Newly proposed tax measures to improve the Dutch investment climate

8 November 2018

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On 15 October 2018, the Dutch government announced alternative tax measures aimed at improving the investment climate as a result of maintaining the dividend withholding tax.  The government earlier announced to abolish the dividend withholding tax. Recent developments led to the decision to abandon this politically controversial proposal.

In relation to this, the earlier proposed new conditional withholding tax on dividends to entities in low tax-jurisdictions will be reconsidered. The government will analyse the possibilities of integrating this conditional withholding tax with the existing withholding tax on dividends.  As a result, the implementation of this conditional withholding tax on dividends will be postponed. However, the conditional withholding taxes on interest and royalties to entities in low tax-jurisdictions are still expected to come into force as of 1 January 2021.

The new proposal includes the following important measures:

  • The higher Dutch corporate income tax rate will gradually reduce from 22.25% to 20.5% in 2021. The rate for 2019 will remain 25% and will not be reduced to 24.3% as proposed.
  • The lower Dutch corporate income tax rate will gradually reduce from 16% to 15% in 2021.
  • The proposal for the reduction of the term of the 30% ruling for expats with 3 years remains unchanged as of 1 January 2019. Nevertheless, a grandfathering rule will be introduced for existing cases that would end in 2019 or 2020.

Author: Erik de Ruijter, HLB Van Daal, HLB Netherlands

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