from State Secretary for Finance Eelco Eerenberg setting out how the Netherlands intends to transpose Council Directive (EU) 2025/50 of 10 December 2024 (the FASTER Directive). The Cabinet will introduce one standalone tax law rather than amend existing legislation.
Why a new law
According to the letter, the directive does not fit naturally within the General Tax Act (AWR) or the Dividend Tax Act 1965. A dedicated act would place administrative decisions under the AWR’s legal protection framework and keep all collected data covered by statutory tax confidentiality.
What the directive does
The directive aims to make procedures for reducing or refunding excess withholding tax on dividends faster and safer against abuse. Source countries often withhold at domestic rates above the maximum agreed in double tax treaties, and national relief procedures are slow, costly and varied. The directive introduces procedural changes only and creates no new substantive right to relief or exemption.
Its main elements are:
- a Common EU Digital Tax Residence Certificate (eTRC) and national registries;
- fast-track procedures: relief at source, quick refund, or both, alongside a standard refund procedure;
- standardised reporting obligations for financial intermediaries; and
- a European Certified Financial Intermediary Portal, together with rules on penalties and liabilities.
The fast-track requirements are mandatory for dividends, while Member States may choose to apply them to interest.
Policy choices
Eerenberg said the Cabinet had chosen:
- relief at source for dividends on publicly traded shares, with existing Dutch refund mechanisms kept as the standard refund procedure and further improvements to treaty relief procedures to be explored;
- digital tax residency certificates issued per calendar year, in line with long-standing Tax Administration practice, carrying standardised additional information such as all tax treaties by default; and
- indirect reporting, under which certified financial intermediaries report on their own activities and those of other intermediaries in the payment chain.
Four exclusion grounds
To guard against abuse such as dividend stripping, relief at source will not be available when:
- the shares were acquired within five days before the ex-dividend date;
- the dividend is linked to a financial arrangement, such as derivatives, not settled, expired or terminated before the ex-dividend date;
- a full exemption from dividend tax is claimed; or
- a reduced withholding tax rate is claimed that does not derive from a tax treaty.
Timeline and next steps
EU Member States must transpose the directive by 31 December 2028, and the new rules apply from 1 January 2030. A stakeholder meeting and internet consultation will be held shortly, followed by an execution assessment by the Tax Administration. After advice from the Council of State, the Cabinet expects to submit the bill to the House of Representatives around the summer of 2027.
Omnibus Directive
The European Commission has also proposed an Omnibus Directive extending FASTER procedures to the Interest and Royalties Directive and the Parent-Subsidiary Directive, which involve exemptions at source. The Cabinet currently excludes full exemptions from relief at source but will monitor these developments as implementation proceeds.
