Legislation update and current structure developments

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Презентация с международной налоговой конференции «Жизнь после Кипра: налоговый апгрейд» (taxconference.ru)

Сессия 3: Деофшоризация: глобальный тренд

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Legislation update and current structure developments

  1. 1. The NetherlandsLegislation update andcurrent structure developments12 June 2013
  2. 2. Summary of the content1. Update relevant new legislation as of 1 January 20132. The Dutch Cooperative (“Coop”) - Amendments as of 1 January20123. Amended Dutch substantial ownership regulations4. Substance5. Other Dutch tax advantages6. Latest developments as regards Curaçao7. Examples structures8. IFAA Accountants & Tax advisers• Services• Company profile• International Team9. Contact details22 June 2013
  3. 3. 2 June 20131. Update relevant legislation as of 1 January 201232 June 2013• As of 2013 no Dutch thin capitalization regulations• New as of 2013 (article 13l Dutch Tax Act 1969)– a new interest deduction legislation is in force as of 1 January 2013. Basedon this legislation, interest deduction on debt financing of (foreign)participations is not be allowed on a pro rata parte basis (i.e. to the extentthe participation is financed with a loan rather than own equity)– A franchise of EUR 750,000 (interest expenses) is put in place introduced(i.e. interest expenses to that amount would be allowed)– So far there are no counterproof measures announced for this legislation, asthe aim of the legislation is to prevent tax erosion at Dutch level for thefinancing of such specific acquisitions– 90% exemption on cost price foreign participations acquired prior to or on 1January to 2006
  4. 4. 2 June 2013• As of 1 January 2012, anti abuse legislation is introduced in the DutchDividend Withholding Tax Act, based on which members in a Coop maybecome subject to Dutch dividend withholding tax if:1. Either, there is a wholly artificial construction. In this respect,reference is made to Cadbury Shweppes Case C196-04/ICI Case 264-96:• Does Coop have a real function (e.g. place of effectivemanagement, material substance, real risk run by Coop)• Comparison between direct BV construction as opposed to Coop-BV construction2. Or, the membership right(s) cannot be attributed to the capital of abusiness enterprise (e.g. parent of Coop is a pure holding entity)• An exemption to sub 2 above is made in case of interposing a Coopbetween a BV with existing retained earnings and its parent. In such a casethe claim on existing retained earning in BV will in any way be subject toDutch DWT (FIFO system applies on claimed dividends)2. The Dutch Cooperative (“Coop”) – amendments as of 1January 201242 June 2013
  5. 5. 2 June 2013• As of 1 January 2012: Narrowing the scope of the Dutch “substantialownership” regulations:– In principle non-resident taxpayers who own 5% or more in a Dutch entity are subject to25% Dutch corporate income tax on dividends, capital gains and interest income derivedfrom such Dutch entity if the Dutch shareholding cannot be attributed to a businessenterprise AND subject to application of EU Directives/respective tax treaties ->consequently effect of such taxation is minimized in practice.– As of 2012 scope of the Dutch substantial ownership regulations further narrowed:substantial ownership regulations will apply only if the main purpose of the structure isto avoid Dutch income/dividend withholding tax– Base for this “main purpose test”-> EC law’s definition of “wholly artificial constrictions”:• Real economic meaning (place of effective management/substance/commercial riskborne by company) of the company interposed between the Dutch entity and thenon-EU UBO;• Dutch port folio investments are pooled in a foreign EU entity which then owns theinvestments.– In case only Dutch dividend withholding tax is avoided, the 25% rate will be decreased to15% (Dutch domestic rate on dividends, further decrease possible based on tax treaty/EUDirective)3. Amended Dutch subtantial ownership regulations52 June 2013
