On March 4, 2016 the Supreme Court rendered its final judgments in the Miljoen, X and Société Générale cases. These cases concern the dividend withholding tax levied on foreign shareholders. Three foreign shareholders (two Belgian individuals and a French bank) filed an objection against the dividend withholding tax levied in the Netherlands. They believe that the Netherlands taxes the dividends they receive more heavily than it taxes the same dividends received by a comparable Dutch resident. At the end of 2013, the Supreme Court asked the Court of Justice of the European Union (hereinafter: CJEU) for a preliminary ruling in these cases, which the CJEU rendered in September 2015. Below, we address the final judgments of the Supreme Court, after the ruling of the CJEU.


The cases concern the Dutch dividend withholding tax levied on dividends distributed to two Belgian individuals (Miljoen and X) and a French company (Société Générale), who all hold portfolio shareholdings in a Dutch company. At issue is whether the levying of dividend withholding tax leads to a restriction of the free movement of capital. Although the dividend withholding tax rate is the same for non-residents and residents, the dividend withholding tax is a final levy for non-residents, while residents can credit it against their personal or corporate income tax.

On December 20, 2013 the Supreme Court asked the CJEU for a preliminary ruling on this. On September 17, 2015 the CJEU ruled that, when comparing the tax treatment of resident and non-resident shareholders, the corporate income tax/personal income tax paid by resident shareholders must be included in the comparison. The final tax burden in both situations must therefore be compared. The CJEU largely indicated how that comparison should be made and whether any discriminatory withholding tax can be neutralized by crediting or deducting it in the state of residence. For a detailed discussion of the CJEU ruling please refer to our (English) report on it.

Final Supreme Court judgments

The Supreme Court ruled as follows on the cases involving the Belgian individuals. According to the CJEU, when comparing the tax burden for non-resident taxpayer individuals with the tax burden of resident taxpayer individuals a reference period of one calendar year must be taken into account. The shares in Dutch companies as a whole must be taken into account as well as the exemption for assets. With regard to the extent to which the exemption for assets must be taken into account, the Supreme Court infers from the CJEU ruling that a comparison must be made with a resident taxpayer whose assets would consist of the shares held by the non-resident taxpayer. The latter thus means that the entire exemption can be deducted in the comparison. These assets do not therefore have to be split pro rata over the shareholding and the other assets of the non-resident taxpayer, such as Advocate General Wattel argued in the Opinion he issued on these cases.

This way of comparing the tax burden of the Belgian individual Miljoen with that of a resident means that Miljoen does not receive a refund. The dividend withholding tax levied on him in 2007, the year in question, is less than the box 3 tax that would be payable by a resident on the total value of their shareholding less their exemption in the same calendar year. The effective tax burden on the Belgian individual X according to this manner of comparison is however higher, so that in this case there is a violation of the free movement of capital and a refund of dividend withholding tax must be granted.

In the case concerning the French company Société Générale, the Supreme Court ruled as follows. According to the CJEU, when comparing the tax burden of non-resident companies with that of resident companies, only the costs that are directly related to the collection, as such, of the dividends have to be taken into account. In light of this, the Supreme Court concluded that the District Court was correct in not including as part of those costs any pre-acquisition dividends (meegekocht dividend) and financing expenses related to the shareholding. Based on this, what was not disputed in the cassation proceedings was the fact that the tax burden of Société Générale in 2008 was not higher than that of a resident company. Therefore there is no violation of the free movement of capital.

Commentary by Meijburg & Co

The Supreme Court ruling is favorable for foreign individuals with shares in Dutch companies. After all, when comparing the tax burden with a resident the entire exemption for assets can be deducted. This does not therefore have to be allocated pro rata to the shareholding and the other assets.

However, when comparing the tax burden of a non-resident company with that of a resident company only a very limited number of costs are taken into account. We therefore expect that only in a limited number of cases will foreign companies be granted a refund.

In his letter dated October 9, 2015 to the Lower House, the Deputy Minister of Finance announced that after the judgment, in anticipation of an amendment of the law, he will prepare a policy statement which will provide clarity for the application of the benchmark in practice.

Click here to download the memorandum in pdf format