The new cabinet will put an end to the dividend tax. This is especially beneficial for foreign companies, which is the intention. The new cabinet wants to make it more attractive for foreign companies to settle here. For Dutch companies it saves a lot on administration. The elimination of dividend tax costs the government annually 1.4 billion euros and will come into effect in 2019. This amount will be balanced by other measures taken by the government for companies.
What is dividend tax?
Companies pay 15% tax on the dividend they pay to their shareholders. The dividend recipient can then settle by the amount deducted from the assessment. For clarity companies in the Netherlands do not receive any money due to the abolition. Instead of paying a portion of the dividend, they pay to the tax authorities (who later give returns to the Dutch shareholders via their declaration), they can give the full amount directly to the shareholder. This causes a lot of administrative hassle.
All parties who do not have to pay tax in the Netherlands, and cannot recover the tax previously collected, by deducting them from their declaration, retain a little more money. These are, for example, foreign companies. Because companies do not have to pay any tax on the dividend, they can simply benefit the shareholders. This is also an added benefit for Dutch companies. For foreign parties, this makes it more attractive to invest in Dutch companies. Also, shareholders of a foreign company will have less resistance to invest in the Netherlands.
Critics have wanted to end the dividend tax for a long time, because it would be good for the economy, and it would create an attractive business climate. But ultimately, the only ones who have a financial advantage here have parties who are not taxable in the Netherlands, says Wilbert Wolters, "These include foundations, VBIs, government and foreign parties."
Just like a tax on your income, a dividend tax is a final tax on companies in the Netherlands, Wolters explains. However, the elimination of the tax is not an enormous advantage, he says. "But it does have a huge administrative advantage for Dutch companies.” The elimination of dividend tax is part of a larger package of tax measures for companies. However, companies have a slight increase in costs.
Translated by Maybeline Whitter
Source: https://nos.nl/artikel/2197005-nieuw-kabinet-maakt-einde-aan-dividendbelasting.html