Tax Treaties and EU Parent–Subsidiary Directive
The most significant international tax features of The Netherlands include a large network of Double Tax Treaties. Where a Double Tax Treaty or the EU Parent–Subsidiary Directive applies, Dutch intermediary Holding-, Financing and Royalty companies benefit from reduced or even tax-free dividend distributions from their subsidiaries.
If certain conditions are met, withholding tax on interest paid to The Netherlands are usually eliminated and withholding tax on royalties paid to The Netherlands is limited to between 0% and 5% in most cases. All subject to anti-avoidance provisions in the jurisdiction of the paying company.
Significantly reduced withholding tax rates may also apply for dividends paid from the Dutch holding company to its parent company. Interest and royalties paid from The Netherlands are not subject to a withholding tax.