  6. 6. 2 June 20134. Substance62 June 2013• Requirements not regulated by law, just guidelines. Most important onesfor servicing companies (and advisable also with holding companies):– At least half of the directors reside or are based in the Netherlands (50%-50%approach)– These directors must have at least equal decision-making powers to the directorsresiding or based outside the Netherlands. In addition, according to the Decree thedirectors should have a sufficient amount of expertise in order to run the company– Board decisions should effectively be made in the Netherlands. Decisions should notbe merely formalized in the Netherlands. Such as by way of approving decisionsalready taken abroad– The "master" bank account should be managed/maintained in the Netherlands– The financial and tax administration must be carried out and maintained in theNetherlands– The Dutch company has fulfilled his tax filing obligations (e.g. CIT, VAT, etc.) in acorrect manner in the past
  7. 7. 2 June 2013• Possibility for loss carry back and loss carry forward:– Generally speaking 1 year carry back and 9 years carry forward– Economic package (FY 2011, 2012): 3 years carry back and 6 years carryforward• 30% facility for highly skilled employees with specific expert knowledge, recruitedfrom abroad or assigned to the Netherlands.– The 30% facility provides among others for the following benefits:The employer may pay the employee a 30% tax free allowance of its incomeThe employer may pay the employee a tax free allowance to cover the costs forcertain international schoolsIf the employee becomes a tax resident in the Netherlands he may, upon request,be considered a non-resident tax payer of the Netherlands for certain types ofincome (e.g. capital gains, dividend and passive investment income) while retainingentitlement to personal allowances and personal tax credits that tax residents ofthe Netherlands enjoy5. Other Dutch tax advantages72 June 2013
  8. 8. • Extensive tax treaty network (more than 90 tax treaties worldwide withcountries including Uzbekistan, Kazakhstan, Egypt, Kuwait, , Oman,Barbados, UAE) and eligible to EU Directives.• Dutch Holding regime (i.e. participation exemption)• No withholding taxes on interest, royalty payments• Advance Tax Ruling (“ATR”) and Advanced Pricing Agreement (“APA”)facilities (i.e. upfront agreement with the Dutch tax authorities)• Extensive experience in international tax services (i.e. ease of regulations)5.1 Other Dutch tax advantages82 June 2013
  9. 9. 2 June 20136. Latest developments as regards Curaçao92 June 2013• Envisaged to replace the current Tax Arrangement for the Kingdom (“TAK”)covering the islands of the former Netherlands Antilles with separate bilateralagreements• Proposed amendments in new bilateral agreement (in power as of 1 January2014):– Replacement of current dividend withholding tax rate (8.3% instead of thedomestic Dutch dividend withholding tax rate of 15%), with new rate: 0% (foractive/listed? Curaçao based companies under certain conditions, see below)– Reduced rate will be subject to a limitation of benefits (“LOB”) clause, onwhich no further information is provided at this point. Not meeting the LOBclause will result in the new TAK not being applicable and thus the Dutchdividend withholding tax rate of 15% will apply• Grandfathering regime will be available up to and including 2019 for existingstructures which would not be able to meet the LOB clause. In such case the8.3% Dutch dividend withholding tax will be reduced to 5%• The Dutch Minister of Finance explicitly confirms that Curacao basedshareholders owning 5% or more in a BV are not subject to Dutch substantialinterest tax subject to application of current (2013) TAK arrangement
  10. 10. 7. Examples structures102 June 2013
  11. 11. 2 June 2013RussianRE/OpCo0% DWHT5% DWHTUBO: Russian Ultimate Beneficial OwnerRE/OpCo: real estate / operational companyBV: Dutch Holding CompanyTC: Trading CompanyDWTH: Dividend Withholding Tax7.1 Examples application PEX regime (Coop usage allert)0% DWHTConsiderations structure:• Much used in the past. As of 1 January 2012only to be used in case sufficient substanceon:• BVI/foreign participant level ;• Sufficient substance on Coop level (as of1 November 2012 the latter option isunder debate. Rulings would in principlenot be supported).JV PartnerNL CoopBVUBOBVI
