End to Dividend Tax
The new cabinet will put an end to the dividend tax. This is especially beneficial for foreign companies – and that is also the intention. The new cabinet wants to make it more attractive for foreign companies to settle here. For Dutch companies it saves a lot of administrative red tape.
The ending of dividend tax costs the government annually 1.4 billion euros and must enter into 2019. This amount will be offset by other measures taken by the government for companies.
What is dividend tax?
Companies pay 15 percent tax on the dividend they pay to their shareholders. The dividend recipient can subsequently settle the amount deducted with his assessment. For the sake of clarity: companies in the Netherlands do not receive any money due to the ending of dividend tax. Instead of paying a portion of the dividend they pay to the tax authorities (who later returns to Dutch shareholders via their declaration), they can give the full amount directly to the shareholder. That’s a lot of administrative hassle.
All parties who do not have to pay tax in the Netherlands, and thus can not recover the tax previously collected, by deducting them from their declaration, retain a little more money. These are, for example, foreign companies. Because companies do not have to pay any tax on the dividend, they can simply benefit the shareholders.
And that is also an added benefit for Dutch companies. For foreign parties, this makes it more attractive to invest in Dutch companies. Also, shareholders of a foreign company will be less likely to settle in the Netherlands. Critics want for a long time to end dividend tax, because it would be good for our economy and for an inviting business climate. But ultimately, the only ones who have a financial advantage here have parties who are not taxable in the Netherlands, says fiscal expert Wilbert Wolters. “These include foundations, VBIs, government and foreign parties.”
Like tax on income, a tax on your income tax is a dividend tax on the final tax of eg in the Netherlands, Wolters explains. So much financial benefit does not mean the abolition. “However, it has a huge administrative advantage for Dutch companies.”