Under current Dutch tax legislation, domestic investment funds benefit from a favorable mechanism that allows them to offset Dutch withholding tax (WHT) on dividends received. This tax reclaim mechanism enables local funds to neutralize their WHT liability by deducting it against the tax they must withhold when distributing dividends to Dutch investors.
In contrast, foreign investment funds—also subject to Dutch dividend WHT—are denied access to this reclaim benefit. As a result, they face higher net taxation on Dutch-sourced income compared to their Dutch counterparts. This unequal tax treatment discourages Dutch investors from choosing non-resident funds and raises serious concerns about market distortion and the violation of EU free movement of capital rules.
Following two landmark rulings by the Dutch Supreme Court (dated 23 October 2020 and 9 April 2021), several non-resident funds submitted formal complaints to the European Commission, arguing that the Dutch system discriminates against foreign investors and restricts capital flows across the EU.
On 25 July 2024, the European Commission initiated an infringement procedure against the Netherlands, citing possible breaches of EU law related to its dividend WHT regime. The investigation focused on whether the current rules unjustly exclude foreign funds from tax reclaim rights available to domestic funds.
On 17 July 2025, the Commission escalated the matter by issuing a reasoned opinion (case INFR(2024)4017), concluding that the Dutch system violates Article 63 of the TFEU and Article 40 of the EEA Agreement, both of which guarantee free movement of capital within the European Economic Area.
According to the Commission, allowing only Dutch investment funds to reclaim dividend WHT while denying the same right to foreign funds constitutes unjustified tax discrimination.
The Dutch government has now been given a two-month deadline to modify its tax rules. If no action is taken, the case may be referred to the Court of Justice of the European Union (CJEU), potentially resulting in legislative enforcement.
This development represents a major opportunity for non-resident investment funds to initiate or accelerate their Dutch withholding tax reclaim efforts. With the EU formally challenging the discriminatory nature of the Dutch regime, the chances of securing a withholding tax refund are significantly improved.
Globe Refund is a leading expert in cross-border WHT recovery. Our analysis team concluded that foreign funds that have invested in Dutch equities over the past three years may be eligible for retroactive tax reclaims. However, the statute of limitations is typically three years, making timely action essential.
This case also reflects a wider trend across Europe: tax authorities are under increasing pressure to eliminate discriminatory rules that prevent foreign investors from reclaiming excessive tax withheld at source.
Globe Refund is actively supporting investment funds in navigating this legal development and recovering excess Dutch WHT. The firm offers tailored tax reclaim solutions that combine legal expertise with efficient claim management—helping clients maximize WHT recovery while minimizing administrative burden.
Whether you're a UCITS fund, pension scheme, or institutional investor, Globe Refund can assess your situation and initiate the proper tax reclaim procedures to recover unduly withheld dividend tax in the Netherlands and beyond.
If your investment fund has received Dutch dividends and suffered excess withholding tax, you may be entitled to a partial or full tax refund.
Contact Globe Refund today to explore your withholding tax recovery options and benefit from our expert assistance in managing tax reclaims across multiple jurisdictions.
Our work focuses on providing outsourced withholding tax recovery services to safeguard your investments from over-taxation and save your time from burdensome processes.
