Articles

The Netherlands remains attractive for business with GCC countries after positive evaluation of the Dutch income tax treaties with Qatar and Bahrain

The Netherlands remains attractive for business with GCC countries after positive evaluation of the Dutch income tax treaties with Qatar and Bahrain

The Netherlands remains attractive for business with GCC countries after positive evaluation of the Dutch income tax treaties with Qatar and Bahrain

01.10.2013 NL law

The Dutch Ministry of Finance has positively evaluated the income tax treaties concluded by the Netherlands with Qatar (the Qatar Treaty) and Bahrain (the Bahrain Treaty) that became effective as of 1 January 2010. The Netherlands currently has around 95 income tax treaties, including with the six GCC countries.

Under both the Qatar Treaty and the Bahrain Treaty, withholding tax rates are substantially reduced or even eliminated. More in particular, according to the Qatar Treaty; a dividend withholding tax rate of 0% will generally be applicable if the shareholder beneficially owns at least 7.5% of the shares of the company paying the dividends and some other (anti-treaty shopping) conditions are met. Under the Bahrain Treaty; the withholding tax rate for dividend distributions is generally reduced to 0%, provided that the shareholder beneficially owns at least 10% of the shares of the company paying the dividends and some other (anti-treaty shopping) conditions are met.

During the Dutch parliamentary proceedings on the tax treaties; questions were raised regarding the possibility of abuse of the treaties (by investors from third countries). With respect to these concerns, the State Secretary of Finance promised to send an evaluation of perceived abuse of the treaties (if any) to Parliament two years after the treaties entered into force. On 16 October 2013 this evaluation has been sent to Parliament. Based on a comparison of the total amount of investments in the Netherlands through Qatar and Bahrain before and after the moment the treaties became effective and a comparison of the number of requests for a refund of Dutch dividend withholding tax from entities of the two countries before and after that moment, the State Secretary of Finance concludes that no abuse of the two tax treaties has taken place. This confirms that the Netherlands continues to be attractive as a jurisdiction to set up a business and/or establish holding and financing companies for investments in relation to the GCC countries, both inbound and outbound.

Team

Related news

09.05.2018 EU law
Proposed EU Directive to help companies move across borders

Short Reads - On 25 April 2018 the European Commission proposed a new directive, amending the EU Directive 2017/1132 on company law. The proposed rules should support companies in moving from one EU country to another, i.e. cross-border mergers, divisions or conversions. However, the proposed rules for cross-border divisions and conversions will also require companies to get prior consent from a competent national authority before moving. Who will act as such authority is not clear yet.

Read more

11.06.2018 NL law
Legislative proposal on changes to the Dutch CIT fiscal unity made public

Short Reads - On 22 February 2018 the European Court of Justice ('ECJ') decided on two cases (C-398/16 and C-399/16), which are relevant for purposes of the 'per-element-approach' concerning the Dutch corporate income tax ('CIT') fiscal unity regime. To mitigate the (negative financial) impact of the decisions of the ECJ, the Dutch State Secretary announced last year that new legislation (with retroactive effect to 25 October 2017) will be introduced to amend the CIT fiscal unity regime.

Read more

Our website uses cookies: third party analytics cookies to best adapt our website to your needs & cookies to enable social media functionalities. For more information on the use of cookies, please check our Privacy and Cookie Policy. Please note that you can change your cookie opt-ins at any time via your browser settings.

Privacy – en cookieverklaring