The regular income from substantial shareholdings in the Netherlands includes dividends, but is also deemed to include:

• a notional yield on shares in an Dutch Tax Exempt Investment Institution (in Dutch: “Vrijgestelde Beleggingsinstelling”) or in a foreign corporation which has an equity divided into shares and which assets mainly consist, directly or indirectly, of investments;
• if certain conditions are met, the repayment of shares in excess of the acquisition price;
• the nominal value of bonus shares in a qualifying Dutch Tax Exempt Investment Institution.

The notional yield referred to above equals 5.69% (2021) of the value of the underlying shares, less actually received taxable income but no less than nil. For determining whether or not a notional yield must be reported, under certain conditions a Dutch corporation with a foreign branch has to be treated the same way as a foreign corporation.

The rules of notional yield do not apply to shares in:

• certain listed banks, mortgage banks and insurance companies;
• foreign corporations whose actual activities differ considerably from investment activities;
• foreign corporations which are subject to a profit tax which can be considered reasonable according to Dutch standards.

Special rules apply for determining the amount of the notional income in specific cases.

Special rules apply to determine the moment of recognition of income from substantial shareholding and the moment of deduction of allocable expenses.

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