Double Taxation Relief Manual: Guidance by country: Netherlands: Underlying Tax
Documents needed to support the underlying tax claim
The resolution declaring the dividend; the accounts showing the profits used for the dividend; and the notice of assessment taxing the profits.
Allocation of fiscal unity
For dividends paid on or after 31 March 2001 ICTA88\S803A applies. DT970 contains advice about the effect of S803A on underlying tax claims involving a fiscal unity.
For dividends paid before 31 March 2001 the fiscal unity tax should be allocated between the members of the fiscal unity with taxable profits. For example,
Company 1 Company 2 Company 3 Total
profits) 2,200,000) (100,000) 134,000) 2,234,000
Tax at 35%) 770,000) (35,000) 46,900) 781,900
The tax is allocable as follows:
Company 1: 2,200,000/(2,200,000 + 134,000) x 781,900 = 737,009
Company 3: 134,000/(2,200,000 + 134,000) x 781,900 = 44,891
(3) EQUITY ACCOUNTING
For dividends paid to the UK on or after 21 March 2000 ICTA88\S801B applies. The relevant profits include the distributable equity in the profits of subsidiary companies. Equity losses are deductible in arriving at relevant profits. See DT973.
For dividends paid to the UK before 21 March 2000 credit is available for tax underlying equity profits if the parent company’s own profits (excluding equity but including dividends received) are insufficient to cover the dividend paid by the parent company. If the parent company’s own profits (including dividend income) are sufficient to cover its dividend, relevant profits exclude equity but include dividend income, with tax underlying the equity excluded and tax underlying dividend income creditable in the usual way.