jean paul dresen - ibcpib™ 2009
TRANSCRIPT
International Business Conference16 July 2009
J.P.A. Dresen
Tax efficient structures with the Netherlands
Contents
NL – introduction
NL – examples of structures
NL - introduction
NL– Tax rates Corporate income tax (CIT) rate: 25.5%
Dividend withholding tax (DWT) rate: 15%
No capital tax
No withholding tax on interest
No withholding tax on royalties & fees
Proposal Ministry of Finance: Group Interest Box - effective 5% tax rate on interest from related parties as from 2010
Why NL
Use of NL tax treaties
* almost all EU and all OECD Member States
* many former USSR countries: Russia, Armenia, Azerbaijan, Estonia, Georgia, Kazakhstan, Latvia, Lithuania, Moldavia, Tadzhikistan, Turkmenistan & Ukraine
* treaties with many Asian, African, Latin and Arab countries
Use of NL Bilateral Investment Treaties (asset protection)
Example: Russian – Dutch tax treaty
Withholding taxes:subsidiary dividends 5%portfolio dividends 15%interest 0%royalties 0%
Capital gains on shares:taxation only in state of selling shareholder
Why NL
Access to EU Directives
Dutch participation exemption / finance / royalty structures
NL for tax beneficial exit
NL - Common used vehicles Dutch BV (limited liability company):
company with capital divided into sharesminimum capital EUR 18,000tax treaty protection/EU Directives
Dutch Cooperative (Coop)commercial associationno minimum capitaltax treaty protection/EU Directives
Dutch Closed CV (Limited Partnership)partnership – no legal person (yet)tax transparentno tax treaty protection/EU Directives
NL - Participation exemption
Full exemption on dividends and capital gains from qualifying subsidiary
Participation exemption may also apply (under certain circumstances) on: Profit rights; Hybrid debt
Requirements:1. at least 5% in company with capital
divided into shares or membership of Coop; and
2. subsidiary not qualifying as low-taxed passive investment subsidiary (LTPS)
NL - Participation exemption
RequirementsAd (2): LTPS:
assets (directly and indirectly) >50% of free passive investments on an aggregate basis; and
subsidiary tax burden < 10% based on Dutch standards; and
subsidiary is not real property subsidiary (the subsidiary owns on a consolidated basis ≥ 90% real estate)
proposal Ministry of Finance: new rules that are less strict for the LPTS - effective as of 2010
NL –intragroup interest
Currently, interest from related parties could be tax free if hybrid instruments and/or entities are used
Proposal from Ministry of Finance: - Group Interest Box- 5% effective tax rate - bill expected after summer holidays, new regime in force per 2010
NL - Taxation non-resident
Non-Dutch resident having an interest in BV/Coop subject to Dutch (C)IT on income from/gains realised on sale of BV/Coop if:
interest in BV/Coop should be allocated to Dutch permanent establishment; or
non-Dutch resident has a substantial interest in BV/Coop:- interest in BV/Coop of at least 5%; and- interest in BV/Coop is not part of the business enterprise of owner
In practice this non-resident taxation very seldom applies to companies
NL - Dividend withholding tax
Dividend distributions by BV subject to 15% dividend withholding tax (unless treaty or EU Directive)
Distributions by Coop not subject to dividend withholding tax
Distributions by VBI and transparent entities not subject to dividend withholding tax
No withholding tax on interest (save certain profit sharing), royalties and fees
NL – examples of structures
NL - Holding company - general
Dutch Participation exemption on dividends and gains from subsidiaries
Often Dutch tax treaties protect against taxation on dividends and gains in country of residence of subsidiary
Generally no Dutch taxation on dividends and gains for foreign parent
Foreign parent
Foreign/NL subs
Coop / BV
5% - 100%
Asset protection structure
Dutch Antilles NV
Russian subsidiary
Dutch Coop / BV
Dutch Antilles Trust (SPF)
Beneficiaries (Russia)
Dutch STAK (optional)
Asset protection structure II
Dutch Coop/BVprotected under Dutch-Russian BIT against expropriation in Russia
Dutch STAK (STichting AdministratieKantoor) legal control over Dutch Coop / BV without economic ownershipcan be used to give certain control rights to trusted persons
Dutch Antilles Trust (Stichting Particulier Fonds – SPF)beneficiaries have no assets that can be seized as such
NL has to report a taxable remuneration Via Dutch tax treaty network source withholding
tax can be reduced/eliminated Interest is tax deductible at the level of OpCo No withholding tax on payment from NL to FinCo,
even if FinCo is resident in a tax haven
Interest payment
Interest payment
No / reduced WHT under DTT
OpCo NL FinCo
No WHT under NL domestic tax law
NL- Use of treaties: financing
Your Houthoff Buruma contacts
Jean Paul Antoine DresenTax lawyer
T: + 31 (0)20 605 6988
M: + 31 (0)6 43 550 853