"De Luxe" tax regime for investment companies
The Dutch State Secretary of Finance, Joop Wijn, announced that a new tax regime will be introduced for Dutch investment companies. The Netherlands tax law already knows a special status for qualifying investment vehicles. By virtue of the current facility, investment companies are subject to a tax rate of 0%. One of the conditions for obtaining this status is the requirement that the company distributes its entire profit within eight months after the end of the financial year. This dividend distribution is subject to Dutch withholding tax. For individual shareholders in tax treaty countries the applicable tax rate will be 15% in most cases and for shareholders resident in non-treaty countries the rate will be 25%.
The current regime will remain in force but companies can elect for application of another investment company treatment (a ‘de luxe’ version). The new regime, that investment companies can apply for, will not longer require that the investment company distributes its profit. Nonetheless, if the company does pay out a dividend, the distributions will not longer be subject to withholding tax. The new regime will be especially attractive for non resident shareholders since they will be released from the Dutch taxation of 15 to 25%.
We expect more details of this proposal later this year. It will then become clear what additional possibilities for group structuring and/or investment structuring will be created as a result hereof. The new regime can make The Netherlands a very attractive location for non corporate (or non EU) investors who want to invest in Europe.
