Einde inhoudsopgave
Treaty Application for Companies in a Group (FM nr. 178) 2022/2.4.2.4
2.4.2.4 Art. 10 OECD MTC: Dividends
L.C. van Hulten, datum 06-07-2022
- Datum
06-07-2022
- Auteur
L.C. van Hulten
- JCDI
JCDI:ADS657719:1
- Vakgebied(en)
Europees belastingrecht / Richtlijnen EU
Vennootschapsbelasting / Fiscale eenheid
Internationaal belastingrecht / Belastingverdragen
Vennootschapsbelasting / Belastingplichtige
Voetnoten
Voetnoten
Of course, Contracting States may agree on a different percentage of ownership by mutual consent. A lower percentage may be justified if the state of residence of the parent company, in accordance with its domestic law, already applies the participation exemption for dividends derived from a holding of less than 25% in a non-resident subsidiary (Commentary on art. 10 OECD MTC, par. 14).
The ‘365 days’-requirement was included in the OECD MTC in 2017 to counter abuse (Commentary on art. 10 OECD MTC, par. 16).
Art. 3, par. 1, sub b, OECD MTC.
After all, it should concern a resident. Art. 4, par. 1, OECD MTC defines the concept of ‘resident of a Contracting State’as ‘any person who, under the laws of that State, is liable to tax therein’.
Art. 10 OECD MTC divides the taxing right on dividend payments. This provision contains a form of group approach. The provision provides for a reduced withholding tax rate on dividend payments if the recipient holds at least 25%1 of the shares in the entity that pays the dividend. In this context, it is also required that the recipient of the dividends holds the shareholding for a period of 365 days.2 The rationale for the reduced withholding tax rate in group relations appears to be that the OECD seeks to prevent excessive taxation in such relations. By requiring a minimum shareholding of 25%, the provision contains an implicit group definition.
The provision covers dividends paid by a company to a resident of the other state. The concept of company means ‘any body corporate or any entity that is treated as a body corporate for tax purposes’.3 The provision therefore covers legal entities paying a dividend. The recipient of the dividend can be a natural person, a legal entity or any other body of persons.4