{"id":236457,"date":"2026-01-09T18:33:07","date_gmt":"2026-01-09T18:33:07","guid":{"rendered":"https:\/\/www.newsbeep.com\/ie\/236457\/"},"modified":"2026-01-09T18:33:07","modified_gmt":"2026-01-09T18:33:07","slug":"dutch-tax-court-rules-ontario-pension-plan-wrongly-claimed-346-million-in-tax-refunds","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ie\/236457\/","title":{"rendered":"Dutch tax court rules Ontario pension plan wrongly claimed $346-million in tax refunds"},"content":{"rendered":"

Open this photo in gallery:<\/a><\/p>\n

A Dutch tax court\u2019s decision would require Healthcare of Ontario Pension Plan to repay millions in tax refunds and interest charges.Galit Rodan\/The Globe and Mail<\/p>\n

A Dutch tax court ruled this week that Healthcare of Ontario Pension Plan wrongly claimed nearly \u20ac214-million ($346-million) of dividend tax refunds through a trading strategy designed to take advantage of the pension fund\u2019s favourable tax status in the Netherlands.<\/p>\n

The court upheld the opinion of a tax inspector who found that in 445 transactions between 2013 and 2018, HOOPP was not the true beneficial owner of Dutch shares that paid the dividends and so could not reclaim tax withheld against them, in a ruling<\/a> published on Wednesday.<\/p>\n

The decision is a setback for HOOPP in a long-running tax dispute, launched in 2019, which also led a Dutch prosecutor to initiate a separate criminal investigation<\/a> in October. The tax court\u2019s decision would require HOOPP to repay the refunded tax as well as about \u20ac40-million ($65-million) in interest charges. <\/p>\n

\u201cHOOPP is disappointed by this tax court ruling and will appeal the decision,\u201d spokesperson Scott White said in an e-mailed statement. \u201cThis initial ruling on events that occurred between 2013 and 2018 will have no impact on HOOPP\u2019s ability to pay pensions to our members today or in the future.\u201d<\/p>\n

HOOPP declined to make further comment on the case because it is still before the courts.<\/p>\n

The key issue in the tax dispute \u2013 and the more recent criminal inquiry \u2013 is whether HOOPP met the test to be considered the beneficial owners of shares traded on the Dutch stock exchange. Dutch authorities have alleged the pension fund used sophisticated contracts with counterparties to exploit its tax status for financial gain.<\/p>\n

Dutch tax authorities first looked into HOOPP\u2019s trades in response to a news story about \u201cdividend stripping,\u201d which involves buying shares for a short period before a dividend is declared and then selling them back to the original owner, according to court filings. <\/p>\n

In 2013, HOOPP\u2019s investment risk committee approved a derivative strategy that sought to capitalize on the fact that foreign pension funds in countries including Canada are entitled to have a 15-per-cent tax on dividend distributions refunded, which other institutions would have to pay, according to documents reviewed by the court. <\/p>\n

HOOPP found that it could buy \u201cforeign stocks prior to the payment of dividends,\u201d then sell them to another entity \u2013 a bank \u2013 shortly after it received the dividend, according to the risk committee\u2019s documents. In the meantime, it would hedge the risk of the stock price changing using an equity swap or call option, keep \u201ca small percentage of the dividend \u2013 a percentage less than the withholding tax, and the remaining dividend amount is paid to the other entity.\u201d<\/p>\n

HOOPP purchased and sold the shares \u201cover the counter\u201d through brokers, and argued there was no contractual link between its share purchases and the price return swaps it entered into with banks, so the transactions were not \u201ccircular,\u201d according to court filings. <\/p>\n

But the tax authorities found that HOOPP correspondence showed the pension fund was communicating with various banks, agreeing on \u201cprice return swaps\u201d at the time it bought the shares. Those contracts were settled after the record date when HOOPP became eligible to receive the tax-free dividends.<\/p>\n

\u201cWith this strategy, the interested party wanted to make use of its dividend withholding tax refund position,\u201d the court ruling said, in reference to HOOPP.<\/p>\n

HOOPP\u2019s counterparty bank, \u201cwhich has retained its interest in the shares by means of the price return swap, is on balance compensated an amount corresponding to the amount of the net dividend to be distributed, plus part of the dividend tax withheld from the dividend distribution,\u201d the tax court said. <\/p>\n

The Dutch tax inspector initially granted HOOPP refunds between 2015 and 2019 totalling \u20ac213.5-million, but later ruled that HOOPP must repay that sum with interest. HOOPP contested that decision but Wednesday\u2019s ruling said the pension fund\u2019s objections \u201care unfounded.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"Open this photo in gallery: A Dutch tax court\u2019s decision would require Healthcare of Ontario Pension Plan to…\n","protected":false},"author":2,"featured_media":236458,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[72,176,61,60,53841,174,175],"class_list":{"0":"post-236457","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance","8":"tag-business","9":"tag-finance","10":"tag-ie","11":"tag-ireland","12":"tag-nodelphi","13":"tag-personal-finance","14":"tag-personalfinance"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/236457","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/comments?post=236457"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/236457\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media\/236458"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media?parent=236457"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/categories?post=236457"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/tags?post=236457"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}