Netherlands: Anti-abuse rule under parent-subsidiary directive (Supreme Court decisions)

Decisions provide guidance on application of the anti-abuse provision

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July 31, 2025

The Dutch Supreme Court on July 18, 2025, issued two decisions regarding application of the anti-abuse provision of the withholding tax exemption under the Dutch implementation of the Parent-Subsidiary Directive (2011/96/EU - PSD).

The cases involved dividend distributions made in 2018 by a Dutch BV (“feeder entity” linked to a Dutch private equity fund) to two Belgian companies. The Belgian companies, owned by Belgian individuals, were passive investors.

  • In the first case, a Belgian BVBA (Besloten Vennootschap met Beperkte Aansprakelijkheid) holding 38.71% interest in the Dutch feeder company was deemed to have an artificial arrangement, leading to the denial of the withholding tax exemption.
  • The second case involved a Belgian NV (Naamloze Vennootschap) with a 24.39% interest, which was also denied the exemption due to insufficient “relevant substance.”

The Supreme Court upheld both judgments of the Amsterdam Court of Appeals, emphasizing that structures originally set up for business reasons could be considered artificial if circumstances change. It noted that the holding structure served no genuine economic purpose and was primarily for avoiding dividend withholding tax. The court aligned its interpretation with CJEU case law and EU abuse of law principles.

Read a July 2025 report prepared by KPMG’s EU Tax Centre

Read a July 2025 report prepared by the KPMG member firm in the Netherlands

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