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HLB Schippers Accountants   Tax & Legal Advisers Jeroen van der Linden Amsterdam, April 2013
Programme1. Substantial interest CIT2. Coop and dividend tax3. Anti-dividend stripping
1.   Substantial Interest for Dutch CIT     purposes
Corporate income tax subjects• Residents• Non-residents, such as:  - societies and other legal persons;  - taxable limited...
Taxable object for non-resident              taxpayers• Non-resident taxpayers are taxed on their  taxable Dutch amount, w...
What is Dutch income?     (i.o.w. when are foreign companies subject to tax in the Netherlands)1. Taxable profit from an e...
When do you have income from a          Dutch enterprise?• Permanent establishment / representative• Real estate located i...
Substantial interest for CIT purposes• Non-resident taxpayer holds at least 5% of the  shares in a Dutch company (e.g. BV,...
Main purpose• Law says “main purpose” or “one of the main  purposes”.• “Someone else’s” income tax or dividend tax.
Main purposePrivate individual is in NL taxed for:Dividend income (Box 2)Capital gains (Box 2)Interest (Box 1)            ...
Main purposeMain purpose to avoid      Private                           individualsomeone else’s income      Non-Dutchtax...
Main purposeHoldco is in NL taxed for:     Private                               individualDividend income                ...
Substantial interest for CIT purposes• Foreign entity can become subject to tax in  the Netherlands for:  - Ordinary incom...
Example 1 Substantial interest                   NLBV distributes dividend of 100NA NV                   NA NV subject to ...
Example 2 Substantial interest  Cyprus              Sale of the shares NL BV may              cause Cyprus to become subje...
Example 3                LoanLiechtenstein                 Liechtenstein                                              Jers...
Practice  “Not attributable to an enterprise”, means   portfolio investment.  When are the shares not held as portfolio  i...
• 2. Coop and dividend tax
• If a Coop holds shares in Dutch and non-Dutch  companies• with the main purpose• to avoid someone else’s dividend tax or...
• In other words a Coop that functions as  holding company may become subject to  Dutch dividend withholding tax, if the c...
Example Coop and dividend tax (1)                               Brazil• Is Coop held as portfolio  investment?• Main purpo...
• If a Coop holds shares in Dutch companies• with the main purpose• to avoid someone else’s dividend tax or  foreign (wht)...
Example Coop and dividend tax (2)                                       Brazil•   Main purpose avoiding tax?•   5% or more...
Example Coop and dividend tax (3)•   Coop purchased Dutch BV in 2011•   Dutch BV has profit reserve of Eu 4 mio•   Coop di...
3. Measures to combat  dividendstripping
What is dividendstripping?• Shareholder with• No or limited right for compensation of  dividend tax provides for• Another ...
Example dividendstripping (1)          Private individual abroad                  Private individual abroad               ...
Example dividendstripping (2) Private individual Abroad                                                               NL B...
Examples dividendstripping•   Sale shares in Dutch listed companies to bank•   Lending of shares•   Sale and repurchase (c...
Example dividendstripping (3)Example 1                               Canada Ltd.   Canada                                 ...
Example dividendstripping (4)Example 2                                   Belgium     Switzerland Belgium    Switzerland   ...
Measures against dividendstripping• Introduction definition beneficial owner• Sanction: reversing reduction or exemption t...
When is a person not considered to be         a beneficial owner?• Recipient of dividend performs a service  which is a pa...
Example dividendstripping (5)                NA NV NA NV                        0%         8,3%                Please note...
Bonafide cases• Bonafide purchaser on the stock exchange• Bonafide withholding agent (based on  declaration recipient of d...
Durable reorganisation• Time between reorganisation and dividend  distribution• Type of dividend distribution• Durableness...
Example dividendstripping (6)                    NA NV1 NA NV2                                   COOP NL BV               ...
Questions?
Thank you for your attention.Remember, you can always contact us with your questions (without the meter                   ...
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Substantial Interest and div tax for Coops

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Substantial Interest and div tax for Coops

