5%-regeling
5% rule
The 5% rule is a tax provision in corporate income tax that renders the participation exemption applicable where a shareholding amounts to at least 5%.
The 5% rule forms part of the participation exemption under the Corporate Income Tax Act 1969. Where an entity holds at least 5% of the nominal paid-up capital in another company, dividends received and capital gains realised on disposal are exempt from corporate income tax.
The regime is designed to prevent double taxation within corporate groups and is relevant to holding companies and investment companies. In practice, the 5% threshold is frequently applied in structuring acquisitions and restructurings to optimise available tax benefits.
Where the interest falls below 5%, the exemption generally ceases to apply with retroactive effect, which may give rise to additional assessments.
“Thanks to the 5% regime, the holding company was able to receive the dividends from the subsidiary free of corporate income tax.”
Related terms
Need legal advice?
Schedule a free consultation with one of our specialists