Transcript Slide 1

The Netherlands company
as a tax planning tool
Globalserve Seminar
November 2013
By Phani Schiza Antoniou
Netherlands, the country
 EU member
 Highly strategic commercial location that makes it
the “Gateway to Europe”
 Natural hub for logistics and headquarter
functions
 High educated, multi cultural and multi-lingual
workforce
 High level of infrastructure
 Good economic and financial climate
Netherlands, the country
 One of the major and reputable international Business
centers
 Extensive Network of double Tax Treaties; 90!!
 Good Banking system
 Advantageous Tax System especially with respect to
taxation of dividends, royalties and interest
 Tax Rulings possible
 Political stability
 Well organized system for monitoring and controlling
financial markets and compliance through laws and
regulations
A Dutch B.V
 BV=Private company with limited liability
 Set up by a notary (make up of their articles)
 Official Permission of Minister of Justice
 Minimum share capital is €1
 Registered in the Chamber of Commerce
 Director can be also legal entity
 Min director/ shareholder 1
 Director can be non Dutch resident but for
management and control purposes Dutch director is
advisable
Summary of Dutch Tax Rates
Corporate Income Tax upto € 200000
Corporate Income T above € 200000
20%
25%
Tax on Dividends received
0% if participation exemption applies i.e
5% minimum shareholding in the
subsidiary held as participation not as an
investment
Royalty income
5%
Capital gains tax in the case of disposal of 0% if participation exemption applies i.e
participation
5% minimum shareholding in the
subsidiary, held as participation not as
investment
Profit from the trading in securities
20-25%
Withholding tax on dividends other than
EU or Treaty countries
15%
Withholding taxes on interest, royalties
0%
Summary of the Dutch tax system
GENERAL
Corporate Income Tax rate=25%
Taxable income ≦EUR 200,000=20%
Innovation box income taxed at 5%
Average ETR of Dutch multinational: Between
8% and 20%
Summary of the Dutch tax system
No withholding tax on interest and royalty
payments
Dividend withholding tax =maximum 15%
Qualifying dividends to EU or 0% treaty
country=0%
No capital taxes
Summary of the Dutch tax system
CORPORATE INCOME TAX SPECIFICS
Tax loss carry forward: 9 years
Tax loss carry back:1
Thin cap: 3 to 1 or the group’s debt-toequity ratio
Interest deduction limitations when eroding
the Dutch taxable basis of operating
subsidiaries
These rules do not affect international
structuring
Summary of the Dutch tax system
INNOVATION BOX
 Offers attractive opportunities to lower the ETR for income
allocable to intangible assets to 5% if:
 The intangible assets are self developed, which includes contract
research for the risk and benefit of the tax payer and participation in
R&D activities by means of cost-contribution arrangements (but
excludes marketing intangibles created by the tax payer, such as brand
names, logos and assets alike)
 The intangible assets are purchased, provided the purchased
intangible asset loses its independence and is merged into a new self
developed intangible asset.
 At least 30% of expected income can be attribute to
patents/registrations obtained for the intangible asset
Summary of the Dutch tax system
Test per intangible asset, to be met at the end
of the first year of applying for the Innovation
Box for an intangible asset
No upfront approval of Dutch tax authorities is
required, so Innovation Box can be applied for
by ticking a box in the Dutch corporate Income
tax return. However, in order to determine
income to be allocated to Innovation Box,
consultation with Dutch tax authorities
upfront is highly recommended.
Summary of the Dutch tax system
PARTICIPATION EXEMPTION
100% income (dividend income and capital
gains)exempt from Dutch corporate income
tax if it concerns an investment in shares of
at least 5% of the nominal paid-in capital,
unless it concerns a portfolio investment
company(no minimum holding period)
Summary of the Dutch tax system
SUBSTANCE REQUIREMENTS
Focus should be on substance requirements set by the jurisdiction that pays to a Dutch
holding company;
Presence of local operations
Key executives 'agenda for travel to the holding company jurisdiction
The Dutch tax authorities published the following list with minimum substance
requirements that should be met by so-called financing flow-through ruling companies:
At least 50% of the Board of Directors(BOD) MEMEBRS SHOULD BE Dutch
residents(live and work there)and of a certain professional level and the company
has adequate staff (itself or from 3rd parties)for performing the functions
All key strategic/material decisions of the BOD should be taken in the
Netherlands, such as the entering into contracts and signing of documents
The main bank account should be held in the Netherlands
The bookkeeping is maintained in the Netherlands
The address of the company should be in the Netherlands and the company is not
considered a resident in another state on the basis of a tax treaty
The company has sufficient equity considering its activities and the risks to be
absorbed by the company.
DOUBLE TAX TREATY WITH UKRAINE
DIVIDEND
*o% applies if min shareholding 50% and at least
$300000 investment
** 5% applies if at least 20% shareholding
In all other cases 15%
INTEREST
*2% rate applies to interest paid on loans granted by
a banking institution and financial or to interest paid
by the purchaser of machinery and equipment to the
seller in connection with a sale on credit; the 10%
rate applies in all other cases.
