On 25 August 2010, the Ministry of Finance of Japan and the Ministry of Finance of the Netherlands announced that they signed a new tax treaty (New Treaty) for the avoidance of double taxation.

The New Treaty contains reduced withholding rates primarily for dividends, interest and royalties to encourage mutual investments and trade between Japan and the Netherlands. Following the trend of recent treaties concluded by Japan, the New Treaty contains various provisions to prevent treaty abuse (among others, a new Limitation on Benefits (LOB) article , a provision for hybrid entities, as well as (in the Protocol) a provision allowing Japan to tax distributions from a Tokumei Kumiai (TK) agreement).

Further details are available from the Ernst & Young Alert which can be accessed using the link below:

•  International Tax Alert: Japan and the Netherlands sign new tax treaty