The Dutch Ministry of Finance submitted a law proposal to Parliament with anti-abuse measures that may impact present as well as future structures involving a Dutch cooperative (Coop).
Under current legislation, a Coop generally can distribute profits without the need to withhold Dutch dividend tax. This applies regardless of the type and place of residence of the shareholder.
As of 2012, if the law proposal is enacted, a Coop is under the obligation to withhold dividend tax in case both of the following two criteria are met:
- the Coop owns shares (in Dutch or non-Dutch entities) with the main aim, or with one of the main aims, to avoid dividend tax or foreign tax of another person / entity; and
- the member of the Coop to whom the profit is distributed, does not own the interest as part of an enterprise.
In a large number of cases, a Coop is set up primarily to avoid dividend tax, foreign and/or Dutch. The main question in those cases will be: is the second criterion met or not?
In practice, if an active company itself is member in the Coop, generally speaking the Coop membership is allocable to an enterprise and as a result no dividend withholding tax should be due. However, especially where an SPV is interposed and used as member in the Coop, it may well be that the Coop membership is not allocable to an enterprise, as a result of which dividend withholding tax may be due. This may apply in particular to an SPV in a low tax jurisdiction, noting that it is not limited to such situations.
The consequences in each case need to be determined on the basis of the relevant facts and circumstances. Our tax department has the knowledge and skills to assist and will be glad to provide tailor made advice.