Benin secures favourable taxation rights under a new bilateral agreement with the Netherlands, designed to address the specific needs of developing economies while meeting global BEPS standards. 

RF Report

Benin and the Netherlands signed an income tax agreement in Cotonou on 21 May 2026.

The agreement is aimed at preventing double taxation while strengthening measures against tax avoidance and evasion. The treaty aligns with current OECD/G20 Base Erosion and Profit Shifting (BEPS) standards and incorporates modern international tax practices. Recognising Benin’s status as a developing nation, the agreement includes provisions that allow the country earlier taxation rights compared to treaties with developed economies.

The treaty applies to major income and profit-based taxes in Benin, including corporate income tax, business profits tax, taxes on movable capital income, property income tax, salary income tax, real estate capital gains tax, and withholding tax on payments to non-resident service providers.

For the Netherlands, it covers taxes in both the European Netherlands and the Caribbean Netherlands (Bonaire, Sint Eustatius, and Saba). It includes income tax, wage tax, corporate/company tax, dividend tax, withholding tax, minimum tax, property tax, revenue tax, and government shares from natural resource exploitation profits. Aruba, Curaçao, and Sint Maarten are excluded.

The treaty establishes capped withholding tax rates on outgoing payments, including interest and royalties, allowing Benin to retain source state levies on gross amounts up to agreed maximums. Additionally, a broader permanent establishment clause enables both countries to tax business activities more readily, particularly concerning service provision and insurance operations.

The treaty sets straightforward withholding rates on cross-border payments.

Dividends are taxed at 15% for most beneficiaries, though this falls to 5% if the recipient holds at least 10% of the paying company for a full year, and to 0% for qualifying pension funds.

Interest withholding stands at 10%, but loans issued or guaranteed by either government, along with payments to government bodies and development banks, are exempt.

Royalties are taxed at 10%.

Both nations must complete their respective approval processes before the treaty takes effect. The Netherlands will submit the agreement to the Raad van State for review, followed by parliamentary consideration.

The treaty enters into force on the last day of the month following ratification exchange, applying from 1 January of the following year.