  12. 12. Advantages of structure:• Dutch CV is established according toDutch law as a transparent partnershipfrom a Dutch tax point of view• Income derived by Dutch CV notsubject to Dutch corporate income tax• BV 1 to get an arm’s lengthremuneration for daily managementactivities. Remuneration will be subjectto 20%-25% Dutch corporate incometax• BV 2 acts as holding company• BVI to treat Dutch CV as a PE. Profits ofinvestments to be allocated to the PEConsiderations structure:• Requirements for allocation BV 2 sharesto CV: substance at CV level (and up)crucial. Under discussion with Dutch taxauthoritiesDutch CV: Dutch Limited Partnership7.2 Example Dutch limited partnership (replacement Coop?)122 June 2013ManagingPartnerBV 1BVIDutch CVLimitedPartnerRusRE/OpCosBV 2
  13. 13. 7.3 Example Russian ZPIF (Possible to structure via NL?)LUX: LuxembourBV: Dutch Holding CompanyZPIF: Zakritei Paevoi Investitionnei FondDWTH: Interest Withholding TaxLUXRUSRE/OpCoBVNL0% DWHT0% DWHTAdvantages of structure:• ZPIF: transparent from a Russian tax point of view andnon-transparent from a Dutch tax point of view• Income from ZPIF exempt on BV level subject toapplication of the Dutch participation exemption• No dividend withholding tax from BV to Lux (subject to P-SDirective)Considerations structure:• Expected level of substance on BV and Lux level• Hybrid treatment mismatch for Russian and Dutch taxpurposes• ATR (i.e. security in advance from the Dutch taxauthorities) feasibility currently under discussion withruling team2 June 2013ZPIF(RUS)
  14. 14. 7.4 Example Dutch exitUS: United StatesBV: Dutch Holding CompanyRUS: RussiaIWTH: Interest Withholding TaxUSRUSBVNLCVLoan/EquityLoanLoan 0% IWHT0% IWHTAdvantages of structure:• CV is established according to Dutch law and is a hybridentity, i.e. it is treated as a transparent partnership from aDutch tax point of view and as a corporate entity for UStax purposes (check the box)• Interest payments made by BV: not subject to Dutchcorporate income tax/not subject to US corporate incometax• Small interest spread on to be reported on Dutch level(i.e. interest income to be offset against interest expense)• Full interest deduction on Russian level• ATR (i.e. security in advance from the Dutch taxauthorities) possibleConsiderations structure:• Book keeping management of CV outside theNetherlands• RUS is an operational / real estate company• RUS is not subject to local thin capitalization regulations• CV-BV structure: tested2 June 2013
  15. 15. • International tax services• Customs and VAT• Wage tax and social security• Accountancy services• Transfer Pricing services• Bookkeeping services• Payroll services• Compliance• Legal and notaries services8. IFAA Accountants & Tax Advisers (Services)152 June 2013
  16. 16. • IFAA Accountants & Tax advisers is a company with an offices inAmsterdam and Almere that provides tax advisory, tax compliance,bookkeeping and accountancy services• The company is ever growing and currently consists of 35 people (6partners and 29 supporting staff)• We serve national as well as multinational clients• In working with our clients, we focus on providing high quality work forreasonable prices by having efficient and effective procedures that arein line with the (internal) procedures of our clients• We have a culture of clear and open communication with our clients• We provide our clients with a clear analysis of their financial and taxpositions, determine the risks and if necessary initiate innovativesolutions• With our team, we work for leading our clients to a next level8.1 IFAA Accountants & Tax Advisers (Company profile)162 June 2013
