Dutch companies are eligible for a full credit of Dutch dividend withholding tax on their income from Dutch portfolio investments (e.g. dividend income from <10% share interests in other companies) against their corporate income tax liability over that same income. When Dutch companies incur a loss, there is no corporate income tax liability and the full dividend withholding tax is refunded. In a similar cross border situation (i.e. a foreign company receiving income from Dutch portfolio investments) Dutch dividend withholding tax is never refunded, even if the foreign company incurs a loss. After the ECJ held a very similar method of taxation in France to be discriminatory and a prohibited violation of the free movement of capital in the European Court of Justice’s “Sofia” judgment (22-11-2018, C-575/17), the Netherlands has decided to restrict the credit of dividend withholding tax for Dutch resident companies to the amount of corporate income tax due. However, not by treating foreign companies equally as Dutch resident companies, going forward, and refunding the dividend withholding tax in loss situations. But by restricting the credit of dividend withholding tax for Dutch resident companies to the amount of corporate income tax due. As a result, there will be no more refund of dividend withholding tax when Dutch resident companies incur a loss. This not only eliminates the discrimination but also raises the total dividend withholding tax revenue. This measure is likely to affect foreign (and from 2022 also Dutch) insurance companies the most, as they are taxable corporations with the most substantial portfolio investments. Foreign insurance companies should consider whether they should make their Dutch dividend withholding tax reclaims retroactively (under the 3 to 5 year – depending on the situation – statue of limitations) before the measure enters into effect in 2022. Finally, the government also announced it expects to repay close to EUR 1 billion in dividend withholding tax levied from foreign investors in violation of the free movement of capital. Presumably this anticipated liability relates not only to taxable corporations in Sofina type situations, but also to the thousands of refund claims filed by investment funds and exempt investors such pension funds in recent years, also on the basis of the free movement of capital.