The Public Prosecutor in the Netherlands is suing an unnamed foreign pension fund on suspicion of evasion of dividend withholding tax. The prosecutor’s office is also investigating a former employee of the pension fund involved in the case.
The pension fund in question reclaimed and received dividend withholding tax from the Netherlands tax authorities for the years 2013 up to and including 2018, the prosecutor’s office said in a press statement.
Foreign pension funds domiciled in a country that has a tax treaty with the Netherlands are entitled to a refund of the full amount of the 15% dividend withholding tax charged by the country. The Netherlands has tax treaties with most OECD countries.
In September 2019, the tax authorities launched an audit into the pension fund once the suspicion had arisen that it had wrongly reclaimed dividend tax.
The total of dividend tax wrongly reclaimed and received by the pension fund exceeds €200m, according to the prosecutor.
The Netherlands Fiscal Intelligence and Investigation Service (FIOD) investigated the case under the direction of the Public Prosecutor.
It found that the shares in question had, around the date the dividend payout of the company was determined, been transferred temporarily to the pension fund by a third party that did not have a right to a tax refund.
Shortly after the payout of the dividend, the shares were then resold to the original shareholder “via complex constructions involving derivatives,” a spokesperson for the prosecutor’s office told IPE.
The prosecutor is still investigating the complicity of a former employee of the pension fund involved in executing the transactions.
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