Netherlands: Update on consultation regarding options to address dividend stripping

The government will consider whether further additional measures are needed to combat dividend stripping

Update on consultation regarding options to address dividend stripping

The government sent a letter on 15 July 2022 to the Lower House of Parliament:

  • Providing a summary of the responses to the internet consultation regarding options for strengthening measures to prevent dividend stripping
  • Outlining the government’s current assessment of the options
  • Describing next steps


Dividend stripping involves splitting the beneficial and legal entitlement in order to obtain a tax advantage—for example a dividend tax refund, reduction or credit for which the beneficial owner itself is not eligible. The tax benefit is usually split between both parties. For example, lending out shares, buying a put option or writing a call option are ways to have one party receive the dividend under civil law (a limited benefit amounting to a part of the tax benefit), while the beneficial interest in the share and the dividend goes to the other party.

There are currently measures in place to address dividend stripping, but because of the tax authorities’ heavy burden of proof, it is not possible to adequately address dividend stripping. The government is investigating how to prevent the improper use of dividend stripping without unnecessarily affecting normal stock exchange trading. To that end, the government on 15 December 2021 launched an internet consultation on options for strengthening measures to prevent dividend stripping. Read TaxNewsFlash

The consultation document contained six potential solutions:

A. Legal ownership of and economic interest in the shares required for reduction, settlement or refund of dividend tax

B. Introduction of a holding period

C. Introduction of a net return/accounting approach for the settlement or refund of dividend tax

D. Documentation obligations

E. Record date codification

F. Extension with connected bodies

Summary of responses to consultation

With regard to alternatives A, B, C and F, the responses to the internet consultation are generally critical and reserved. The main point of criticism is that these alternatives are overkill to a greater or lesser extent, i.e., that there is no longer any right to a reduction, settlement or refund of dividend tax in bona fide situations. Most responses acknowledge that the tax authority’s greatest challenge lies in distributing the burden of proof and collecting the necessary information, and not in substantive law. In general, there is support for the introduction of additional measures to improve the information and evidence position, and thus for alternatives D and E.

Government’s assessment of options

The government first notes that the European Commission (EC) is currently working on an initiative to improve withholding tax procedures for non-resident investors. The initiative aims to provide Member States with information to prevent tax abuse in the field of withholding tax, while enabling a rapid and efficient processing of requests for refunds or reductions at the source of the excess taxes withheld. The EC has announced that it will come up with a proposal at the end of 2022 or early 2023.

In addition, the government will take one or more measures to strengthen the fight against dividend stripping. When opting for new measures, proportionality is central to the government, so that only abuse situations and no bona fide cases are affected. In any event, the government currently sees possibilities in a combination of one or more additional measures, based on alternatives D and E. In this context, the government is investigating measures aimed at improving the information and evidence backlog of the tax authority, including an amendment to the current burden of proof. As an example, measures are also mentioned that ensure that both domestic and foreign beneficiaries (with the tax return or refund request) must provide a number of additional statements and/or information to substantiate their position as beneficial owner of the dividend yield in question. An efficiency threshold for the amount of revenue is being considered.

In the near future, the government will also investigate whether it is possible to develop a robust, proportional and easily executable measure based on alternatives C and F.

Finally, the government has received signals that in practice there are specific situations of dividend stripping in which pension funds are involved. The government will therefore investigate whether, and how, an additional measure can be taken against this that focuses exclusively on pension funds that are engaged in dividend stripping (along with alternative C).

Next steps

In the coming period, research will be conducted, and how the measures could be further elaborated in a bill will be considered. Considering the Lower House of Parliament’s desire to spread legislation and the complexity of the approach to dividend stripping, the measures to strengthen the approach to dividend stripping will not be introduced before 1 January 2024.

The government will monitor the effectiveness of the new measures after their entry into force. Depending on the outcome of this or signals from practice, the government will consider whether further additional measures are needed to combat dividend stripping.

Read a July 2022 report prepared by the KPMG member firm in the Netherlands


The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 3712, 1801 K Street NW, Washington, DC 20006.