Executive Summary

On 18 July 2025, the Dutch Supreme Court confirmed that Belgian family-owned holding companies are not eligible for the dividend withholding tax exemption due to anti-abuse rules—even if originally legitimate, structures may become abusive over time. This signals to CFOs that substance, control, and implementation matter continuously.

CFOs and Tax Directors reading this will be able to:

• Understand the dynamic and layered anti-abuse test applied by the Supreme Court
• Assess whether their holding structures remain compliant over time
• Evaluate whether shareholders truly control dividend decisions
• Strengthen substance, governance, and functional attribution to safeguard exemptions
  

 

Anti-Abuse Provision Enforced in Belgian Holding Cases

On 18 July 2025, the Dutch Supreme Court upheld the Amsterdam Court of Appeals’ decisions: two Belgian holding companies, despite initial legitimacy, were refused dividend withholding tax exemption under Article 4(3)(c) of the Dividend Withholding Tax Act—implementing an EU anti-abuse rule.

 

Layered and Dynamic Abuse Assessment 

The Court affirmed that abuse can arise from just part of a structure—even if other components are commercially valid. Structures originally set up for real business purposes may later become abusive due to changes or added artificial elements.
This establishes that abuse testing is ongoing—subject to facts and circumstances evolving over time.

 

Substance Alone Doesn’t Shield from Abuse

Despite one Belgian holding conducting genuine business, the Court held that without functional attribution—i.e., connection of shareholding to actual activities—the exemption cannot apply. The mere existence of substance is insufficient.

 

Shareholder Control Over Dividend Distribution Matters

A significant factor was that the Belgian families, not the holding companies, retained full discretion to distribute or reinvest profits—and there was no obligation to reinvest. This lack of corporate-level control signals abuse.

 

Conclusion

CFOs and Tax Directors should now:

• Review fund structures under the similarity, fixed and symmetrical approaches. Recognize that anti-abuse analysis is dynamic and applies to portions of structures
• Ensure holdings have genuine economic activity functionally linked to their shareholdings
• Confirm that holding companies—not just ultimate shareholders—control dividend decisions
• Reassess holding structures proactively to preserve withholding exemptions
  

*Disclaimer: This article provides general information only and does not constitute professional advice. Seek tailored guidance before acting.