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Netherlands To Keep Dividend Tax

by Ulrika Lomas,, Brussels

19 October 2018

The Dutch Government has decided to cancel the proposed elimination of the dividend tax and provide for a larger reduction in the rate of corporate tax, according to an announcement by State Secretary for Finance Menno Snel on October 15, 2018.

The proposal to abolish the dividend tax and introduce a withholding tax on dividends paid to low-tax jurisdictions and in situations where the tax system is being abused was included in the 2019 Budget, announced last month. However, according to Snell's statement to parliament, the measure has been dropped in favor of maintaining current dividend tax rules.

The Government intends to use revenue saved by retaining current dividend tax rules to provide additional reductions in corporate tax. Under the new plans, the headline rate of corporate tax will be cut from its existing rate of 25 percent to 20.5 percent in 2021. The Budget had originally proposed reducing corporate tax to 22.5 percent.

In addition, the rate of the corporate tax on profits up to EUR200,000 (USD231,000) will be reduced to 15 percent from 2021, instead of 16 percent as originally planned.

In another change to the Government's tax policy, the proposed reduction in the length of time expatriate workers can benefit from the special 30 percent ruling tax scheme will be delayed.

The 30 percent ruling provides an income tax exemption for qualifying expat workers of up to 30 percent of taxable income, subject to a minimum salary requirement. Earlier this year, the Government agreed to reduce the maximum duration of the scheme from eight to five years.

TAGS: expatriates | Finance | tax | Netherlands | law | transfer pricing | withholding tax | dividends | individual income tax | BEPS

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