The following capital gains derived by a resident of one Contracting State may be taxed by the other State:

• Gains from the alienation of immovable property situated in the other State;
• Gains from the alienation of movable property forming part of the business property of a permanent establishment in the other State; and
• Gains from the alienation of shares or comparable interests if, at any time during the 365 days preceding the alienation, the shares or comparable interests derived more than 75% of their value directly or indirectly from immovable property in the other State, other than immovable property in which the company carries on its active business, with an exemption where:
• the gains are derived in the course of a merger or division;
• the gains are derived from the alienation of shares listed on a recognized stock exchange; or
• the gains are derived by a pension fund.

 Gains from the alienation of other property by a resident of a Contracting State may only be taxed by that State.

Tax is withheld at the rate of 5% from gross dividends and liquidation proceeds distributed to non-residents. As of 1 January 2009, dividends paid to companies and other legal entities resident in an EU/EEA country are exempt from withholding taxes pursuant to the Parent-Subsidiary Directive (PSD). However, the exemption does not apply to hidden profit distributions.

The withholding tax rate on dividends under the new 2020 tax treaty (effective 1 January 2022) is 0% if the beneficial owner is a company that has held at least 10% of the paying company's capital throughout a 365-day period that includes the date of payment or the beneficial owner is a pension fund; otherwise, 15%.

Under the earlier 1990 tax treaty, the withholding tax rate on dividends was 15% and a reduced rate of 5% applied if the beneficial owner was a company which directly held at least 25% of the capital of the company paying the dividends.

The withholding tax rate on interest under the new 2020 tax treaty (effective 1 January 2022) is 5%, with an exemption provided where:

• The recipient of the interest is a Contracting State or a political subdivision or local authority thereof, a public body or the Central Bank of a Contracting State;
• The interest is paid in connection with a loan granted, approved, guaranteed, or insured by a Contracting State, the Central Bank of a Contracting State, or any agency or entity (including a financial institution) controlled by a Contracting State;
• The recipient of the interest is Atradius Dutch State Business NV (or its legal successor) in respect of loans granted, approved, guaranteed, or insured by the Netherlands or the recipient of the interest is the Netherlands' Finance Company for Developing Countries (de Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden NV) (or its legal successor);
• The recipient of the interest is a pension fund;
• The interest is paid in connection with a loan granted by a bank or an insurance company;
• The interest is paid in connection with the sale on credit of any industrial, commercial, or scientific equipment; and
• The interest is paid in connection with the sale on credit of any merchandise by one enterprise to another enterprise.

Under the earlier 1990 tax treaty, the rate was 0%.

The withholding tax rate on royalties is 5% under the new 2020 tax treaty (effective 1 January 2022) as well as the earlier 1990 tax treaty.

The withholding tax rate on royalties is 5% under the new 2020 tax treaty (effective 1 January 2022) as well as the earlier 1990 tax treaty.

The withholding tax rate on royalties is 5% under the new 2020 tax treaty (effective 1 January 2022) as well as the earlier 1990 tax treaty.

The new 2020 tax treaty (effective 1 January 2022) as well as the earlier 1990 tax treaty, does not specifically deal with technical, management and similar service fees. In line with the OECD Model, this means that said services do not fall under the royalty article and do not attract the royalty withholding tax provided for under the treaty unless the services represent a minor part of a commingled transaction imparting in essence know-how. In that case, the services would follow the qualification of the principal component of the transaction, and may then attract the royalty withholding tax under the treaty. Otherwise, said services may be taxed in the source country only if the recipient has therein a (services) PE and the fees are attributable to that PE. Note, however, that not all countries would adhere to the OECD standpoint. ORBITAX has by default opted for the OECD position and the withholding tax rate is by default set to zero where the treaty does not specifically deal with technical, management and similar service fees. Where the relevant country has a developed policy regarding the treatment of technical, management and similar service fees and the correlation between those and royalties, ORBITAX has sought to cover this in Sec. 5.6. of the country chapters (Qualification of Specific Income Categories for Tax Purposes).

The new 2020 tax treaty (effective 1 January 2022) as well as the earlier 1990 tax treaty, does not specifically deal with technical, management and similar service fees. In line with the OECD Model, this means that said services do not fall under the royalty article and do not attract the royalty withholding tax provided for under the treaty unless the services represent a minor part of a commingled transaction imparting in essence know-how. In that case, the services would follow the qualification of the principal component of the transaction, and may then attract the royalty withholding tax under the treaty. Otherwise, said services may be taxed in the source country only if the recipient has therein a (services) PE and the fees are attributable to that PE. Note, however, that not all countries would adhere to the OECD standpoint. ORBITAX has by default opted for the OECD position and the withholding tax rate is by default set to zero where the treaty does not specifically deal with technical, management and similar service fees. Where the relevant country has a developed policy regarding the treatment of technical, management and similar service fees and the correlation between those and royalties, ORBITAX has sought to cover this in Sec. 5.6. of the country chapters (Qualification of Specific Income Categories for Tax Purposes).