investing and trade in the netherlands & netherlands the gateway to europe september 16, 2014

Investing and Trade in the Netherlands & Netherlands the gateway to Europe

September 16, 2014

2© 2014 KPMG N.V ., registered with the trade register in the Netherlands under number 34153857, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (‘KPMG International’), a Swiss entity. All rights reserved. Printed in the Netherlands.

Agenda

1

2

Introduction

3

The Netherlands, an overview & European hub

4

The Netherlands, a tax update

Q&A


With you here today

Laurens Kreuze

Head of high growth markets – Africa

Jens Karreman

Tax expert high growth markets

Laurens H.A. Kreuze

Partner, KPMG Accountants N.V.

Laan van Langerhuize 11186 DS Amstelveen

Phone: +31 20 656 7461Mobile: +31 6 537 29 674E-mail: [email protected]

Jens Karreman

Partner, KPMG Meijburg & Co

Prof.dr. Dorgelolaan 30D5613 AM Eindhoven

Phone: +31 40 250 2450Mobile: +31 6 215 58 268E-mail: [email protected]

Starting for KPMG Nigeria in Lagos per 1

November 2014


KPMG in the Netherlands

Founded1987 merger between Peat Marwick and Klynveld Main Goerdeler

Revenue (2013)US$ 23,4 billion

Employees152,000 in 156 countries

IndustryProfessional services

Main servicesAudit, tax, and advisory

KPMG Global

Founded1919 by Piet Klynveld

Revenue (2013)EUR 606 million (approx. US$ 833 million)

Employees3,131

IndustryProfessional services

Main servicesAudit, tax, and advisory

KPMG in the Netherlands


KPMG’s High Growth Market Desk Africa – multi discipline approach

AUDIT

• Reviewing financial accountability on behalf of third parties

• Corporate governance

• Assessing strategy, business risks and implications for the financial statements

• Center of excellence for international holding and finance audits

TAX

• All the different areas of the tax field, including corporation, income, turnover and wage tax

• Tax Innovation Centre

• Import duties, international executive services, immovable property tax and environmental levies, succession planning and transfer pricing

ADVISORY

• Transactions & Restructuring

• Risk Consulting

• Management consulting

High Growth Markets desk – Africa

One point of contact covering all services and client related matters

The Netherlands, an overview & European hub


The Netherlands

Netherlands facts and figures

Area:

41,528 sq km (water: 7,643 sq km; land: 33,883 sq km of which forest 3,447 sq km)

Five largest cities (November 2013):

Amsterdam (capital) – population 810,084

Rotterdam – population 618,279

The Hague (seat of government) – population 508,480

Utrecht – population 327,834

Eindhoven – population 221,101

Climate:

Temperate; marine; cool summers and mild winters

Netherlands Facts & Figures


The Netherlands

Natural resources:

Natural gas, petroleum and arable land

Population (January 2014):

16,825,618

Age structure (2013)

0-24 years: 29.3%

25-64 years: 53.7%

65 years and older: 17.0%

Currency:

Euro (EUR)

Transportation infrastructure (2013)

Roadways: 139,295 km

Railways: 3,013 km

Waterways: 6,237 km

Netherlands Facts & Figures


The Dutch economy The recent financial crisis has had a strong impact on the Dutch economy

-2.5

-2.0

-1.5

-1.0

-0.5

0.0

0.5

1.0

I II III IV I II III IV I II III IV I II III IV I II III IIII I II III IIII

2008 2009 2010 2011 2012 2013

Economic growth in the Netherlands

GDP, in % quarter-on-quarter

Source: Economist Intelligence Unit, ING

The financial crisis led to economic downturn. Only now the economy is

slowly starting to recover

■ Sluggish economic growth of 0,5% is forecasted for 2014, in 2015 the growth pace will likely pick up to 1,5%.

■ In comparison to neighbouring countries, e.g. Germany, the Netherlands was slow to recover from the economic downturn. And Netherlands suffered serious drop in consumer confidence

■ As in other countries, the Dutch financial sector was not able to withstand the global financial crisis and the state intervened to prevent its collapse

■ First indications of Netherlands economy picking up again and faster than European average

■ Current growth is mainly export driven.


