New Double Taxation Convention
A new Double Taxation Convention between the United Kingdom and the Netherlands was signed on 26 September 2008. The convention aims to prevent double taxation on income and capital gains. The new convention is a revision of the current convention, which was first signed in 1980 and since changed in 1983 and 1989.
Important features of the new Convention include:
– nil withholding tax on dividends paid to pension funds and charities;
– a reduction of withholding tax on portfolio dividends to 10% (down from 15%);
– a provision for mutual recognition of pension contributions;
– a special provision dealing with dual listed companies.
The Convention will enter into force once both countries have completed their legislative procedures. In the United Kingdom the provisions of the Convention will take effect from 1 April (for corporation tax purposes), and from 6 April (for income tax and capital gains tax purposes) in the calendar year following the date of entry into force. In the Netherlands, the provisions will take effect from 1 January in the calendar year following the date of entry into force.