  17. 17. Ferruh Tarık Tığlıferruh@ifaa.nlTel:+ 31 20 77 19 909Mob:+31 655173046Mob: +905336272895Ferruh is a tax partner with IFAA Accountants & Tax AdvisersHe started his career in 1999 at the Istanbul office of Arthur Andersenwhere he performed tax audits and tax due-diligence studies mainlyfor multinational companies operating in pharmaceutical, finance, andenergy industriesHe joined the tax department of Ernst & Young’s Turkey practice as asenior tax auditor in 2002. Ferruh obtained a Turkish CertifiedChartered Accountant (SMMM) degree in 2003. He became a managerin the Ernst & Young Turkey tax department in 2004Ferruh moved to the Netherlands in 2007 as being one of the co-founders and the head of the Turkish Business Centre at Ernst & YoungAmsterdam office where he served several Turkish and Europeanmultinatonal compianes until June 2009He has a vast experience on tax efficient structuring services (i.e.future capital gain exit, constructive yearly dividend policy and cashflow oriented solutions) to Turkish and European based companiesmaking investments especially in former CIS countries (i.e. Russia,Poland, Romania)Ferruh is a native Turkish speaker and fluent in English. He holds aTurkish Certified Chartered Accountant degree8.2 IFAA Accountants & Tax Advisers (International Team)172 June 2013
  18. 18. Robert Çitgezrobert@ifaa.nlTel:+ 31 20 77 19 9090Mob:+31 650989936Robert is a tax partner with IFAA Accountants & Tax AdvisersBefore joining IFAA as a tax partner in 2008, he worked for more thanseven and a half years for Arthur Andersen, KPMG and Ernst & Young,where he primarily advised multinational corporate clientsDuring his Ernst & Young period he was one of the co-founders of theTurkish Business Centre where he served a vast amount of Turkishinvestors (i.e. Turkish multinational companies, medium-sized Turkishfamily businesses and individuals) investing outside Turkey and ableto benefit from tax efficient structures through the NetherlandsRobert is an all-round adviser in the Dutch international tax practicewith an extensive experience in international taxation and thecoordination and implementation of various global structuringprojectsRobert is a native Dutch and Turkish speaker and fluent in English. Heholds a Master Degree in Tax Law, Civil Law and Corporate Law fromthe University of Leiden8.2 IFAA Accountants & Tax Advisers (International Team)182 June 2013
  19. 19. Boian Popovboian@ifaa.nlTel:+ 31 20 77 19 909Mob:+31 644389128Mob:+359 887529866Boian is a tax partner with IFAA Accountants and TaxAdvisers (IFAA)He is an all-round adviser in the Dutch international taxpractice with an extensive experience in internationaltaxation and the coordination and implementation of variousglobal projectsBefore joining IFAA as a tax partner in 2009, he worked formore than eight years for KPMG and Ernst & Young, wherehe primarily advised multinational corporate clientsDuring his Ernst & Young period he worked for the DutchDesk of Ernst & Young in London providing advise toAmerican corporate clients, as well as America based privateequity and real property funds on the tax aspects ofEuropean investmentsAt the Amsterdam practice of Ernst & Young he was amember of Multinational Corporate Department whichadvise Turkish companies on the tax aspects of Europeaninvestments in general and Turkish outbound & throughbound investments in particularBoian also specializes in Eastern Europe and Russia related international restructuring projectsBoian is a native Bulgarian and Dutch speaker and fluent in English. He holds a Master Degree in TaxLaw from the University of Leiden8.2 IFAA Accountants & Tax Advisers (International Team)192 June 2013
  20. 20. Bart van der Lindenbart@ifaa.nlTel:+ 31 20 77 19 909Mob:+31 626688074Bart is a tax partner with IFAA Accountants & Tax AdvisersHe is an all-round adviser in the Dutch (international) taxpractice with more than eight years experience in national aswell as international taxationBefore joining IFAA as a tax partner in 2005, he worked forErnst & Young where he primarily advised multinationalcorporate clientsHe has a special expertise and vast experience inimplementing new tax structures next to existing groupstructures from a corporate, accountancy and taxperspectiveBart is fluent in Dutch and English. He holds a Master Degree in Tax Law from the University ofAmsterdam8.2 IFAA Accountants & Tax Advisers (International Team)202 June 2013
  21. 21. 9. Contact detailsIFAA Accountants & Tax AdvisersSingel 148, 1015 AG AmsterdamThe NetherlandsP.O. Box: 3732, 1001 AM AmsterdamThe NetherlandsAmsterdam Chamber of Commerce: 34146099Website: www.ifaa.nl / www.ifaainternational.comE-mail: info@ifaa.nl212 June 2013

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