Dividend WHT rate under NL – South Africa DTAA affected by “MFN” clause – Effective rate: zero

Tax courts in the Netherlands and South Africa have confirmed that the effective withholding tax (WHT) rate on dividends under the Netherlands – South Africa Double Tax Avoidance Agreement (DTAA) is 0%. This rate is conditional upon the exemption from dividend WHT in the South Africa – Kuwait DTAA remaining in force as well as the most favoured nation clause in the South Africa – Sweden DTAA remaining unchanged. The decision of the Tax Court of South Africa, which applies to dividends flowing from South Africa to the Netherlands, has interesting implications for multinational companies looking to invest in South Africa.


09 Oct. '19
Patrick T.F. Schrievers

“Most Favoured Nation” (MFN) clauses

MFN clauses are commonly found in DTAAs between developed and developing countries. These are negotiated into DTAAs to ensure that if one of the treaty partners offers a more beneficial treatment to another country, such treatment will also automatically apply under the DTAA that includes the MFN clause. Though MFN clauses are a popular topic of discussion in the context of treaty law as well as EU law, it is difficult to keep up with the actual application of these clauses because of their inter-dependence and also the complexity of language.

Decision of the Dutch Supreme Court


Patrick T.F. Schrievers

Patrick T.F. Schrievers is a tax lawyer and member of the Dutch Association of Tax Advisers (NOB) and the International Fiscal Association (IFA).

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