Sign up with GoogleCan someone pse explain in laymans terms how does the double taxation occur? And if it can be ‘avoided’?
The way it appears to me is that if a foreign company, dual listed on the JSE (such as EPP) declares dividends then these are taxed at the domiciled country as well as in RSA.
In the EPP example this will be 15% by Dutch tax, and then 20% by SA tax. Does this mean that taxation on dividends then amount to a whopping 35%?
TIA
EPP Sens below:
"UPDATE: DIVIDEND FOR THE SIX MONTHS TO 30 JUNE 2017
EPP shareholders are referred to the dividend declaration contained in the condensed consolidated financial information
for the six month period ended 30 June 2017, announced on Tuesday, 5 September 2017 (the “June 2017 dividend”), as
well as the finalisation information in respect of the dividend, announced on Tuesday, 12 September 2017.
As previously announced, shareholders on the company’s South African register were entitled to a gross local dividend
amount of ZAR79.93880 cents per share in respect of the June 2017 dividend. Dutch dividend withholding tax
(“DWHT”) at a rate of 15% was withheld by EPP on the dividend, unless a shareholder met the formal requirements for
reduced DWHT in terms of the tax treaty concluded between the Netherlands and South Africa (“NL-SA treaty”).
As the dividend was also subject to South African dividends withholding tax (“SADWT”) at a rate of 20%, unless a
shareholder qualified for an exemption from SADWT, dividends received in respect of EPP shares on the South African
register were subject to an additional SADWT, as further detailed below.
Relief from DWHT for South African shareholders
In terms of the NL-SA treaty, a reduced DWHT rate applies in certain instances.
Companies resident in South Africa that own 10% or more of the capital of EPP
A reduced DWHT rate of 5% applies to qualifying companies resident in South Africa that own 10% or more of the
capital of EPP.*
In respect of the June 2017 dividend, this reduced DWHT rate will only have been applied at source if certain formal
requirements were satisfied by the relevant shareholder. If these formal requirements were not met and 15% DWHT has
been suffered in the Netherlands by a company resident in South Africa that owns 10% or more of the capital of EPP,
shareholders may claim a refund by providing the following details to the company:
(i) name, address and place of residency;
(ii) amount, number and percentage shares owned in EPP; and
(iii) a tax residency certificate issued by the South African tax authorities.
EPP will then file the relevant request with the Dutch Tax Authorities (“DTA”) and after EPP having received the DWHT
refund from the DTA, refund the relevant shareholder(s) accordingly.
Shareholders who in future wish to have the reduced DWHT applied at source are required to be provide the above details
to the company no less than 8 weeks prior to the declaration of a dividend. The company will upon receipt of the above
information file a request with the DTA to obtain written confirmation of a reduced DWHT, which decision should be
provided in principle within 6 weeks. Any such decision will remain valid for a period of 4 years, provided that the
relevant requirements continue to be met by the shareholder concerned.
Companies resident in South Africa that own less than 10% of the capital of EPP and individual persons tax resident in
South Africa
A reduced DWHT rate of 10% applies to qualifying companies resident in South Africa that own less than 10% of the
capital of EPP and qualifying individual persons tax resident in South Africa.*
In respect of the June 2017 dividend, this reduced DWHT rate will only have been applied at source if certain formal
requirements were satisfied by the relevant shareholder. If these formal requirements were not met and 15% DWHT has
been suffered in the Netherlands by a company resident in South Africa that owns less than 10% of the capital of EPP or
individual persons tax resident in South Africa, such shareholder may claim a refund by registering at
www.belastingdienst.nl/refunddividendtax and submitting the required documentation online. Although at the date of this
announcement, the registration form provides for corporate entities and authorised representatives only, this form may
also be used by individuals.
Shareholders who in future wish to have the reduced DWHT applied at source, are required, each and every time a
dividend is declared by the company, to send a signed IB-92 statement to the South African Revenue Service for
signature and stamp certifying the shareholder’s place of residence, and provide such signed and stamped IB-92 statement
to the company prior to the declaration of a dividend. The company will file the statement with the DTA together with its
DWHT return. The IB-92 statement can be found at www.belastingdienst.nl/refunddividendtax.
