On May 16, 2017 the Dutch Government published a draft law that introduces the obligation to withhold withholding taxes for so-called houdstercoöperaties (holding co-operatives). The Dutch Government invites interested parties to provide their feedback on the draft law. The deadline for submitting submissions for this consultation is June 13, 2017.

Dutch NV’s and BV’s have to withhold dividend withholding tax over the dividend distributions they make (under conditions). Under current Dutch law such an obligation does not exist for co-operatives. Not even if such a co-operative acts as a holding co-operative in international structures.

The Dutch Government describes the purpose of the draft law as follows:

“In order to prevent improper use and to better combat abuse, holdings co-operatives will be obliged to withhold dividend withholding tax over the proceeds from qualifying membership rights. In addition, the aim is to achieve a more equal treatment for the application of the withholding exemption for co-operatives and capital companies. As a result, in the case of a direct distribution of profits to a shareholder which is a resident of a non-treaty country, dividend tax can always be withheld regardless of whether the distribution is made by a holding co-operative, NV, BV, or any other capital company.”

For doing so the underlying draft law intends to make amendments to Articles 17 and 25 of the Dutch corporate income tax Act and to Articles 1, 3 and 4 of the Dutch dividend withholding tax Act.

The draft law defines holding co-operatives as a co-operative which activities in the year prior to the moment on which the proceeds are being distributed have consisted for at least 70% out the holding of participations as meant in Article 13 of the Dutch corporate income tax Act and/or the directly or indirectly financing of related entities or individuals.

A qualifying membership right exists if that membership right (whether or not together with the membership rights of certain other members of the co-operative) entitles the member to at least 5% of the annual profits of the co-operative or to at least 5% of the proceeds to be distributed if the co-operative is being liquidated.

The aim of the Dutch Government seems to be to have the final law to enter into force on January 1, 2018.

Click here to be forwarded to the website of the Dutch Government where more information on this publication, as well as links to the consultation documents (draft law and an explanatory memorandum), can be found.

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