The board meeting is nearly over. A Dutch company has healthy profit reserves, but its foreign owner does not want a cash dividend. The proposal is to issue bonus shares instead. Capital stays in the business, the balance sheet looks stronger, and no money appears to move.
Then the dividend-tax calculation arrives.
A Belastingdienst knowledge-group position published on 6 May 2026, KG:024:2026:1, shows the problem clearly. An individual living in another EU Member State owned all shares in a company established in the Netherlands. The company issued bonus shares from profit reserves. Their value triggered 15 percent Dutch dividend tax, although the shareholder received shares rather than cash.
That distinction reaches well beyond large international groups. An owner-managed Dutch company can make a sensible capital decision and still create an immediate tax payment, a filing deadline and a later refund process.
Shares are not cash
Bonus shares often feel harmless because they do not take funds out of the company as visibly as a cash dividend. Their source matters. When a company charges the shares to profit reserves, Dutch dividend-tax law can treat their nominal value as taxable proceeds.
The company generally handles the withholding, files the return and pays the tax. The return and payment are normally due within one month after the dividend becomes available. A shareholder’s possible refund follows its own route and does not change that timetable.
This creates an awkward mismatch. The shareholder receives no cash from the distribution, while the company or shareholder must still fund the withholding. If bonus shares have a nominal value of €200,000, 15 percent withholding means €30,000 must be accounted for. That money has to come from somewhere.
The board should not leave the economic burden to assumption. If the company pays the tax without recovering it from the shareholder, the cost remains with the company. A separate Belastingdienst position from 2025 found, in a domestic case, that tax borne by the company did not automatically increase the shareholder’s acquisition price. It could reduce the economic value of the shares instead.
A refund is a second process
The May 2026 position adds another complication. In the case described, the bonus-share issue did not count as regular substantial-interest income for Dutch income-tax purposes in that calendar year. The foreign shareholder therefore had no matching Dutch income-tax amount against which to credit the withheld dividend tax.
Full credit was also unavailable in the shareholder’s country of residence under the applicable treaty. The tax burden sat between two systems.
Article 10a of the Dividend Tax Act can provide relief for qualifying residents of another EU Member State or EEA state. In the published case, a refund was available once the statutory conditions were met. Broadly, the calculation concerns the excess of withheld dividend tax over the Dutch income tax that would have been due if the individual had lived in the Netherlands, after other relief is taken into account.
That relief matters, but it does not reverse the company’s payment automatically. The shareholder must follow the refund procedure and support the claim. Registration through Mijn Belastingdienst Zakelijk may be required. Residence, the distribution, tax withheld, other refunds and the Dutch comparison all need to align.
This is a timing lesson as much as a tax lesson. The tax leaves before the relief returns. An amount that is ultimately recoverable can still tie up cash for months, especially when the records are assembled only after the transaction.
The board decision needs a tax calendar
Return to that boardroom. The directors may have discussed reserves, solvency, voting rights and future investment. They may have legal documents ready for the share issue. The practical question is simpler: who has prepared the cash for the withholding, and who owns the refund process afterwards?
The answer should be clear before the distribution date. The board resolution should match the accounting entry and the share-register change. The nominal value and source of the issue should be unambiguous. The shareholder’s country of residence and current residence evidence should already be available. So should agreement on who bears the tax, and when the return and payment fall due.
For a cross-border owner, the relevant treaty needs its own reading. The Dutch government’s direct-tax treaty overview was updated to 1 July 2026, but treaty wording differs by country. The treaty version, protocol and effective date can change the result. Labels such as “old treaty” and “new treaty” are too loose when real money is involved.
The issue becomes sharper when bonus shares form part of a wider plan. A founder may capitalise reserves before a sale, succession, migration or restructuring. A later repurchase or disposal can bring its own Dutch and foreign tax treatment. The earlier share issue, tax payment and refund should remain traceable when that later event arrives.
Capital still has a cost
Bonus shares can strengthen a company without paying cash to its owner. That remains a legitimate commercial purpose. The mistake is to confuse a non-cash distribution with a transaction that carries no cash consequences.
The May position gives a qualifying foreign shareholder a route out of a stranded Dutch tax burden. It also makes the division of responsibility plain. The company handles the withholding and one-month deadline. The shareholder pursues the refund. The adviser must connect Dutch law, residence and treaty treatment without allowing one calendar to outrun another.
For a small company, the adjustment is modest: discuss the tax payment and refund path in the same meeting as the share issue. When those conversations are separated, a neat capital decision can produce an avoidable cash surprise. When they stay together, bonus shares remain what the board intended them to be: a financing choice, not an accidental tax advance.
Planning bonus shares for a foreign shareholder? We can map the tax payment, records and refund steps before the board decides
The data, sourcing, and analysis behind this article were conducted by Linda Pavan. AI was not used to identify sources, build the factual basis, or produce the analytical judgment contained here. AI was used only as a drafting aid. The final English text was personally reviewed, edited, and approved by Linda Pavan before publication.
