In relation to this, the earlier proposed new conditional withholding tax on dividends to entities in low tax-jurisdictions will be reconsidered. The government will analyse the possibilities of integrating this conditional withholding tax with the existing withholding tax on dividends.  As a result, the implementation of this conditional withholding tax on dividends will be postponed. However, the conditional withholding taxes on interest and royalties to entities in low tax-jurisdictions are still expected to come into force as of 1 January 2021.

The new proposal includes the following important measures:

• The higher Dutch corporate income tax rate will gradually reduce from 22.25% to 20.5% in 2021. The rate for 2019 will remain 25% and will not be reduced to 24.3% as proposed.
• The lower Dutch corporate income tax rate will gradually reduce from 16% to 15% in 2021.
• The proposal for the reduction of the term of the 30% ruling for expats with 3 years remains unchanged as of 1 January 2019. Nevertheless, a grandfathering rule will be introduced for existing cases that would end in 2019 or 2020.

By Erik de Ruijter, HLB Netherlands