On 18 December 2009, the Netherlands and Japan announced that agreement has been reached on a new double tax treaty that will replace the current tax treaty which dates from 1970. It is expected that the new tax treaty will be ratified by mid 2010 and will become effective as per 1 January 2011.

The full text of the new treaty will be published once the treaty has been ratified. Meanwhile, the Dutch Ministry of Finance published the following details on the new text.  

Most noticeable is that the new treaty includes a full exemption from dividend withholding tax for dividends paid by qualifying shareholdings. The withholding tax exemption applies if a resident of one of the countries holds at least 50% of the shares in a company resident in the other country. For shareholding between 10% and 50% a reduced withholding tax rate of 5% applies.

We fully agree with the Dutch State Secretary of Finance, Mr Jan Kees de Jager, who stated that “This is an important milestone in the 400 years trade relationship between The Netherlands and Japan. The new treaty stimulates investments and strengthens the economic relationship between Japan and the Netherlands”.

More details will be available once the full text has been published.