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Jean Paul Dresen - IBCPIB™ 2009

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    Jean Paul Dresen - IBCPIB™ 2009 Jean Paul Dresen - IBCPIB™ 2009 Presentation Transcript

    • Tax efficient structures with the Netherlands
      International Business Conference
      16 July 2009
      J.P.A. Dresen
    • 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:
      at least 5% in company with capital divided into shares or membership of Coop; and
      subsidiary not qualifying as low-taxed passive investment subsidiary (LTPS)
    • NL - Participation exemption
      Requirements
      Ad (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
      Foreign parent
      Coop / BV
      5% - 100%
      Foreign/NL subs
      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
    • Asset protection structure
      Beneficiaries (Russia)
      Dutch Antilles Trust (SPF)
      Dutch Antilles NV
      Dutch STAK (optional)
      Dutch Coop / BV
      Russian subsidiary
    • 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
    • OpCo
      NL
      FinCo
      Interest payment
      Interest payment
      No WHT under NL domestic tax law
      No / reduced WHT under DTT
      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
      NL- Use of treaties: financing
    • NL - Trading Structure
      Group/Market
      NL
      Sale raw materials/ products
      ProdCo
      Transfer price sale to NL: minimum acceptable price from ProdCo country perspective
      NL sells onwards against market prices
      Difference between market price and transfer price less allocable Dutch remuneration: deemed dividend distribution to NL, tax exempt in the NL under the participation exemption
      NL taxable profit: usually 0.5-2% of turnover as remuneration for trading activities
    • Your Houthoff Buruma contacts
      Jean Paul Antoine Dresen
      Tax lawyer
      T: + 31 (0)20 605 6988
      M: + 31 (0)6 43 550 853
      E: j.dresen@houthoff.com