The difference in tax treatment of profit distributions made by cooperatives and corporations resident in the Netherlands has been under scrutiny from the Dutch government for some time. Also, the European Commission has voiced its concerns with regard to possible state aid. 

On September 20, 2016 (Budget day), the Deputy Minister of Finance of the Netherlands sent a letter to Parliament with proposed changes to the Dutch Dividend Tax Act. These changes include a withholding obligation for holding cooperatives, and the extension of an exemption for both shareholders and members of cooperatives in active business structures.

The letter will be followed by a bill, most likely preceded by a public internet consultation; the changes are intended to become effective as  from January 1, 2018, at the latest.


In order to prevent improper use and to better combat abuse, the government intends to require holding cooperatives to deduct dividend withholding tax. These cooperatives are used in international structures and are involved with the holding of participations, asset investment and the financing of related entities. Holding cooperatives also often have a limited number of members. The government proposes introducing a withholding obligation if a member has an interest of 5% or more in the holding cooperative. For dividend withholding tax purposes, the cooperative will in those cases be treated as a company with share capital by equating the membership rights with shares. In active business structures where there is no abuse, a withholding exemption will however apply.

Against this background, the government considers that it would be appropriate to extend the existing withholding exemption for participation dividends involving active business structures (i.e. for parent companies within the EU/EEA with an interest of 5% or more)  to parent companies established in countries with which the Netherlands has concluded a tax treaty. The Netherlands is following the example set by countries such as Belgium and Denmark in this. In order to prevent this facilitating the untaxed routing of dividends from the Netherlands to non-treaty countries and thus also to tax havens, the legislation will provide adequate rules to combat improper use and abuse.

The equating of holding cooperatives with companies with share capital, in combination with the proposed changes to the withholding exemption, means that private limited liability companies (BVs)/public limited companies (NVs) on the one hand, and holding cooperatives on the other, will be treated the same for dividend withholding tax purposes. There is, in principle, a dividend withholding tax obligation, but a withholding exemption will apply to participation dividends if the Netherlands has concluded a tax treaty with the shareholder’s country of residence and there is no question of abuse. With regard to the anti-abuse rules, these will be in line with, for example, the General Anti-Avoidance Rules (GAAR) in the EU Parent-Subsidiary Directive, which means that the exemption will not apply to artificial arrangements and will only apply to active business structures.


The proposals mean that cooperatives must in principle withhold dividend withholding tax in situations where that is now not required. Furthermore, the existing exemption (in case of parent companies within the EU/EEA with an interest of 5% or more) will also be applicable in case of a cooperative, and will also be extended in case of shareholders and members resident in a country with which the Netherlands has concluded a tax treaty, provided no abuse is present. The legislative proposal is intended to become effective as from January 1, 2018 at the latest, most likely preceded by a public internet consultation.

Click here to open the memorandum in pdf-format