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When you, as a resident of the Netherlands, receive dividends from another country, it is subject to income tax in the Netherlands. After all, you pay Dutch income tax on your world income. That is your total income, wherever in the world it was generated.<\/p>\n
Dividend is the reward received by the shareholder for making capital available a legal entity. It is the distribution of part of the profit earned by the legal entity. If you own Shell shares, Shell pays you a portion of its profits each year as a reward. That payment is the dividend.<\/p>\n
As such, dividends are not subject to income tax in the Netherlands. Shell shares belong to the basis of your income from savings and investments (box 3). A lump-sum return is calculated on that basis, after the tax-free capital has been deducted. This standard return is taxed with 30% income tax.<\/p>\n
Tax treaties assign the right to levy income tax on dividends to the country of residence of the beneficial owner. Suppose you invest in shares in French company Airbus, you have to include the value of those shares in the basis of your Dutch income from savings and investments (box 3).<\/p>\n
Many countries impose a withholding tax on dividends. The dividend from your Airbus shares is subject to 30% of French withholding tax. You will receive from Airbus only 70% of the gross dividend.<\/p>\n
Most tax treaties also grant the source state the right to levy a withholding tax. In most cases, the source state may levy (a maximum) 15% in withholding tax.<\/p>\n
Through your Dutch income tax return, you can offset the foreign withholding tax on dividends against your Dutch income tax. However, this credit will not exceed the :<\/p>\n
The second limit is equal to the maximum withholding tax that the source state is allowed to levy under the tax treaty. That is 15% in most treaties. So, of the 30% French withholding tax that Airbus has deducted from your dividend, you may only credit 15% against the income tax due in the Netherlands. The other part (also 15%) must be refunded to you by the French tax authorities. There is a procedure for this under the tax treaty.<\/p>\n