EUROPE/NETHERLANDS - Pension funds based in other EU member states will also be allowed to reclaim dividend tax, the Dutch Treasury has announced.

The change will be part of a government amendment to the Working on Profits Bill, which has already been submitted to parliament, it said.

At present, only Dutch schemes have the right to reclaim dividend tax.

According to the Finance Ministry, the proposed change will also apply to other exempted bodies within other EU member states.

“The amendment also provides that Dutch companies don’t need to withhold dividend tax, if the dividend is being paid to companies in another member state which participates for at least 5% in the Dutch company,” it added.

At the moment, this withholding exemption applies only to participations of over 20%.

The Working on Profits Bill is intended to make the Netherlands a more attractive base for foreign business. The bill already provides for lowering the dividend tax from 25% to 15%.

“The proposed changes have the added benefit, that the discussion on the compatibility with EU legislation on the withholding exemption and the restitution scheme, will become history,” the Treasury stated.

The Bill is due to come into force as of 1 January 2007.

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