How we helped a Dutch BV with the paperwork for their dividend distribution

The client’s problem

A Dutch BV (a Dutch limited liability company) is about to distribute a dividend to its shareholders. The BV has shareholders residing both in the Netherlands and in Germany. Client asked for our assistance with the paperwork (red tape) of the dividend distribution.

Our solution

For a dividend distribution it is obviously of great importance to determine first if and to what extent the company has free distributable reserves indeed. The director of the company should make a distribution test to see if and to what extent the company can actually distribute these reserves without harming the continuity of the company. Can all creditors still be paid after the dividend distribution? If not, the director of the company could be held liable.

If the director agrees with a distribution of dividend (ideally by way of a directors’ resolution), the shareholders of the company can resolve in a shareholders’ meeting or by way of a shareholders’ resolution to make the dividend payment. The shareholders resolution should obviously be in accordance with the articles of association of the company. Hence next to the financial statements, the articles of association should also be checked. Subsequently, it has to be determined if and for what rate Dutch dividend withholding tax is due.

Once the dividend has been made available, the company has one month to submit a Dutch dividend tax return and to process payment of dividend withholding tax (if any).

Obviously, we provided for all necessary paperwork timely taking care of the legal deadlines.

Current situation

Our client is very happy now that all paperwork was taken care of in a timely and complete matter.

Note: due to the privacy of our clients, this case study provided by TGS lime tree does not include any names, numbers and other sensitive information of our clients, partners and other parties involved.