The Dutch Ministry of Finance has announced the launch of a consultation on alternative measures to address dividend stripping. This involves temporarily transferring legal ownership of shares to parties entitled to more favorable tax treatment on dividends, while the shareholder retains the economic interest. In order to address this issue, six possible measures are being consulted on:

• Requirements that both the legal ownership and economic interest of shares must be proven at the time of dividend payment for any reduction, settlement, or refund of dividend tax;
• Holding period requirements both before and after the recording date, which could be as short as 10 days or as long as two to four months;
• Net return/tax base approach for settlement or refund of dividend tax, meaning that dividend tax can only be offset insofar as corporate tax is due on the dividend after deduction of the related costs;
• Documentation obligations so that the inspector is able to more easily assess whether there is a question of dividend stripping;
• Rules regarding who is entitled dividends on the record date that could be used to provide clarity in combination with other measures; and
• Statutory provisions stating that there is only an economic interest in shares if a person, independently or together with an affiliated entity or an associated natural, owns the entire economic interest.

The consultation will end on 26 January 2022, after which a further assessment will be made on possible next steps.