Non-domestic dividend tax payers

Certain elements of the Dutch dividend tax regime are in breach of European regulations, it has been claimed by the EU judiciary. Although the Dutch regime offers domestic tax payers the option of setting off their dividend tax charges against other outstanding taxes, this option is not nearly as readily available to non-Dutch based Dutch tax payers. This has prompted the EU judiciary to suspect the Dutch Tax and Customs Administration of applying double standards to the detriment financially of those Dutch tax payers who happen to be based outside the Netherlands, resulting – according to the EU judiciary – in “the movement of capital being potentially thwarted”. 

A class action has now been submitted for the scrutiny of the Dutch Supreme Court the plaintiffs in which include French-based Société Générale and a Belgian-based Dutch tax payer. The ruling to date has been as follows: “Where it is established that the movement of capital is being thwarted, this may be justified by the consequences of a bilateral double taxation convention having been entered into between the Member State of residence and the source Member State of the dividends in question, with the proviso that the difference between source Member State residents and non-source Member State residents where it concerns the treatment of taxes being levied on dividends should be undone. It is with due observance of the verifications to be performed by the referring court that as far as the circumstances of cases C‑14/14 and C‑17/14 are concerned, the thwarting of the free movement of capital – in so far as this is to be established as having been the case – would have to be said to have lacked justification.” 

Having already been looked into by the various court echelons in the Netherlands, the matter is now in the hands of the Dutch Supreme Court.