AG concludes on anti-abuse provisions on dividend payments | Deloitte Nederland


AG concludes on anti-abuse provisions on dividend payments

In several cases Advocate General Wattel has concluded that, by taking into account the interested parties’ subjective intention in assessing whether there is abuse, the Court of Appeal of The Hague and the Court of Appeal of Amsterdam have used the appropriate criterion.

2 October 2023

In recent months, Advocate General (AG) Wattel delivered opinions in four relevant cases for tax professionals. These cases address whether the Amsterdam and The Hague courts have correctly applied two Dutch anti-abuse provisions to dividend distributions. The AG argued they have and, additionally, that the court judgments are consistent with an earlier Supreme Court judgment (HR 10-01-2020, BNB 2020/80). As such, the AG took a different stance than the State Secretary’s argument in cassation, which may have major consequences in practical situations.


The central issue is whether the courts have correctly applied the anti-abuse provisions in the dividend withholding exemption (Article 4(3)(c) of the Dividend Withholding Tax Act 1965) and the foreign tax liability for corporate income tax purposes (Article 17(3)(b) of the Corporate Income Tax Act 1969). These anti-abuse provisions prevent a group from reducing the tax burden on dividends by interposing a foreign company in a Dutch company’s shareholder structure, which company is entitled to an exemption or lower rate but has no economic function. Application of the anti abuse provisions depends on two conditions. The first is the requirement that the structure is artificial. Second, the main purpose of holding the interest in the Dutch company must be to avoid the levying of income or dividend tax on another person.

Fact-finding instances

All four cases involved a dividend distribution by a Dutch private limited company (‘besloten vennootschap’, or ‘BV’) to a foreign resident holding company. The first two cases involved two different minority shareholders that received the dividend, which were Belgian companies whose (ultimate) shareholders are Belgian resident natural persons. The other two cases regarded BVs incorporated under Dutch law and established in Curaçao that received dividends. A father and his son held all shares in these companies.

In all cases the court regarded the holding companies that received the dividends as artificial intermediaries. The court found it implausible that these companies performed any real function economically. The companies had no staff and no business premises and only one of the cases involved an actual business. The latter had, however, no relation to the shareholding on which the dividend was paid. Since the artificiality requirement is met, the application of the anti-abuse provisions depends on whether the companies were interposed with the motive of avoiding tax. As the Amsterdam Court of Appeal argued, this was the case for the Belgian holding companies, while the The Hague Court of Appeal argued this was not the case for the Curaçao holding companies.

The AG’s arguments

In all four cases, the existence of the holding companies has resulted in a lower tax burden on dividends than if these companies had not existed. The State Secretary has argued that this sufficiently proves the anti-tax motive. The State Secretary’s underlying rationale for this is what is referred to as the ‘notion of disregarding’ (‘wegdenkgedachte’), as it has emerged in the legislative history. Under this reasoning, whether the main purpose is tax avoidance is actually only determined arithmetically, without the need to investigate the taxpayer’s motives. In an earlier judgment (HR 10-01-2020, BNB 2020/80), the Supreme Court also seems to see this legislative history as a guiding principle.

Following on from the Court of Appeal of The Hague, though, the AG did not concur with this. In respect of the Curaçao holding companies, the court of appeal argued that it has been proven that transferring these companies’ place of establishment to Curaçao was not based on tax reasons. The transfer of the registered office was prompted by the wish of the director of both companies (the father) to spend his old age living near his son, who had emigrated to Curaçao earlier. What’s more, as the Netherlands still had taxing rights on dividend payments to the holding companies when the structure was set up, no tax benefit was gained from the structure at the time. The AG thus concludes that the Court of Appeal has passed a comprehensive verdict and rightfully concurs with the taxpayer’s reasoning that the taxpayer’s motives should be considered, too, and not just the existence of a tax benefit.


The conclusions offer taxpayers a starting point in providing rebuttal evidence in this type of discussion on the intention for setting up an arrangement. If the Supreme Court follows the conclusions of the Advocate General, the Tax Inspector would have a heavier burden of proof regarding the tax motive of taxpayers. The mere fact that a holding structure provides a tax benefit would then be insufficient to consider such a motive proven. This would be particularly helpful for taxpayers who chose to set up a certain arrangement for other, non-tax reasons or who did not yet enjoy a tax benefit at the time of setting up an arrangement. It would be logical in this regard that the historical reasons for setting up a structure decrease in value in the abuse test, the more time passes. The extent in which the Supreme Court will follow the AG’s conclusions remains to be seen though, because from the aforementioned judgment HR 10 01-2020, BNB 2020/80 it is difficult to distil whether our highest court takes the same view.


  • Opinion of AG Wattel on HR, 26-05-2023, no. 22/02691 and HR, 26-05-2023, no. 22/02695
  • Opinion of AG Wattel to HR, 28-07-2023, no. 22/04506, no. 22/04508
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