The Netherlands: The European Commission picks a side

In July 2024, the Netherlands was notified by the European Commission about the differences in tax treatment between resident and foreign investment funds. As the Netherlands is among the top five jurisdictions attracting the most investment from investment funds, this news is welcome for asset managers, who will be able to improve their funds' performance if their claims are properly processed.

The Dutch Supreme Court has made withholding tax refunds extremely difficult for foreign investment funds receiving dividends from the Netherlands, while resident investment funds remain exempt from such taxes.

In fact, the Netherlands has become one of the most challenging European jurisdictions for the recovery of WHT by the investment funds Globe Refund works with.

While the violation of Article 63 of the Treaty on the Functioning of the European Union (TFEU) may seem obvious from an external perspective, the Supreme Court has ruled otherwise, stating that it is up to the Netherlands to resolve the violation, if any exists.

Recent developments involve a group complaint filed with the European Commission in July 2022.

In July 2024, the European Commission notified the Netherlands that its withholding tax reduction scheme discriminates against foreign investment funds that are comparable to domestic investment funds. The EC gave the Netherlands two months to respond with either a justification or rectification of this discriminatory tax treatment.

We believe the outcome of this development will be positive for the investment funds industry.

The investment funds that will benefit the most will be those working with a proactive tax reclaim service provider that will fill the claims before the response from the Netherlands, avoiding any losses due to the statute of limitations.

If the investment funds you work with invest in the Netherlands, you can assess the tax situation related to these dividends by clicking the button below.