Arnhem-Leeuwaarden Court of Appeal confirmed (again) that up to 15% of foreign withholding tax may be credited against Dutch income tax.
The case concerns a resident of the Netherlands, who receives dividends from Switzerland and Italy. The Swiss dividend is subject to approximately 35% Swiss withholding tax. Italy withholds 26.5% Italian withholding tax on the dividend.
The tax treaties with Switzerland and Italy allocate the right to levy income tax on dividends received to the country of residence: the Netherlands. But the source country (Switzerland and Italy) may apply a withholding tax. This partially leads to double taxation. To prevent this, the tax treaties stipulate that the Netherlands must grant a concession for the withholding tax levied by Switzerland and Italy. But this relief is capped at 15%.
According to the Court, the interested party did not present any arguments on the basis of which the Netherlands should grant compensation higher than 15%. Nor the argument that the interested party does not wish to take the trouble to request the Swiss and Italian authorities to refund the excess withheld withholding tax (the tax treaties provide for such requests). Nor the argument that the tax authorities' return programme (wrongly) takes into account the total amount of withheld withholding tax.
Interested party could have saved itself the proceedings as the Supreme Court in 2019 as once decided accordingly.