When a Dutch BV pays dividends to a foreign shareholder, the company must consider Dutch dividend withholding tax.

This is separate from the company-law question whether the dividend can be distributed at all. A dividend may pass the balance test and distribution test, but still require a withholding tax analysis.

For foreign shareholders, the key question is usually:

Should the Dutch BV withhold Dutch dividend tax, or does an exemption or treaty reduction apply?

This article explains the main points.

For the formal company-law process, see our related article on distributing dividends from a Dutch BV, including the balance test and distribution test.

Dutch dividend withholding tax: the starting point

The starting point is that a Dutch company paying dividends usually withholds Dutch dividend tax.

Business.gov.nl explains that if a BV or NV distributes profit to shareholders, the dividend-paying company must withhold dividend tax and pay it to the Dutch Tax Administration.

The standard Dutch dividend tax rate is 15%.

This means that, unless an exemption or reduction applies, the Dutch BV withholds dividend tax from the gross dividend and pays the tax to the Belastingdienst.

Example:

• gross dividend: EUR 100,000;
• Dutch dividend withholding tax at 15%: EUR 15,000;
• net payment to shareholder: EUR 85,000.

The shareholder may then be able to credit, offset or reclaim the tax, depending on its position and the applicable treaty rules.

Filing the dividend tax return

If a Dutch company pays a dividend and dividend tax is due, it must file a dividend tax return.

A company paying dividend must file a dividend tax return within one month of the dividend being issued. The return states the amount of tax deducted from the dividend.

That filing deadline matters. The dividend payment should therefore not be treated only as an accounting entry or bank payment.

A practical dividend file should show:

• gross dividend amount;
• date of the dividend resolution;
• date of payment or availability;
• shareholder details;
• withholding tax analysis;
• tax withheld;
• dividend tax return;
• payment to the Belastingdienst;
• net payment to the shareholder;
• exemption or treaty documentation where relevant.

Foreign shareholders may qualify for an exemption or refund

A foreign shareholder may be entitled to a full or partial exemption or refund of Dutch dividend tax.

If a shareholder lives or is established outside the Netherlands and holds shares in a Dutch company, that shareholder may be exempt from, or receive a refund of, Dutch dividend tax.

The Belastingdienst explains that a dividend recipient outside the Netherlands may be entitled to a partial dividend tax exemption, and that the level of exemption primarily depends on whether the dividend is participation dividend or portfolio dividend.

This distinction is important.

Participation dividend

Participation dividend is generally the more relevant category for foreign corporate shareholders in group structures.

Participation dividend is dividend received by an organisation from another company in which it holds 5% or more of the shares. In exceptional cases, a shareholding below 5% may also qualify as a participation.

I an organisation based outside the Netherlands receives participation dividend from a company based in the Netherlands, that dividend is usually exempt from dividend tax.

For foreign-owned Dutch BVs, this is often the practical issue. If the shareholder is a foreign parent company holding at least 5%, the dividend may potentially fall within the participation dividend framework. But the exemption should not be applied casually. The conditions and anti-abuse rules must be checked.

Portfolio dividend

Portfolio dividend is generally dividend that is not participation dividend.

Foreign recipients of portfolio dividends from a Dutch company may not have to pay all Dutch dividend tax, depending on the country where the recipient lives or is established. A treaty may provide a partial exemption.

For portfolio shareholders, the outcome is often treaty-driven. The Dutch BV and shareholder need to check the relevant tax treaty and any required forms or residence documentation.

Treaty reductions and residence documentation

Where a treaty applies, the shareholder may be entitled to a reduced Dutch dividend withholding tax rate or an exemption.

The amount of a refund or exemption depends on the arrangements between the Netherlands and the treaty country.

The foreign shareholder may need a certificate of residence or other supporting documentation. Business.gov.nl notes that treaty countries may ask for a certificate of residence when a taxpayer requests an exemption or refund of foreign tax withheld.

For a foreign shareholder, this should be prepared before the dividend is paid where possible. Otherwise, the Dutch BV may withhold tax first and the shareholder may need to reclaim it later.

Beneficial ownership and anti-abuse

The dividend withholding tax position is not only a mechanical shareholding test.

The Dutch rules include anti-abuse measures. In practice, the dividend-paying company and shareholder need to consider whether the shareholder is the beneficial owner and whether the structure has valid commercial reasons.

In the context of exempt organisations receiving portfolio dividends, the organisation must be the beneficial owner of the income.

