A Dutch company distributing dividends is required to withhold dividend withholding tax at a rate of 15% on these dividends. The shareholders therefore only receive 85% of the dividend. Beside dividend payments by Dutch companies the tax is also applicable to other similar payments, such as certain share repurchases, liquidation distribution et cetera, as well as interests paid on hybrid loans. It does not apply to transfers of profits earned by the Dutch branches of foreign companies. In certain cases, domestic law provides for an exemption from withholding tax or grants the right to a refund.

In certain cases, domestic law provides for an exemption from withholding tax or grants the right to a refund. An exemption is granted to corporate shareholders if the participation exemption or participation credit is applicable or if the payment is made within a fiscal unity. The exemption also applies to non-residents if the shares or hybrid loans are held through a permanent establishment (branch) in the Netherlands. Shareholders resident in an EU member state that satisfy the conditions for application of the EU Parent-Subsidiary Directive are also entitled to an exemption. An exemption is also provided for listed companies, subject to fulfilling a number of conditions as regards repurchase of their own shares. Withholding tax may be partly or fully reduced under applicable tax treaties.