1. HLB Schippers Accountants
Tax & Legal Advisers
Jeroen van der Linden
Amsterdam, April 2013

2. Programme
1. Substantial interest CIT
2. Coop and dividend tax
3. Anti-dividend stripping

3. 1. Substantial Interest for Dutch CIT
purposes

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. Taxable object for non-resident
taxpayers
• Non-resident taxpayers are taxed on their
taxable Dutch amount, which is their Dutch
income minus losses.

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. 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. 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. Main purpose
• Law says “main purpose” or “one of the main
purposes”.
• “Someone else’s” income tax or dividend tax.

10. Main purpose
Private individual is in NL taxed for:
Dividend income (Box 2)
Capital gains (Box 2)
Interest (Box 1) Private individual
Non-Dutch

11. Main purpose
Main purpose to avoid Private
individual
someone else’s income Non-Dutch
tax?
Private individual
Holdco
Non-Dutch
Cyprus

12. Main purpose
Holdco is in NL taxed for: Private
individual
Dividend income Non-Dutch
Capital gains
Interest Private individual
Holdco
Non-Dutch
Cyprus

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. Example 1 Substantial interest
NLBV distributes dividend of 100
NA 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. 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. Example 3
Loan
Liechtenstein Liechtenstein
Jersey
Stiftung AG
1/3 Loan 1/3 1/3
Loan
BV

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. • 2. Coop and dividend tax

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. • 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. 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. • 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. 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. 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. 3. Measures to combat
dividendstripping

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. Example dividendstripping (1)
Private individual abroad Private individual abroad
Sale to
bank in NL
15%
3% dividend 3%
tax
Dividend
NL NV NL NV
Dividend distribution 28 Sale cum dividend 128
Dividend tax 3,5 Repurchase ex dividend 100
Net 24,5 Net 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. 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. 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. 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. Measures against dividendstripping
• Introduction definition beneficial owner
• Sanction: reversing reduction or exemption to
national tariff of 15%

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. Example dividendstripping (5)
NA NV
NA NV
0%
8,3% Please note:
Cyprus Ltd When sanction
then 15% DT
BV 0%
BV

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. Durable reorganisation
• Time between reorganisation and dividend
distribution
• Type of dividend distribution
• Durableness reorganisation
Safe Harbour
In case of durable reorganisation in combination
with an ordinary dividend distribution irrespective
of the time between reorganisation and dividend
distribution

37. Example dividendstripping (6)
NA NV1
NA NV2 COOP
NL BV Sale
NV2 looses it’s current participation, consequently no sanction

38. Questions?

39. Thank you for your attention.
Remember, you can always contact us with your questions (without the meter
immediately running).