On December 18, 2009, the Japanese and Dutch Ministries of Finance announced that agreement had been reached on the text of a new tax treaty.
One of the highlights of the new treaty is that it provides an exemption from dividend withholding tax at source for qualifying dividends distributed by a company resident in one of the countries to a company resident in the other country if it owns at least 50% of the shares in the capital of the distributing company. The current tax treaty maximizes the withholding tax rate at 5% on these dividends, whereas for other dividends a maximum rate of 15% applies.
The new treaty furthermore grants a maximum rate of 5% upon participations of less than 50% but more than 10%. For participations of less than 10% a rate of 10% will apply. The new treaty still has to be signed and ratified by both countries. The first date of application is envisaged for January 1, 2011.