New tax treaty signed between the Netherlands and mainland China

The Netherlands and China signed a new Tax Treaty for the Avoidance of Double Taxation and Prevention of Fiscal Evasion on 31 May. Once in effect (no earlier than 1 January 2014), it will replace the current tax treaty, which was signed in Beijing on 13 May 1987.

The treaty clearly purports to further improve investment opportunities. For investors, the main advantage of the treaty is a reduction in the dividend withholding tax rate from 10 per cent to five per cent on shareholdings of 25 per cent or more. For shareholdings of less than 25 per cent, the preferential treaty rate will remain 10 per cent.

The treaty also provides explicit provisions designed to counteract ‘treaty shopping’. The treaty provides explicit provisions designed to counteract treaty shopping and contains an expanded exchange of information provision…

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