Concentrix Services Netherlands B.V. Vs ITO (TDS) (Delhi High Court)
Withholding Tax rate of 5% on payment of dividend to resident of Netherlands after applying MFN Clause
The Hon’ble Delhi High Court in the case of Concentrix Services Netherland B.V. Vs. ITO (TDS) & Ors held that withholding tax rate of 5% is to be applied while making payment of dividend by Indian entity to its shareholder in Netherlands after applying the Most Favoured Nation (MFN) clause in the Tax Treaty between India and Netherlands.
Facts of the case, contention raised by the Tax Department and decision of the Hon’ble High Court is as under:-
Facts
1) The Taxpayers are tax resident of Netherlands and holds 99.99% shares in their Indian counterparts.
2) The Taxpayers made an application to the Tax Department for issue of lower withholding tax (WHT) certificate at a rate of 5% in order to enable their Indian counterpart to pay dividend to them after withholding lower rate of tax.
3) The aforesaid lower WHT rate is based upon Article 10 of the Tax Treaty between India and Netherlands read along with the clause IV(2) of the Protocol. Conditions prescribed in Clause IV(2) of the protocol is mentioned hereunder:-