For participation dividends and group structures, the anti-abuse analysis can be more important. The Dutch withholding exemption should not be applied if the arrangement is abusive.

Practical questions include:

• Is the foreign shareholder the beneficial owner of the dividend?
• Does the shareholder have a real function in the group structure?
• Is the structure mainly designed to avoid Dutch dividend withholding tax?
• Is the shareholder located in an EU or treaty jurisdiction?
• Is there sufficient commercial reason for the holding structure?
• Are there hybrid entity or mismatch issues?
• Does the structure involve a low-tax jurisdiction?
• Is the shareholder entitled to treaty benefits?

These questions should be answered before applying an exemption.

Conditional withholding tax on dividends to low-tax jurisdictions

Separate from ordinary Dutch dividend withholding tax, the Netherlands also has conditional withholding tax rules aimed at payments to low-tax jurisdictions.

A company may have to pay withholding tax if it pays interest, royalties or dividends to a foreign company within the same group and that company is established in a low-tax country. The withholding tax is 25.8% on interest, dividends and royalties originating in the Netherlands.

The Netherlands introduced withholding tax on interest and royalty payments to group companies in low-tax countries, and that dividends have also been subject to this withholding tax since 2024.

This is a different risk category from a normal parent company dividend to a shareholder in an ordinary treaty jurisdiction.

For foreign groups, the practical point is clear: dividends to low-tax jurisdictions should be reviewed carefully before any payment is made.

Accounting and reporting implications

The Dutch dividend withholding tax analysis should connect to the accounting records.

The accounting entries should clearly record:

• gross dividend;
• dividend withholding tax payable, if any;
• net dividend payable;
• payment to the shareholder;
• payment to the Belastingdienst;
• exemption or refund documentation where relevant.

For group reporting, the foreign parent may focus only on the net cash received. The Dutch BV still needs to record the correct gross dividend and any withholding tax position.

This is also relevant for annual accounts and future review. A dividend should be traceable from the shareholder resolution through to the accounting entries and tax filing.

Common mistakes

Common mistakes include:

• paying the net dividend before analysing withholding tax;
• assuming all parent-company dividends are automatically exempt;
• ignoring the difference between participation dividend and portfolio dividend;
• failing to obtain residence documentation;
• applying a treaty reduction without checking the treaty conditions;
• forgetting the dividend tax return deadline;
• confusing ordinary dividend withholding tax with conditional withholding tax;
• ignoring anti-abuse rules;
• failing to document beneficial ownership;
• recording only the net payment in the Dutch ledger.

These are practical issues, not only technical tax points. A controlled dividend process should catch them before payment.

Practical checklist for foreign shareholders

Before a Dutch BV pays a dividend to a foreign shareholder, check:

• Who is the shareholder?
• Where is the shareholder established?
• What percentage does the shareholder hold?
• Is the dividend participation dividend or portfolio dividend?
• Does the domestic withholding exemption apply?
• Does a tax treaty reduce or eliminate withholding tax?
• Is the shareholder the beneficial owner?
• Are anti-abuse rules relevant?
• Is the shareholder in a low-tax jurisdiction?
• Is conditional withholding tax relevant?
• Is a residence certificate or other documentation needed?
• Does a dividend tax return need to be filed?
• Has the accounting treatment been prepared?
• Has the company-law distribution process also been completed?

How Kanso Accounting helps

Kanso Accounting supports foreign-owned Dutch BVs and international finance teams with Dutch accounting, VAT compliance, annual accounts and filing support.

For dividends to foreign shareholders, this can include:

• preparing the accounting entries for a proposed dividend;
• checking whether the dividend connects properly to annual accounts and reserves;
• coordinating the dividend withholding tax process;
• identifying when exemption, treaty or anti-abuse questions need tax review;
• supporting the dividend tax return process where applicable;
• keeping the dividend file connected to the accounting records;
• coordinating with the foreign parent company’s finance team.

Kanso does not treat dividend distributions as isolated payments. The dividend should fit the Dutch BV’s accounting, legal and tax position.

Practical takeaway

A dividend from a Dutch BV to a foreign shareholder is not only a cash transfer.

The Dutch BV must consider whether the distribution is legally possible, whether Dutch dividend withholding tax applies, whether an exemption or treaty reduction is available, and whether anti-abuse or low-tax jurisdiction rules are relevant.

For foreign shareholders, the key question is:

Can the Dutch BV support the dividend payment, the withholding tax treatment and the accounting entries from a clean file?

If not, the dividend process should be reviewed before payment.