Political developmentsMaking the shift from welfare state to ‘participation society’

Prince day 2013 – The concept of participation society was introduced last

year and means to change the way people perceive services provided by the state

■ The recent economic downturn led to a downsizing of the welfare state, in order to control government expenditures. But reforms of the welfare state should lead to more sustainable government finance in the long term as well

■ The participation society is supposed to introduce a changing mindset. Citizens in need should no longer expect the state to solve their problems, but should first involve their own social network to come up with a solution. The state should create conditions that enable citizens to undertake action themselves (similar to Cameron’s ‘Big society’)

■ This is in line with previous governments that have sought to create a smaller state. Due to the ageing population many welfare arrangements are increasingly unsustainable and thus require an overhaul

■ Participation society was proclaimed the word of the year for 2013

Prince day 2014 –

Expectations are that on average there will be a (small) increase in personal income.

And the there will be a focus going forward on creating more jobs.


The Dutch economy Both the standard of living and overall wellbeing are high, also compared to other EU countries

Income per capita(GDP per capita, PPP, average= 100) (Better Life Index, 2012)

Average

That is 6% higher than the German

average

Feeling goodLife is

GREAT!


Ranking competitiveness

1

2

3

4

5

6

7

8

9

10

11

122006 2007 2008 2009 2010 2011 2012 2013

The Dutch economy is based on strong fundamentals, but there is room for improvement

10

8

5

7

8

10

11

8

Source: World Economic Forum

+

■ Quality of life

■ Telecom / internet infrastructure

■ Transport & logistical infrastructure

■ Stable social and political climate

■ Local labor skills

■ Good competitive position of the country

Plus

-

■ Relative small domestic market

■ Size of the government sector

■ Graying of the population

■ High labor costs

■ Inflexible labor market

■ Open economy

Minus


Competitive Position Netherlands and Amsterdam

The Netherlands

Global Competitiveness Index (WEF) #8(2013)

Global business environment rankings (EIU)

#16 (2014-17)

Innovation Ambition top-5

Technological readiness #4 (2013)

Ease of Doing Business #28 (2014)

Education (OECD PISA) #10 in mathematics, #15 in reading, # 14 in science (2012)

KPMG: Competitive Alternatives 2012 Lowest Cost Level in Continental Europe

Amsterdam

Cushman & Wakefield’s European Cities Monitor

#4 (2011)

Most livable city #2 (2012)

IBM: Global LocationTrends Report #14 (2012)


Netherlands: Strong sectors

Agri-food

Horticulture and propagation materials

High Tech

Energy

Logistics

Creative Industry

Life sciences

Chemicals

Water


Netherlands – European Business Hub: Home to Global and regional HQ’s

13 Dutch Multinationals belong to Fortune 500 (incl Shell, Unilever, Philips

and Aegon)

More than 400 US companies and more than 300 Asian companies have

established EHQ’s in the Netherlands

More than 5000 foreign based companies operate in the Netherlands


Netherlands: A European Business Hub

Most often used for activities:

• Sales and marketing

• Infrastructure and Logistics

• Holding/Finance/Treasury

• Intellectual Property and R&D

• EU Regional HQ/Management Centre

Why:

• Open economy – long history with working with foreign companies

• Dependent on investments – so focused on creating the right legislation and infrastructure

• Strategic location and specialised in logistics

• Favourable fiscal climate

• Specialised industry with trust offices, specialised (tax) lawyers and auditors

• High level of education with focus on innovation

Other advantages

• Lower cost of operation than other

countries

• Availability of different corporate

governance regimes, which offer

possibility to create most appropriate

set up


Netherlands: A European Business Hub – further information

Contents of Investment in the Netherlands app 2014

■ Business environment in Netherlands

■ Starting or acquiring a business in the Netherlands

■ Incentives (government grants and other facilities)

■ Reporting, audit and regulatory environment

■ Business taxation

■ Logistical services and customs

■ Immigration, employment and personal tax

■ Exit matters

In total 232 pages of useful and detailed information on “Investing and Trade in the Netherlands & Netherlands the gateway to Europe”

2014 version available in App store under “Invest in NL”

Or on website: http://www.meijburg.com/publications/inve

stment-in-the-netherlands-2013-en


Netherlands: A Business Hub – proven track record with Africa

Did you know?