SADWT"
The way it appears to me is that if a foreign company, dual listed on the JSE (such as EPP) declares dividends then these are taxed at the domiciled country as well as in RSA.
In the EPP example this will be 15% by Dutch tax, and then 20% by SA tax. Does this mean that taxation on dividends then amount to a whopping 35%?
TIA
EPP Sens below:
"UPDATE: DIVIDEND FOR THE SIX MONTHS TO 30 JUNE 2017
EPP shareholders are referred to the dividend declaration contained in the condensed consolidated financial information
for the six month period ended 30 June 2017, announced on Tuesday, 5 September 2017 (the “June 2017 dividend”), as
well as the finalisation information in respect of the dividend, announced on Tuesday, 12 September 2017.
As previously announced, shareholders on the company’s South African register were entitled to a gross local dividend
amount of ZAR79.93880 cents per share in respect of the June 2017 dividend. Dutch dividend withholding tax
(“DWHT”) at a rate of 15% was withheld by EPP on the dividend, unless a shareholder met the formal requirements for
reduced DWHT in terms of the tax treaty concluded between the Netherlands and South Africa (“NL-SA treaty”).
As the dividend was also subject to South African dividends withholding tax (“SADWT”) at a rate of 20%, unless a
shareholder qualified for an exemption from SADWT, dividends received in respect of EPP shares on the South African
register were subject to an additional SADWT, as further detailed below.
Relief from DWHT for South African shareholders
In terms of the NL-SA treaty, a reduced DWHT rate applies in certain instances.
Companies resident in South Africa that own 10% or more of the capital of EPP
A reduced DWHT rate of 5% applies to qualifying companies resident in South Africa that own 10% or more of the
capital of EPP.*
In respect of the June 2017 dividend, this reduced DWHT rate will only have been applied at source if certain formal
requirements were satisfied by the relevant shareholder. If these formal requirements were not met and 15% DWHT has
been suffered in the Netherlands by a company resident in South Africa that owns 10% or more of the capital of EPP,
shareholders may claim a refund by providing the following details to the company:
(i) name, address and place of residency;
(ii) amount, number and percentage shares owned in EPP; and
(iii) a tax residency certificate issued by the South African tax authorities.
EPP will then file the relevant request with the Dutch Tax Authorities (“DTA”) and after EPP having received the DWHT
refund from the DTA, refund the relevant shareholder(s) accordingly.
Shareholders who in future wish to have the reduced DWHT applied at source are required to be provide the above details
to the company no less than 8 weeks prior to the declaration of a dividend. The company will upon receipt of the above
information file a request with the DTA to obtain written confirmation of a reduced DWHT, which decision should be
provided in principle within 6 weeks. Any such decision will remain valid for a period of 4 years, provided that the
relevant requirements continue to be met by the shareholder concerned.
Companies resident in South Africa that own less than 10% of the capital of EPP and individual persons tax resident in
South Africa
A reduced DWHT rate of 10% applies to qualifying companies resident in South Africa that own less than 10% of the
capital of EPP and qualifying individual persons tax resident in South Africa.*
In respect of the June 2017 dividend, this reduced DWHT rate will only have been applied at source if certain formal
requirements were satisfied by the relevant shareholder. If these formal requirements were not met and 15% DWHT has
been suffered in the Netherlands by a company resident in South Africa that owns less than 10% of the capital of EPP or
individual persons tax resident in South Africa, such shareholder may claim a refund by registering at
www.belastingdienst.nl/refunddividendtax and submitting the required documentation online. Although at the date of this
announcement, the registration form provides for corporate entities and authorised representatives only, this form may
also be used by individuals.
Shareholders who in future wish to have the reduced DWHT applied at source, are required, each and every time a
dividend is declared by the company, to send a signed IB-92 statement to the South African Revenue Service for
signature and stamp certifying the shareholder’s place of residence, and provide such signed and stamped IB-92 statement
to the company prior to the declaration of a dividend. The company will file the statement with the DTA together with its
DWHT return. The IB-92 statement can be found at www.belastingdienst.nl/refunddividendtax.
SADWT"
