International corporate structures – changes to the taxation of Dutch Cooperatives

• United Kingdom
• Netherlands

• Corporate
• Tax planning and consultancy

21-09-2016

Dutch Cooperatives (Coops) have for a long time been used in international corporate group structures, one of the main benefits being that profit distributions by Coops are in principle not subject to Dutch dividend withholding tax.

However, on 20 September 2016 it was announced by the Dutch Ministry of Finance that dividend withholding tax will be applied to certain Coops that act as holding companies. The intention behind this change is to align the dividend withholding tax treatment of holding Coops with that of Dutch holding companies (which attract a 15% withholding tax on dividend payments, subject to domestic exemptions and tax treaty reductions).

At the same time as announcing this change, the Ministry of Finance also announced a proposal to extend the scope of certain Dutch domestic exemptions to the dividend withholding tax, broadly meaning that dividends paid by a Dutch Coop or company to shareholders in any country that has entered into a double tax treaty with the Netherlands will be exempt from dividend withholding tax (subject to certain anti-avoidance rules).

Although the changes above are not yet in force (the planned long-stop date for implementation is 1 January 2018), businesses with Dutch Coops as part of their corporate structure will need to consider the implications of these proposed changes, the ongoing suitability of Dutch Coops within the corporate group and whether any group reorganisation might be required in the future to mitigate the impact of these changes.