Consultation on alternatives against dividend stripping


15 December 2021, the Ministry of Finance has launched an internet consultation on six alternative measures to combat dividend stripping more effectively.

The government considers it undesirable if parties unjustly pay no or less dividend withholding tax by means of dividend stripping. The public can respond to these alternatives from15 December 2021 to 26 January 2022.

What does this mean for your company?

At the moment, there is only an internet consultation. After the consultation period has ended, the results may be converted into a legislative proposal. Such a legislative proposal must first be submitted to, and subsequently adopted by, parliament. If (one of) the alternatives from the internet consultation becomes law, strict(er) conditions will be imposed on the set-off of dividend tax if your organisation/company receives dividends.

What is dividend stripping?

In case of dividend stripping, the legal ownership of, and the economic interest in, shares are split with the aim of obtaining a tax advantage. As a result of splitting the legal ownership from the economic interest, a shareholder retains the economic interest in the shares, but the legal ownership of the shares is (temporarily) transferred to other parties. The purpose of splitting is to achieve a certain tax advantage, as these other parties generally are entitled to a more favourable treatment for dividend withholding tax purposes.This (more favourable) treatment may relate, for example, to a credit, a refund or a reduction of Dutch dividend withholding tax to which the original (foreign) shareholder has no (or a more limited) right.

Recently, research has been carried out to determine which forms of dividend stripping occur in practice and which enforcement problems are associated with it . The forms in which legal ownership on the one hand and economic interest on the other are split, are very diverse. The ‘simplest’ form is the borrowing and lending of shares (security lending). The person borrowing the shares thereby acquires legal ownership, while the lender still has an economic interest. Splitting the interest in shares can also be achieved by, for example, buying put options (i.e., the right to sell shares during a specified period at a specified exercise price) or writing call options (i.e., the right to buy shares during a specified period at a specified exercise price). The parties involved will generally share the resulting benefit.


Current Anti-Abuse Legislation

In 2001, Dutch domestic tax law saw the introduction of generic anti-abuse regulations to prevent dividend stripping. These regulations exclude a reduction, a credit or a refund of dividend withholding tax if the person who receives the dividend (or has requested a reduction, a credit or a refund) is not the ultimate beneficial owner of that dividend. The aim in 2001 was to introduce a measure that would be feasible in practice and would not contain overkill.

Purpose of the internet consultation

In practice, it has become apparent that within the current legal possibilities, dividend stripping cannot always be adequately combated, despite the aforementioned anti-abuse legislation. For example, the (heavy) burden of proof that there has been dividend stripping rests on the tax inspector, and the complexity of the cases identified has increased in recent years. The government considers it undesirable that it remains possible to pay no or less dividend withholding tax by means of dividend stripping. That is why six different options have been explored to better combat dividend stripping. The aim of the internet consultation is to investigate the impact of these six different alternatives. In addition, the parties involved are given the opportunity to propose other alternatives.

Six alternative measures to combat dividend stripping more effectively

In order to improve the approach to the problem described here, an inventory has been made of the possible (fiscal) solutions. The consultation document identifies the following six alternative measures:

Alternative A: Legal ownership and economic interest of shares mandatory for reduction, settlement or refund of dividend tax

In this alternative, it is established by law that a credit, a reduction or a refund of dividend withholding tax is only possible if the taxpayer who credits, reclaims or is entitled to a reduction the dividend withholding tax proves that he retains both the legal title and the economic interest at the time of the dividend payment. This would address dividend stripping at its core.

Alternative B: Introducing a holding period

Under this alternative, it is established by law that only the person who, for a certain period prior to the “record date” and for some time afterwards has both the legal ownership and the economic interest in the shares with respect to which dividend tax has been withheld, is regarded as the beneficial owner of the dividends. The “record date” is the date on which the positions are determined at the end of the business day by the financial institution, and based on the stock deposits of clients it is determined who is entitled to the dividend. A relatively short period (10 days) before and after the record date is considered, but a longer period (two to four months) is also conceivable. This alternative can optionally be combined with a rebuttal scheme and/or a minimum amount by way of efficiency threshold.

Alternative C: Introducing a net return/base approach to dividend tax credit or refund

In this alternative, the dividend withholding tax can only be credited to the extent that corporate income tax is due on the dividend after deduction of the related costs, such as dividend replacement payments. Consider, for example, payments for borrowing the shares in case of security lending. This alternative can also possibly be combined with a minimum amount by way of efficiency threshold.

Alternative D: Documentation obligations

A system is envisaged in which only one dividend note is issued per dividend distribution. Dividend notes must be registered with the tax authorities, and shareholders are obliged to show a dividend note for settlement, refund or reduction. 

Alternative E: Codification record date

According to a Ministerial Decree, it is determined on record date who is entitled to the dividend. It is proposed to include the record date from this Decree in the Dividend Withholding Tax Act 1965.

Alternative F: Expansion to affiliated entities

This alternative entails the introduction of a statutory provision stating that there is only an economic interest in the shares if a person is acting independently, or owns the entire economic interest together with an affiliated entity or an affiliated individual.

Alternatives A, B and C are independent measures. Alternatives D, E and F appear to be insufficiently effective in their own right to combat dividend stripping, but could be included as additional measures.

In its consultation document, the government submits three general questions, as well as eleven questions that are more related to specific solutions.


As mentioned, it is possible to respond to this internet consultation from 15 December 2021 till 26 January 2022. The House of Representatives is expected to be informed further in the spring of 2022 as a result of the consultation.

Contact us

Maarten de Wilde

Maarten de Wilde

Director, PwC Netherlands

Tel: +31 (0)63 419 67 89

Michel van Dun

Michel van Dun

Senior Manager, PwC Netherlands

Tel: +31 (0)61 042 11 99

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