Dutch implementation of the European FASTER Directive

The FASTER Directive (Faster and Safer Relief of Excess Withholding Taxes) aims to harmonise and speed up withholding tax reduction procedures within the EU, as well as to make them less vulnerable to abuse. The Directive must be transposed into national law by 31 December 2028 and the national rules must apply from 1 January 2030.

In our earlier Accountancy Insights article on FASTER (Dutch only), we described the key elements of the directive and the potential implications for investors and financial intermediaries. The letter to Parliament of 16 October now provides more clarity about the choices that the Netherlands intends to make in the implementation.

The Netherlands intends to implement the FASTER Directive through a single new tax act. According to the government, the Directive is not suitable for incorporation into existing tax legislation, such as the General Tax Act or the Dividend Withholding Tax Act 1965. The guiding principle is to implement the Directive as faithfully as possible and avoid unnecessary national additions.

The new act will therefore have a distinct position within the Dutch tax system. Decisions made under this act will fall within the closed system of legal remedies provided by the General Tax Act. Information obtained during its execution will also be subject to the statutory duty of tax confidentiality.

A key choice concerns the procedure through which investors can obtain relief from dividend withholding tax. 

FASTER allows Member States to choose a relief-at-source procedure, a quick-refund procedure or both. The Dutch government has chosen to implement only the relief-at-source procedure for publicly traded shares. Under this procedure, the applicable treaty rate is taken into account immediately when the dividend is paid. 

The Netherlands will therefore not implement a separate quick-refund procedure under FASTER. According to the government, the Netherlands already has relatively swift refund procedures, which will remain in place. If an investor fails to submit the documentation required for the relief-at-source procedure on time, or if the certified financial intermediary (CFI) has not established the required processes in time, the existing system will continue to apply. In those cases, the treaty rate or reduced withholding rate will be applied through the standard refund procedure rather than through relief at source. The State Secretary has, however, announced an intention to examine whether the current procedures for obtaining dividend withholding tax relief under tax treaties can be improved further. 

FASTER also introduces a European digital tax residence certificate. The Netherlands has opted for a certificate valid for one calendar year, in line with the Dutch tax authorities’ existing practice.

The Netherlands also intends to use the option to include additional information in the certificate. For example, the government plans to list all tax treaties as standard, rather than only the treaty applicable in a particular case. According to the letter to Parliament, this standardisation should also help reduce the administrative burden.

The Netherlands has also made a clear choice regarding reporting obligations. FASTER requires CFIs to report certain information. The Netherlands has opted for indirect reporting. This means that CFIs in the payment chain will not report information about their activities and payments directly to the Dutch tax authorities. Instead, they will pass this information through the entire payment chain to the withholding CFI, which will then report the aggregated information to the Dutch tax authorities. According to the government, this approach is less technologically complex and limits the number of intermediaries required to submit information directly. For some CFIs, however, it may result in a greater administrative burden. 

For financial institutions, the impact of FASTER therefore extends beyond tax alone. As described in our earlier article, FASTER introduces new reporting, verification and due-diligence obligations for CFIs.

The Netherlands intends to use four of the six possible grounds for exclusion available under FASTER. Under the government’s current plans, the relief-at-source procedure cannot be used where:

• the shares concerned were acquired through a transaction within five days before the ex-dividend date; 

• the dividend payment relates to a financial arrangement, such as certain derivatives, that had not been terminated before the ex-dividend date;

• an exemption from dividend withholding tax is claimed; or 

• a reduced withholding tax rate that does not arise from a tax treaty is claimed.

According to the government, the first two exclusions relate to the increased risk of dividend stripping. For exemptions and non-treaty-based rate reductions, the government considers the safeguards available in advance insufficient to establish with adequate certainty that the claimant is entitled to the relief covered by FASTER. 

The Netherlands has decided not to exclude dividend payments exceeding €100,000 per registered owner and payment date from the procedure on th

The Netherlands’ decision to exclude cases in which an exemption from dividend withholding tax is claimed is particularly relevant to entities that rely on such exemptions. 

Pension funds may be entitled to a full exemption or a reduction under domestic law. Where Member States exclude such cases, the scope of FASTER may be more limited for pension funds, leaving them reliant on existing refund procedures in these situations. 

The choice the Netherlands announced makes this concern concrete: under the government’s current plans, claims by foreign investors for an exemption or a reduced rate that does not arise from a tax treaty will indeed be excluded from the relief-at-source procedure. 

An important consideration is the interaction with the European proposal for an Omnibus Directive on direct taxation. According to the letter to Parliament, the European Commission proposes extending the FASTER procedures to situations covered by the Interest and Royalties Directive and the Parent-Subsidiary Directive, including cases involving exemptions at source. This could also give pension funds access to the FASTER procedures.

This directly affects the current Dutch choice to keep cases involving exemption claims outside the FASTER procedure. For now, the government is maintaining this exclusion, but has indicated that it will take further developments concerning the Omnibus proposal into account when implementing FASTER.

The letter to Parliament provides greater clarity on how the Netherlands intends to implement the FASTER Directive. The choices to adopt relief at source, indirect reporting and four grounds for exclusion give investors and financial intermediaries a clearer view of how FASTER is likely to operate in the Netherlands. However, the Dutch rules are not yet final. A public consultation will be held, and the government will also organise a stakeholder meeting. It aims to submit the bill to the House of Representatives around summer 2027. 

The selected grounds for exclusion mean that the FASTER procedure will not apply in every situation. This is particularly relevant to foreign pension funds and other foreign investors claiming an exemption from dividend withholding tax or a reduced rate that does not arise from a tax treaty. In such cases, they will be unable to use the Dutch relief-at-source procedure under FASTER. 

For financial intermediaries, implementing FASTER will also require changes in areas including reporting, due diligence, verification and data processing. These obligations will also affect the design of internal processes and systems. The Dutch policy choices now announced provide greater clarity for these preparations. 

Finally, developments at EU level remain relevant. The Omnibus Directive proposes extending the FASTER procedures to the Interest and Royalties Directive and the Parent-Subsidiary Directive. This affects the Dutch choice to exclude, for now, cases involving an exemption claim — for example, by pension funds — from the FASTER procedure. The government has indicated that it will take further developments concerning the Omnibus Directive into account when implementing FASTER.