The Tax Administration has clarified its position on whether dividends can qualify for a withholding tax exemption under Article 4(2) of the Dividend Withholding Tax Act if they don’t qualify for treaty benefits.
The Dutch Tax Administration has published its position (KG:024:2025:4) on whether a dividend qualifies for the withholding tax exemption under Article 4(2) of the Dividend Withholding Tax Act when it does not qualify for treaty benefits.
Article 4(2) exempts withholding tax on proceeds from shares, profit-sharing certificates, capital contributions, and certain loans if the beneficiary is in a non-EU/EEA state with a tax treaty with the Netherlands covering dividends.
The law does not guarantee a right to treaty benefits for the dividend in question. Treaty benefits may not apply if, for example, ownership percentages for participation dividends or requirements in a ‘limitation on benefits’ or remittance base provision are not met.
A Dutch company distributed dividends to a company in a state with a tax treaty with the Netherlands. However, the dividends were sent to a bank outside the receiving company’s state, so the distribution was not eligible for treaty benefits.
The Tax Administration states that the withholding tax exemption under article 4(2) applies if the beneficiary is in a state with which the Netherlands has a qualifying tax treaty, even if the treaty benefits do not apply to the dividend. Whether there is a right to treaty benefits for the dividend is irrelevant.
