Articles

Dutch court: foreign funds entitled to refund of Dutch dividend with holding tax

Dutch court: foreign funds entitled to refund of Dutch dividend with holding tax

Dutch court: foreign funds entitled to refund of Dutch dividend with holding tax

20.12.2013

In a remarkable decision of 9 March 2012, the Court of Appeal of Den Bosch awarded a Finnish investment fund a full refund of Dutch dividend tax withheld from portfolio dividends received from Dutch resident entities.

The Finnish fund was not subject to Finnish corporate income tax and could therefore not credit the Dutch dividend withholding tax. The fund had requested a refund of Dutch dividend withholding tax under the EU free movement of capital, but such refund was refused by the Dutch Revenue.

DECISION OF THE COURT OF APPEAL 
 
In its decision, the Court of Appeal1 firstly established that if the Finnish fund would have been a Dutch tax resident, it would have been subject to Dutch corporate income tax. Dutch resident entities that are not subject to Dutch corporate income tax are entitled to a full refund of dividend tax withheld on their account. The rationale is to avoid economic double taxation. 2The Court of Appeal took the position that in view of this objective, the Finnish fund - as an entity not subject to (Finnish) corporate income tax - was objectively comparable to non-subject Dutch resident entities. According to the Court of Appeal, this objective comparability amounted to a non-justifiable restriction of the EU free movement of capital (currently in Article 63 of the Treaty on the Functioning of the EU). In doing so, the Court of Appeal overturned a 6 June 2011 decision of the Lower Court of Breda. 
 
REACTION DUTCH STATE SECRETARY OF FINANCE 
 
In a letter to Dutch Parliament dated 23 March 2012, the Dutch State Secretary of Finance has announced that he will file an appeal against the Court of Appeal's decision with the Dutch Supreme Court. The Dutch State Secretary argues that the Court of Appeal has erred in comparing the Finnish fund with non-subject Dutch entities. 
 
REFUND POTENTIAL EU AND NON-EU INVESTMENT FUNDS 
 
If the Dutch Supreme Court were to uphold the decision of the Court of Appeal, this might open a vast refund potential for both EU and non-EU investment funds. The case decided by the Court of Appeal also interplays with French cases that are currently pending before the European Court of Justice (the Santander case3). These cases revolve around the question on whether cross border distributions by French investment funds made to EU and non-EU investment funds should benefit from the same exemption from dividend withholding tax granted to domestic distributions to French investment funds. In its future decision, the Dutch Supreme Court will likely closely monitor the outcome of the Santander case and the reasoning applied therein by the European Court of Justice. 
 
FINAL REMARK 
 
In view of the above developments, investment funds should consider to file for refund of Dutch dividend tax withheld on their account. Appeals for refund may arguably extend to the past 3 calendar years (although shorter or longer terms may also apply). The Stibbe tax team has a wide-ranging and in-depth experience on both cross border fund structuring and tax litigation and is well-equipped to advise its clients on steps necessary to preserve their rights in this respect. 
 
1 Court of Appeal of 's Hertogenbosch 9 March 2012, reference number 11/00451.
2 As from 1 January 2007, this Dutch dividend withholding tax refund also extends to non-subject EU resident entities, which, had they been Dutch tax residents, would also not have been subject to Dutch corporate income tax. As per 11 June 2009, the scope of the refund has been further extended to designated Member States of the European Economic Association and, as from 1 January 2012, provided further conditions are met, also to certain non-subject entities resident outside of the EU and EEA. This refund does however not apply if the non-subject non-Dutch resident entity would be comparable to a Dutch fiscal investment institution (fiscale beleggingsinstelling) or a Dutch exempt investment institution (vrijgestelde beleggingsinstelling).
3 The Santander case consists of a number of joint cases numbered C-338/11 through C-347/11.

Team

Related news

14.08.2020 NL law
Provisional rental discounts in times of COVID-19

Short Reads - Recent interim injunctions indicate that the corona crisis can, in principle, be an unforeseen circumstance that may be a reason to amend a commercial lease agreement. If the parties are unwilling to amend the lease together, the court may amend the lease for them; recent interim injunctions cautiously indicate which circumstances are relevant, and how the lease can be amended by the court.

Read more

10.08.2020 NL law
ISDA kondigt publicatie van Adjusted RFRs, wijziging van de 2006 Definitions en IBOR Fallback Protocol aan

Short Reads - In twee in juli verschenen persberichten kondigt ISDA (i) de aanvang van de berekening en publicatie door Bloomberg van zogenaamde 'Fallback Rates' voor een aantal bestaande IBORs en (ii) de voorgenomen publicatie door ISDA van gewijzigde 'rate options' in de 2006 Definitions en het langverwachte IBOR Fallback Protocol aan.

Read more

14.08.2020 NL law
Voorlopige huurkortingen in coronatijd

Short Reads - Uit recente kortgedinguitspraken volgt dat de coronacrisis in beginsel een onvoorziene omstandigheid is die aanleiding kan zijn om een commerciële huurovereenkomst te wijzigen. Als partijen daar samen niet uitkomen, dan kan de rechter worden verzocht om de huurovereenkomst te wijzigen. Uit recente kortgedinguitspraken kan voorzichtig worden afgeleid welke omstandigheden daarbij relevant zijn en hoe de huurovereenkomst kan worden gewijzigd.

Read more

10.08.2020 NL law
Het NOW register: openbaarmaking van gegevens van ontvangers van de NOW-subsidie

Short Reads - Het UWV heeft op verzoek van de minister van Sociale Zaken en Werkgelegenheid een register gepubliceerd met informatie over werkgevers die de NOW-1 subsidie hebben ontvangen. De publicatie van dit register komt niet geheel als een verrassing. De NOW-1 bevat immers een bijzondere bepaling over openbaarmaking van de desbetreffende gegevens.

Read more

10.08.2020 NL law
Geelgroen huis in Den Helder in ernstige mate in strijd met de redelijke eisen van welstand

Short Reads - In de gemeentelijke welstandsnota staan criteria waaraan het uiterlijk van bestaande en nieuw te bouwen woningen dienen te voldoen: de redelijke eisen van welstand. Voor bestaande woningen geldt dat zij niet in ernstige mate in strijd mogen zijn met deze eisen. Welstandsexcessen zijn met andere woorden uitgesloten. In de uitspraak van de Afdeling van 15 juli 2020 was de vraag aan de orde of een geelgroen geverfde woning in Den Helder terecht als een dergelijk welstandsexces is aangemerkt.

Read more

05.08.2020 NL law
ACM is verplicht om het besluit waarin zij afziet tot oplegging van een boete te publiceren

Short Reads - De Instellingswet Autoriteit Consument en Markt (Instellingswet ACM) verplicht de ACM om een besluit waarbij een ernstige overtreding (zoals overtreding van het kartelverbod) is geconstateerd, maar waarbij is afgezien van het opleggen van een boete toch openbaar te maken. Een dergelijk besluit beschouwt het CBb als een beschikking tot het opleggen van een bestuurlijke sanctie in de zin van artikel 12v van de Instellingswet ACM. Dat oordeelt het CBb in haar uitspraak van 18 februari 2020 (ECLI:NL:CBB:2020:92).

Read more