The Netherlands wants an end to dividend stripping | BNR News Radio
The Netherlands wants an end to dividend stripping, the imposition of dividend tax by foreign investors. Dividend tax is withheld by a company on behalf of the tax authorities. Subsequently, legal ownership of a share is sold to another party, who has less of no dividend withholding tax on a share. It is then difficult to determine who is or is not the owner of a share. “It costs the Dutch treasury about a billion euros a year,” says Financial Market editor Lennart Zandbergen of the FD.
Zandbergen does not know exactly who are all intended. According to the Financial Expertise Center, it does take place on a large scale. The Netherlands is not the only country struggling with these kinds of practices. Germany also had a similar problem. ‘The cum-ex scandal has been in the news a lot there. There are still 1,300 suspects there, and a banker confirmed a prison sentence for another week.’
Listen back | The Netherlands missed out on 27 billion euros due to dividend tax fraud
Various options
To tackle dividend tax avoidance, the government launched an internet consultation with a number of options. For example, the government wanted to map out the impact of various alternatives in consultation with the parties involved. Those alternatives are, for example, equalizing the economic interest and legal ownership of a share, or setting a fixed term before dividend tax can be deducted.
Listen also | AEX factor | Bank shares: Death house construction of dividend dream?
There is still a lot of resistance to these alternatives. ‘Pension funds and insurers, for example, are not happy with this at all, as large investors are. If you are going to introduce these kinds of rules, or if you are going to ensure that we have to supply much more information to the tax authorities, this will provide them with the administrative last. And, they say, that money ultimately just comes out of the customers’ wallets.’