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Ashraf Reshamvala

Netherlands Imminent Implementation of Conditional Dividend Withholding Tax

The Dutch Cabinet has contended the current provisions concerning the Dividend Withholding Tax are inadequate and hence proposed the new Conditional Dividend Withholding Tax (WHT) to be implemented from January 1st, 2024.

Companies distributing dividends to shareholders in countries with profit tax rates under 9% or jurisdictions flagged on the EU list of non-cooperative tax territories will be subject to Conditional Dividend WHT irrespective of any pre-existing tax treaties.

The new provision is intended to cover the loopholes of the Regular Dividend WHT, address tax evasion, and prevent the Netherlands from being a channel for the same.

There will be differences between the Regular Dividends WHT and Conditional Dividends WHT. Hence, Conditional Dividend WHT will be considered separately from Regular Dividend WHT for each dividend payment from January 1st, 2024.

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