ROYALTIES
* 0% rate applies to royalties paid for a copyright of
scientific work, a patent, trademark, design or
model, plan, secret formula or process, or for
information concerning industrial, commercial or
scientific experience. The 10% rate applies to
0%*/5**%/15%
2*/10%
0*/10%
DOUBLE TAX TREATY WITH RUSSIA
DIVIDEND
•If 25% ownership in the
subsidiary Russian company
and minimum investment of
•€ 75000
5*%/15%
INTEREST
0%
ROYALTIES
0%
Organigram
Russian company
loans
Cyprus Ltd.
interests
dividends
One or more BO’s
Dutch B.V.
Subsidiaries
In any country
Example loan
Loan from Russian Comp. to subsidiaries
Russian company
I
N
T
R
E
S
T
Russian company
I
N
T
R
E
S
T
Dutch B.V.
Witholding tax: 35%
Subsidiaries
Witholding tax: 0%
I
N
T
R
E
S
T
Witholding tax: 0%
Subsidiaries
Example dividend
Dividend from subsidiaries in Argentina to
Russian holding
Russian company
Russian company
Witholding tax: 0%
Cyprus Ltd
Witholding tax: 15%
Witholding tax: 0%
Dutch B.V.
Witholding tax: 0%
Subsidiaries (EU
country without
treaty)
Subsidiaries (EU
country)
Comparison of Luxembourg and Dutch Tax Rates
Luxembourg company
Dutch company
Capital
It has minimum amount and has No minimum
to be paid in advance according
to the type of company
Corporate tax
28.8%
20 % upto € 200000
25% above € 200000
Tax on Dividends received
O% if participation exemption
applies i.e
•10% minimum shareholding or
a minimum of € 1.2 m
investment
•For at least 12 months
•EU co or if non EU to be taxed
at tax rate at least equal to
10.5%
0% if participation
exemption applies i.e
•5% minimum
shareholding in the
subsidiary
•held as participation not
as an investment
Royalty income
5.85%
5%
Comparison of Luxembourg and Dutch Tax Rates
Luxembourg company
Dutch company
Capital gains tax in the
case of disposal of
participation
O% if participation
exemption applies i.e
•10% minimum
shareholding or a
minimum of € 6 m
investment
•For at least 12 months
•EU co or if non EU to be
taxed at tax rate at least
equal to 10.5%
0% if participation
exemption applies i.e
•5% minimum shareholding
in the subsidiary,
• held as participation not as
an investment
Profit from the trading in
securities
28.8%
20-25%
Thin capitalisation rules
15:85 equity /debt
1:3 equity /debt
Withholding tax on
15%
15%
.
Comparison of Luxembourg and Dutch Tax Rates
.
Luxembourg company
Dutch company
Tax loss carried forward
indefinite
9 years
EU dividend , interest and
royalty directives
Yes
Yes
Extensive network of DTT
64
90
DTT with Russia :
WHT on dividend
5%*/15%
*10% participation
And € 80000 investment
5%*/15%
*25% participation
And € 75000 investment
WHT on royalty and
interest
0%
0%
Exchange of information
Yes
Yes
Limitation of treaty
Will not apply provided
Will not apply provided
Disclaimer
Whilst every effort was made to ensure that the information contained in this booklet is correct and error-free, no
responsibility or liability can be accepted by Globalserve Consultants Ltd for any loss or damage incurred as a result of
relying on information contained in this booklet. Globalserve Consultants Ltd, its management and staff, any individual
or legal entity that has contributed in any way to the preparation, composition or promulgation of this booklet hereby
disclaim any overall liability arising from any inappropriate, improper or fraudulent use. This document is not
intended to be used as a general guide to investing, or as a source of any specific investment recommendations, and
makes no implied or express recommendations. This document does not constitute an offer or solicitation to any
person in any jurisdiction in which such an offer or solicitation is not authorized or to any person to whom it would be
unlawful to make such as offer or solicitation. It is the responsibility of any person or persons in possession of this
material to inform themselves of and to observe all applicable laws and regulations of any relevant jurisdiction,
including MiFID compliance. Prospective investors should inform themselves and take appropriate advice as to any
applicable legal requirements and any applicable taxation and exchange control regulations in the countries of their
citizenship, residence or domicile which might be relevant to the subscription, purchase, holding, exchange,
redemption or disposal of any investments. No part of this material may be i) copied, photocopied or duplicated in
any form, by any means, or ii) redistributed without the prior written consent of Globalserve Consultants Ltd .
14
GLOBALSERVE CONSULTANTS LTD
9 Vassili Michaelides
Globalserve Business Centre
3026, Limassol-Cyprus
P.O.Box 57019 3311 Limassol-Cyprus
Main tel. line: 00357 25 817181
Fax: (00357) 25 824055
Web Site: www.globalserve.com.cy
Email: [email protected]
[email protected]