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Written by:
Bas Hollenberg


Dividend tax rebate for foreign-based company?

According to a ruling by the European Court of Justice, the tax on dividend payments made to non-resident beneficiaries may not exceed that on dividends paid out to their resident counterparts, the comparison between the tax burden of dividends paid out by non-resident companies and that paid out by resident companies having to be based on gross dividends less direct dividend collection charges.

According to the District Court by which the dispute had been adjudicated at an earlier stage, the tax burden on the dividends paid out in 2008 to a French company would have been greater than that for a resident company had the dividend collection charges exceeded 40% of the gross dividend. The Court in question had refused to give credence to the suggestion that the dividend collection charges in a domestic setting, in 2008, had topped 40% of the gross dividends, and had likewise been decidedly underwhelmed by the allegation that the corporation tax on the net dividends would have turned out at less than 15% of the gross dividends.

The Supreme Court based its decision, which it issued in the wake of the European Court’s ruling, on the District Court’s earlier assertions, to the effect that the tax burden experienced by the French company where it concerned the Dutch dividends had not turned out greater in 2008 than the tax burden experienced by a (Dutch) resident company, with the company’s appeal in cassation being dismissed.


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