  1. 1. HLB Schippers Accountants Tax & Legal Advisers Jeroen van der Linden Amsterdam, April 2013
  2. 2. Programme1. Substantial interest CIT2. Coop and dividend tax3. Anti-dividend stripping
  3. 3. 1. Substantial Interest for Dutch CIT purposes
  4. 4. Corporate income tax subjects• Residents• Non-residents, such as: - societies and other legal persons; - taxable limited partnerships (Open CV’s) and other companies not having legal personality of which the equity is divided into shares; - special purpose funds
  5. 5. Taxable object for non-resident taxpayers• Non-resident taxpayers are taxed on their taxable Dutch amount, which is their Dutch income minus losses.
  6. 6. What is Dutch income? (i.o.w. when are foreign companies subject to tax in the Netherlands)1. Taxable profit from an enterprise run in the Netherlands (so-called Dutch enterprise)2. Taxable income from a subtantial interest in a company resident in the Netherlands, if the substantial interest does not form part of the assets of an enterprise
  7. 7. When do you have income from a Dutch enterprise?• Permanent establishment / representative• Real estate located in the Netherlands• Rights to a share in the profit of the equity of an enterprise• Activities performed as a director or member of an advisory board of a Dutch resident company• Certain activities on, or above the territorial waters as well as the oceanlevel and below• Income from receivables held on substantial interest companies
  8. 8. Substantial interest for CIT purposes• Non-resident taxpayer holds at least 5% of the shares in a Dutch company (e.g. BV, NV or Coop), and• Shareholding is not attributable to an enterprise of the non-resident taxpayer, and• non-resident taxpayer holds the shares as main purpose to avoid taxation of someone else’s income tax or dividend tax
  9. 9. Main purpose• Law says “main purpose” or “one of the main purposes”.• “Someone else’s” income tax or dividend tax.
  10. 10. Main purposePrivate individual is in NL taxed for:Dividend income (Box 2)Capital gains (Box 2)Interest (Box 1) Private individual Non-Dutch
  11. 11. Main purposeMain purpose to avoid Private individualsomeone else’s income Non-Dutchtax? Private individual Holdco Non-Dutch Cyprus
  12. 12. Main purposeHoldco is in NL taxed for: Private individualDividend income Non-DutchCapital gainsInterest Private individual Holdco Non-Dutch Cyprus
  13. 13. Substantial interest for CIT purposes• Foreign entity can become subject to tax in the Netherlands for: - Ordinary income (dividends) - Capital gains and - (deemed) interest income
  14. 14. Example 1 Substantial interest NLBV distributes dividend of 100NA NV NA NV subject to tax in the Netherlands for Dividend CIT 100 x 25% Treaties / BRK can decrease the CIT f.i. 8,3% (2011)NL BV
  15. 15. Example 2 Substantial interest Cyprus Sale of the shares NL BV may cause Cyprus to become subject to tax in the NL NL BV
  16. 16. Example 3 LoanLiechtenstein Liechtenstein JerseyStiftung AG 1/3 Loan 1/3 1/3 Loan BV
  17. 17. Practice “Not attributable to an enterprise”, means portfolio investment. When are the shares not held as portfolio investement:• Management activities?• Risk bearing capital?
  18. 18. • 2. Coop and dividend tax
  19. 19. • If a Coop holds shares in Dutch and non-Dutch companies• with the main purpose• to avoid someone else’s dividend tax or foreign (wht) tax and• the membership in the Coop does not belong to the entreprise of the Coop member,• the Coop will be treated as a limited liability company for Dutch dividend tax purposes.
  20. 20. • In other words a Coop that functions as holding company may become subject to Dutch dividend withholding tax, if the coop member holds its (≥5%) membership share as a portfolio investment and intends to avoid withholding tax.
  21. 21. Example Coop and dividend tax (1) Brazil• Is Coop held as portfolio investment?• Main purpose avoiding tax? 0% or 15%• 5% or more? Coop 0% GmbH
  22. 22. • If a Coop holds shares in Dutch companies• with the main purpose• to avoid someone else’s dividend tax or foreign (wht) tax,• the Coop will be treated as a limited liability company for Dutch dividend tax purposes• to the extent the profit distribution does not exceed the profit reserves of the Dutch companies when acquired.
  23. 23. Example Coop and dividend tax (2) Brazil• Main purpose avoiding tax?• 5% or more?• Does NL 0% or 15%• Did BV have profit reserves when acquired? Coop 0% NL BV
  24. 24. Example Coop and dividend tax (3)• Coop purchased Dutch BV in 2011• Dutch BV has profit reserve of Eu 4 mio• Coop distributes profit to its member in 2012• First Eu 4 mio will be subject to Dutch dividend tax.
  25. 25. 3. Measures to combat dividendstripping
  26. 26. What is dividendstripping?• Shareholder with• No or limited right for compensation of dividend tax provides for• Another person to receive the dividend• Who does have the right to set off dividend tax• In the exchange for the equivalent of the dividend
  27. 27. Example dividendstripping (1) Private individual abroad Private individual abroad Sale to bank in NL 15% 3% dividend 3% tax Dividend NL NV NL NVDividend distribution 28 Sale cum dividend 128Dividend tax 3,5 Repurchase ex dividend 100Net 24,5 Net 28
  28. 28. Example dividendstripping (2) Private individual Abroad NL BV 15% 0% dividend dividend tax tax Dividend NL NV NL NV Private individual sells his shares to NL BV and NL BV concludes a putoption. After dividend distribution, BV sells shares back to private individual.
  29. 29. Examples dividendstripping• Sale shares in Dutch listed companies to bank• Lending of shares• Sale and repurchase (call- and putoptions)• Hanging within concern• Intermediate holding company
  30. 30. Example dividendstripping (3)Example 1 Canada Ltd. Canada 0% dividend tax Ltd. Cyprus Ltd. 10% dividend tax 0% dividend tax NL BV NL BV
  31. 31. Example dividendstripping (4)Example 2 Belgium Switzerland Belgium Switzerland 0% dividend tax 15% dividend tax Malta Ltd. NL BV 0% dividend tax NL BV
  32. 32. Measures against dividendstripping• Introduction definition beneficial owner• Sanction: reversing reduction or exemption to national tariff of 15%
  33. 33. When is a person not considered to be a beneficial owner?• Recipient of dividend performs a service which is a part of several transactions• in exchange for the income• which income will actually be received by the holder of the restricted right and• this holder keeps it’s position in the company
  34. 34. Example dividendstripping (5) NA NV NA NV 0% 8,3% Please note: Cyprus Ltd When sanction then 15% DT BV 0% BV
  35. 35. Bonafide cases• Bonafide purchaser on the stock exchange• Bonafide withholding agent (based on declaration recipient of dividend)• Durable reorganisation combined with an ordinary dividend distribution
  36. 36. Durable reorganisation• Time between reorganisation and dividend distribution• Type of dividend distribution• Durableness reorganisationSafe HarbourIn case of durable reorganisation in combinationwith an ordinary dividend distribution irrespectiveof the time between reorganisation and dividenddistribution
  37. 37. Example dividendstripping (6) NA NV1 NA NV2 COOP NL BV Sale NV2 looses it’s current participation, consequently no sanction
  38. 38. Questions?
  39. 39. Thank you for your attention.Remember, you can always contact us with your questions (without the meter immediately running).

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