Refund of Dutch dividend withholding tax granted to UK insurer under the free movement of capital

In the case ruled by the Court, the taxpayer was a UK-resident insurance company offering unit-linked policies, primarily to institutional pension insurers and employers. Premiums received are invested in ring-fenced investment baskets that are segregated only for accounting purposes within the insurer’s own assets. Those investments included shares in Dutch resident companies on which Dutch dividend withholding tax had been levied. The key issues were whether the insurer qualified as the recipient of the dividend proceeds and the beneficial owner of the dividends, whether it was comparable to a tax-exempt Dutch pension fund, and whether it was entitled to a refund under EU law. To the extent the proceedings concerned refund claims filed by an affiliated entity (Pensions), the court held the appeal inadmissible under the closed system of standing laid down in Article 26a of the Dutch General Taxes Act (AWR).

Judgment

The court first assesses the case under the domestic framework of Article 1(1) of the Dutch Dividend Withholding Tax Act 1965 and Article 10 of that Act. Referring to Supreme Court 19 January 2024, ECLI:NL:HR:2024:49, it holds that the insurer is entitled to the dividend proceeds because it is both civil-law and economically entitled to the dividends and acts in its own name and for its own account. The court also finds that the insurer is the beneficial owner of the dividends, as the tax authorities failed to demonstrate that there was dividend stripping or that the insurer acted merely as an agent or nominee. The court then rejects the argument that the insurer is comparable to a Dutch tax-exempt pension entity within the meaning of Article 5(1)(b) of the Dutch Corporate Income Tax Act 1969 and Article 3 of the Corporate Income Tax Decree 1971. The refund ultimately follows from EU law. In line with the preliminary ruling of the CJEU of 7 November 2024, C-782/22, ECLI:EU:C:2024:932, the court holds that the Dutch levy is contrary to Article 63(1) TFEU (free movement of capital), because a comparable Dutch resident corporate taxpayer would, through application of the total profit concept under Article 8(1) of the Dutch Corporate Income Tax Act 1969 in conjunction with Article 3.8 of the Dutch Income Tax Act 2001, not bear any effective tax burden on these dividends.

Practical relevance

This decision is relevant for foreign insurers, pension-related investment structures and other non-resident entities receiving Dutch portfolio dividends. It shows that a refund claim does not depend solely on whether a foreign entity is formally comparable to a tax-exempt Dutch pension fund. It may also be decisive whether, in a domestic comparator scenario, no effective Dutch tax burden would arise in light of the total profit concept and the relationship between investment returns and liabilities towards policyholders or clients. For advisory practice, the judgment highlights the importance of a careful analysis of legal and economic entitlement to dividends, beneficial ownership, and the EU-law comparison of effective tax burden under Article 63 TFEU. In particular for unit-linked structures and similar asset-backed liability arrangements, this approach may create additional opportunities for withholding tax refund claims.

Case reference: 

Court of Appeal of ’s-Hertogenbosch, 22 April 2026, case nos. 20/535 through 20/542, ECLI:NL:GHSHE:2026:1082.