Dutch tax position of US investors improved

Currently, 15% Dutch dividend withholding tax (“DWT”) is due on distributions of profits by a Dutch resident company unless an exemption applies or a double tax treaty (“DTT”) provides for a reduction. For EU investors, an exemption applies in case of a participation of 5% or more, whereas most US investors generally face DWT at a rate of 5% on the basis of the DTT between the Netherlands and the US. The proposed measures will extend the EU DWT exemption to investors residing in a country that (i) has concluded a DTT with the Netherlands that (ii) provides for a provision on dividends (provided no abuse provision applies). This exemption will apply even if the relevant DTT only provides for a reduction to 5% or 10%. If implemented accordingly, this new exemption will be beneficial for US investors with an interest of 5% or more in a Dutch resident company (provided all requirements are met). These investors who until now were subject to 5% DWT will be subject to 0% as of January 1st 2018.