Dutch government wants additional Dutch dividend stripping measures

The Dutch government wants to take additional dividend stripping measures to better tackle dividend stripping. It is undesirable that no or less dividend tax is paid due to this form of tax avoidance. However, given the current laws and regulations, this is not always possible. Additional measures will be investigated and further elaborated in the near future.

With dividend stripping, the economic and legal rights to dividends are split in order to obtain a tax advantage. For this purpose, the legal ownership of the shares is, for example, (temporarily) lent to another party (also known as securities lending) that has a more favorable tax situation, such as a Dutch shareholder who can offset the dividend tax. This limits or prevents the levying of dividend tax.

Dutch State Secretary Marnix van Rij: “The cabinet considers it undesirable that parties pay no or less tax by means of dividend stripping. The complexity and international character of dividend stripping show that the current measures are insufficient. New, additional measures are therefore necessary.”

The government has recently investigated how the approach to dividend stripping can best be improved. An internet consultation was also held to map out the impact of possible alternative measures. In the coming period, the government will investigate and further develop the following additional measures to combat dividend stripping more effectively:

• Restrict set-off or refund of dividend tax (net yield/tax base approach);

• Stricter documentation obligations;

• Legislation of the reference date on which it is determined who is entitled to receive the dividend;

Introduction of a legal provision to determine whether a person (together with related parties) holds the beneficial interest in the shares.

Further research is being carried out into whether it is possible to convert these alternatives into well-functioning and easily implementable measures. The government is also looking at how the information and evidence position of the Tax and Customs Administration can be improved. In addition, further research is being carried out into whether an additional measure should be introduced that focuses on pension funds.

International developments in the field of legislation and regulations are also monitored, because dividend stripping often takes place across national borders. Because dividend stripping continues to develop, it is also important to be able to make timely adjustments where necessary. That is why the government will monitor the new measures to be introduced.

Further research will be carried out in the near future and it will be examined whether and how these measures can be elaborated in a bill. The additional measures are not expected to become effective before 1 January, 2024.