There are currently > 1.300 global companies based in the Netherlands holding investments in Africa

We invite you to do the same and start using the Netherlands as hub for your investments in Europe & the rest of the world

For further credentials on sectors and experiences of other companies: www.nfia.nl

Tax Meijburg

The Netherlandsa tax update

Jens Karreman


• 25% Corporate income tax rate (20% if taxable amount < EUR 200,000)

• Fiscal Unity Regime (tax consolidation)

• 5% Effective tax rate on qualifying innovative income

• 60% Research & Development Deduction

• No stamp duties / capital contribution / net wealth tax

• No withholding tax on interest, royalties, technical fees

• Dividend withholding tax: 15%, 0% for cooperatives

• Large tax treaty network and application EU directives

• 100% Participation exemption (dividends, foreign exchange results and capital gains)

• Expat Exemption (“30% ruling”) and tax return filing exemption

• White listed jurisdiction

• Effective centralized and coordinated practice to obtain certainty in advance through rulings with Dutch tax authorities

• Facilities available for business transfer to the Netherlands for Greenfield projects (i.e. informal capital approach).

Domestic International

Tax update the NetherlandsHighlights of the Dutch tax system


• Excellent legal infrastructure

• Quality & independency courts

• Company law robust, yet flexible

• Quality work force

• Well trained and skilled labour force

• Multi lingual

• Stable political environment

• Good logistic infrastructure

• Sea ports Rotterdam, Amsterdam

• Schiphol airport

• Experienced high quality service providers

• Competitive fiduciary service providers

• Tax / legal service providers

• Proven track record in investment protection

• Large Treaty Network available

Tax update the NetherlandsAlso a competitive legal edge …

http://www.google.com/url?url=http://www.beautyjournaal.nl/2011/05/17/monique-schrijft-prinses-maxima-by-erwin-olaf/&rct=j&frm=1&q=&esrc=s&sa=U&ei=NwwXVIyYGbCg7Ab46IHwDA&ved=0CCAQ9QEwBQ&usg=AFQjCNGJdXCAfh8cYavmj3e4sAVSZdK8_A


WHAT

Innovation as wide scoped term (not only true R&D, but any innovation that results in efficiencies or enhanced performance)

Entry tickect – S&O certificate or Patent; and

Self produced

Effective tax rate of 5%

SAVINGS

WHY

20%

Innovative income taxed at effective rate of 5%

No limit Available for all industries Development costs

deductible at 25%

HOW

1 Analysis Innovative Character

2

3

Quantify Savings

Ruling tax authorities

Unique track record with negotiating rulings with the Dutch tax authorities

Ruling provides certainty as to tax effects and what part of income can be qualified as innovative income

An E

xam

ple

Routine functions

EBT100

Profit from entrepreneurial functions + profit from innovation

80

20

40

40

Income for Innovation box

Income at normal rate

Tax 25

Tax

Inno-vation box

2

(40 @ 5%)

Normal tax

15

(60 @ 25%)

Tax 17

Saving 8

Tax update the NetherlandsDutch innovation box


An extensive Tax Treaty network…


as well as Investment Protection Treaty network...


Basic holding structureDutch participation exemption

General rules

•The Dutch participation exemption applies to (non transparent) shareholdings of at least 5% unless these can be qualified as “low taxed passive investments”

•All benefits exempt for 100% - dividends, forex and capital gains

•Losses not tax deductible (exception: liquidation losses)

•Expenses tax deductible (exception: acquisition / disposal costs)

•A “Cooperative” is not subject to dividend withholding tax, unless the participant in the Cooperative is a passive investor and the use of the cooperative can be regarded “abusive”

•Substance requirements apply

Advance certainty from tax authorities available (Advance Tax Ruling)

≥ 5%Dividends and capital gains

Full exemption

Foreign Co’sForeign Co’s

Foreign Co’s

Dutch Holdco (Cooperative)

Holdco

Dividends


Basic financing structures

Provision of loan

Foreign GroupCo

Dutch FinCo

General rules

• Access to the vast tax treaty network of the Netherlands

• Credit for foreign withholding tax on interest on incoming interest payments

• No Dutch withholding tax on outgoing interest payments

• Low taxable spread

• Substance requirements to be met – Sanction: Exchange of information to source country

• APA available

• Mutual Agreement Procedure protection available

Advance certainty from tax authorities available (Advance Pricing Agreement)

Foreign GroupCo

Thank you!

Q&A

© 2014 KPMG N.V ., registered with the trade register in the Netherlands under number 34153857, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (‘KPMG International’), a Swiss entity. All rights reserved. Printed in the Netherlands. The KPMG name, logo and ‘cutting through complexity’ are registered trademarks of KPMG International.

investing and trade in the netherlands & netherlands the gateway to europe september 16, 2014

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