Transcript Dia 1 - CrossTax

EMEA Tax Conference
8-9 June, 2012
Amsterdam
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The role of the Netherlands in International
Tax Planning
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Going Dutch
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Strategic location in Europe
Gateway to EMEA
Founding member of EU
Stable country with solid legal system
Logistics and technology infrastructure
International business environment
English as second language
Competitive fiscal climate
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Tax Characteristics
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Corporate income tax rate of 25% (20% for profits below EUR 200,000)
Very extensive network of bilateral double tax treaties
No withholding tax on outgoing interest and royalties
Dividend withholding tax rates on dividends is 15% but can under certain
conditions be reduced
Advance Tax Rulings and Advance Pricing Agreements with TA
No CFC rules
Tax reporting in foreign currency
Loss carry forward of nine years
Various tax facilities
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Tax Facilities
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Participation exemption
• Innovation Box
• IP right structuring
• Dutch Coop
• 30% ruling
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Participation exemption
 Capital gains realised on the sale of shares by and dividends received
by a Dutch company are exempt from corporate income tax
 Dutch company holds at least 5% of the shares of the subsidiary
 The subsidiary is not considered to be held as a portfolio investment,
i.e. the purpose for which the participation is held
 If the subsidiary is considered a portfolio investment, the subject to tax
test or the asset test should then be met
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Innovation Box
 Special tax rate of 5% for income derived from self development of
certain intangible assets
 Normal tax rate is 25% resulting in a tax benefit of 20%
 Assets should be developed for the risk and benefit of a Dutch
company
 Assets should have be patented for and/or an R&D-statement should
have been received from the local authorities
 Development of software may apply
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IP right structuring
 With more than 80 tax treaties in place, the Netherlands attracts many
international business, including sportsmen and artists
 Bands such as The Rolling Stones and U2 structured the collection of
their music copyright related royalties via a Dutch company
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Structuring via the Netherlands
 Legal and commercial benefits
 No or reduced tax on royalties paid to the Dutch company, due to DTT
and the EU Interest and Royalty Directive
 Low income tax spread in the Netherlands (minimum profit on arms
length remuneration taxed at 25%)
 No tax on royalties paid by Dutch company
 Tax residency certificates and Advance Pricing Agreements and
Advance Tax Rulings with Dutch tax authorities
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How does it work?
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A company owning the IP donates or sells it to a company in a zero or low tax
jurisdiction (offshore company). This is preferably done when the IP is still of
little value.
The offshore company then licences some or all of the rights for the use of the
IP to an intermediary or agency company created in a jurisdiction offering tax
benefits such as a tax treaty network, withholding tax exemption for royalty
payments and other advantages.
The intermediary company then sub-licenses this right to customers in various
countries. This way the royalty fees are remitted to the intermediary company,
which may be subject to zero or a low withholding tax rates due to double tax
treaty provisions.
The intermediary company retains a licence fee for the work done in negotiating
the contracts and will pay tax on this sum
Finally, the intermediary company remits the balance to the offshore company
free of any further withholding taxes.
Choosing the intermediary company
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Dutch Cooperative Association (COOP)
 Basic structure
 Tax aspects
 Benefits COOP
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Basic structure
Foreign Co
Foreign Co
Foreign Co
COOP
Dutch BV
Project
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Tax aspects
 Subject to Dutch corporate income tax – but no actual tax
levied (participation exemption)
 Tax resident under NL Tax Treaties
 Distributions by COOP not subject to dividend withholding
tax under domestic law – no tax treaty required
 BV is optional (depends on approach foreign countries) but
preferred due to familiarity with usage
 Participation exemption on COOP’s shareholding in BV
 Tax consolidation possible between COOP and BV
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Benefits
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No Dutch dividend withholding tax
Access to EU Directives and Dutch treaty network
Only one jurisdiction; easier to manage
Low annual maintenance cost
Simple and straightforward; no need for complicated
structuring with hybrid instruments or –entities
 Possibility to conclude ATR/APA on tax treatment and tax
base
 Easy exit
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30% ruling – Proposition
Dutch Personal income tax rates (2012)
Income (€)
Tax Rate
Up to 18,945*
18,945 to 33,863*
33,863 to 56,491
€ 56,491 and above
33.10%
41.95%
42.00%
52.00%
* Includes 31.15% as Social Insurance Tax
►Expats may qualify for a special tax ruling by which 30% of their employment
income can be paid tax free to compensate them for specific expatriate costs
(referred to as “extraterritorial costs”). This so-called 30% ruling effectively
reduces the top rate of 52% to 36.4%
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30% Ruling – Conditions as from 1 Jan. 2012
• Non-resident employee is hired abroad by a Dutch resident employer;
• Employee must have specific expertise scarcely available on Dutch labour
market;
• Specific expertise is deemed to be met at salary level of more than EUR
35,000 (EUR 50,000 including “extraterritorial costs”). For individuals (< 30
years of age) holding a Masters degree, the minimum salary requirement is
EUR 26.605 (EUR 38,007 including “extraterritorial costs”);
• Incoming employees must have lived more than 150 km from the Dutch border
before the work in the Netherlands commences;
• Maximum ‘granting’ period of 8 years. Periods of prior employment or stay in
the Netherlands of less than 25 years before the (new) assignment to the
Netherlands (“reference period”) will reduce duration of the ruling.
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30% Ruling – Transitional rules
• Maximum granting period of 8 years and the new reference period of 25 years
will only apply for new applications as from 1 January 2012;
• If the 30% ruling regime is granted after January 1, 2007 (but before 1 January
2012), the old conditions apply for a period of 5 years. As from year 6, the new
minimum salary condition applies;
• Furthermore, the employee should not be living within 150 km from the Dutch
border at the start of their employment.
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Knowledge migrant (“kennismigrant”) regulation
• A knowledge migrant is a foreign (non-EU) individual employed or seconded
to a company in the Netherlands for a minimum period of 3 months. A
knowledge migrant earns an annual gross salary of at least € 51,239 (or €
37,575 if the individual is younger than 30 years).
• Certain groups of knowledge migrants will be deemed to have specific
expertise to qualify for the 30% ruling.
• As a knowledge migrant your employer does not have to apply for a separate
work permit. Having a residence permit as a knowledge migrant allows a
foreign individual to legally work and reside in the Netherlands for a specific
period of time.
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Contact
Amsterdam
P.O. Box 74175
1070 BD Amsterdam
T: +31 20 - 426 06 00
F: +31 20 - 426 06 99
Rotterdam
P.O. Box 4308
3006 AH Rotterdam
T: +31 10 - 266 15 00
F: +31 10 - 266 15 99
[email protected]
www.crowehorwath.nl
Nijmegen
P.O. Box 451
6500 AL Nijmegen
T: +31 24 - 372 54 00
F: +31 24 - 372 54 99
 Hans de Kruijs
 E-mail: [email protected]
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