Netherlands Signs Double Tax Treaty With Taiwan

Mary Swire, Tax-News.com, Hong Kong

21 March 2001

After more than 30 years of intermittent discussions, the Netherlands and Taiwan have finally signed a Double Taxation Treaty. At a seminar yesterday in Taipei, Taiwanese Minister of Finance Yen Ching-Chang spoke about the benefits that will flow from the Treaty. 'Most importantly,' he said, 'it will fine tune our tax system so that Taiwan will fit more cleanly into the international community.'

The Treaty was negotiated between the Netherlands Trade and Investment Office in Taipei and the Taipei Representative Office in the Netherlands and it was ratified at the Hague on February 27, 2001. But because of problems with Taiwan's international status, the Treaty does not have the same legal standing as other Double Tax Treaties. Instead, the Netherlands government took powers allowing the Minister of Finance to enact new rules for the avoidance of double taxation on conditions of reciprocity.

"We think profits should only be taxed once," said Dutch official Bart Kosters, "The Netherlands will become an attractive place for Taiwan investors, with no taxation on interest and royalties paid to non-residents." Changes in the Dutch tax code to accommodate the treaty will take effect from 1st January 2002.

"The tax burden will be reduced," said Lotus Wu, Supervisor of Taiwan's Department of Taxation, "however it remains fairly in line with our current tax code. The most important thing is reciprocity, a compromise." In Taiwan the agreement will go into operation sometime in April this year.

The Netherlands is the tenth country to sign a Double Tax Treaty with Taiwan, which says many others are being negotiated. The Netherlands exports more to Taiwan than to any other Asian economy, twice as much as to all of mainland China, and is the biggest European investor in Taiwan. Both countries have highly export-oriented economies.

Dick Bruinsma, visiting Director General for the Netherlands Foreign Economic Relations Bureau, said, "We have a very long history of trade, and continue to earn more than 50 percent of our GDP from exports. Our current relations with Taiwan fit perfectly with our policy of global trade liberalization. The Ministry actively encourages Dutch to invest in Asia."

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