The argument with which I agree is that the provisions of the Dutch agreement are clear and provide that, if another State in the future receives preferential treatment from South Africa, the country established in the Netherlands must enjoy the same preference. It is equally clear that in the event of a subsequent conclusion of the Agreement with Sweden, this Agreement provides that Swedish residents should enjoy the same preferential treatment as any other Party with South Africa, regardless of when residents of that other State will enjoy such a preference, either before or after the conclusion of the agreement with Sweden. When the agreement was concluded with Sweden, the inhabitants of Kuwait were already given preferential treatment, so that swedes were entitled to the same treatment. The conflicting views of SARS and the Dutch court have given rise to some uncertainty as to the correct withholding rate to be applied when a South African company pays a dividend to a shareholder based in the Netherlands. On 18 January 2019, the Supreme Court of the Netherlands had to consider the above and set the appropriate tax rate applicable to the payment of a dividend from a Dutch company to a shareholder based in South Africa. The Court held that the distribution of dividends from the taxable person (a Netherlands entity) to a South African undertaking in 2013 was subject to the Netherlands dividend tax of 0% due to the application of Article 10(10) in conjunction with the South Africa/Kuwait and South Africa/Sweden tax agreements. At ABC, the taxpayer, a South African-based company, paid dividends to a Netherlands-based shareholder in April and October 2012. The shareholder provided the necessary declarations and obligations and the taxpayer withheld the dividend tax of 5%. The shareholder then found that the declarations and commitments were inaccurate and submitted amended declarations and commitments inviting the taxpayer to withhold 0% dividend tax from dividends paid to the shareholder.
The taxable person then requested a refund from the Commissioner on the basis of the amended declarations and obligations which the Commissioner rejected. Where a dividend is paid to a beneficial owner who is not established in South Africa, the rate at which the dividend tax is to be withheld may be reduced, in accordance with the provisions of the applicable Double Taxation Convention („DBA“) between the two countries, provided that there is one. For the purposes of the DBA between South Africa and the Netherlands, dividends may be taxed in South Africa only if they are paid to a person established in the Netherlands at a maximum rate of 5 % if that shareholder holds at least 10 % of the shares in the South African company and, in all other cases, 10 %. The DBA between South Africa and the Netherlands also provides for a so-called most-favoured-nation clause, which, where appropriate, lowers the maximum rate of payment of dividends paid by a South African company to a shareholder established in the Netherlands if the following conditions are met: without relying on the decision of the Dutch Supreme Court, the Finanzgericht ruled in favour of the taxable person and decided that the dividends in question did not subser the withholding tax on the dividends. . . .