The Dutch B.V.
For Tax Planning
By Robert Hek
Paritax International Tax Advisors (Cyprus) / Fundatio B.V. (the Netherlands)
The Netherlands
EU member
Natural hub for logistics and headquarter
functions
High educated, multi cultural and multi-lingual
workforce
High level of infrastructure
Good economic and financial climate
 Political stability
The Netherlands
One of the major and reputable international
Business centers
Tax Treaties with more than 90 countries
Good Banking system
Advantageous Tax System especially with
respect to taxation of dividends, royalties and
interest
Tax Rulings possible
The Dutch B.V.
One or more 'incorporators’ possible, being
either individuals and/or legal entities;
No secretary is needed;
One or more directors possible;
If one shareholder, his name will be registered
as such in the certificates of registration of the
BV issued by the trade register.
The Dutch B.V.
Share capital
 The incorporator can choose how high the share
capital will be, which can even be € 1.
 There must at least be one share with one voting
right.
 A share can have a voting right, a profit right or
both.
The Dutch B.V.
Audit
The audit must be performed by external auditors and
annual accounts have to be published when (2 out of 3
requirements must be met) :
- the company's turnover exceeds EUR 12 million
- the balance sheet totals over EUR 6 million
- the average number of employees is 50
Time Frame
The procedure of incorporation usually takes 2 to 4
weeks.
Dutch Corporate Tax highlights
Which companies pay tax in the Netherlands?
Corporations in the Netherlands (resident
taxpayers)
Corporations not established in the
Netherlands which receive income from
sources in The Netherlands (called nonresident taxpayers)
Dutch Corporate Tax Highlights
Dutch Tax Resident
 Whether a corporation (not incorporated under Dutch law)
is tax resident in The Netherlands depends on the facts and
circumstances, such as
- place of the effective management
- the location of the head office
- the place where the general meeting of shareholders is
held.
 Under the Corporation Tax Act, all corporations
incorporated under Dutch law are tax resident in the
Netherlands unless tax treaty overrules this fiction.
Dutch Corporate Tax Highlights
 SUBSTANCE REQUIREMENTS
Substance requirements that should be met by socalled financing flow-through ruling companies
(dividend / interest / royalties):
• At least 50% of the Board of Directors (BOD)
members 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;
Dutch Corporate Tax Highlights
• 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
Dutch Corporate Tax Highlights
• The address of the company should be in the
Netherlands.
• The company is not considered a tax 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.
Dutch Corporate Tax Highlights
The current corporate income tax rates are:
 Taxable profit up to and including € 200.000: 20%
 Taxable profit above € 200.000: 25%
Dutch Corporate Tax Highlights
The loss carry forward period is restricted to 9
years
The loss carry back period is restricted to 1
year.
Dutch Corporate Tax Highlights
Interest is generally deductible. In some situations
however, limitation rules may apply.
Limitation on the deductibility of inter-company
interest can affect on interest paid on debts arising
from:
- unpaid dividends to the parent company;
- the acquisition of the shares of a company from a
group company through an intercompany loan.
Dutch Corporate Tax Highlights
Thin capitalization rules are applicable for all
taxpayers. A Dutch entity is not affected by the thin
capitalization rules in the following situations:
• The entity is not part of a group;
• There is no debt to a related party;
• The interest income from related parties equals
or exceeds interest expenses to related parties;
• Certain debt – equity ratio’s are satisfied;
Dutch Corporate Tax Highlights
Related party transactions / arm’s length
pricing
Transactions between related parties that are
not concluded at arm’s length basis may be
disregarded or may be adjusted appropriately.
Dutch Corporate Tax Highlights
The participation exemption applies if:
The taxpayer owns (generally) at least 5% of
the capital of its subsidiary (no minimum
holding period) and
The subsidiary is not held as portfolio
investment (“portfolio investment
subsidiary”)
Dutch Corporate Tax Highlights
 If the participation exemption applies, dividends and
capital gains arising in respect of shareholdings by a
Dutch parent company are free from corporate income
tax.
 Capital losses are available upon liquidation of the
participation.
 Expenses regarding a foreign subsidiary are tax
deductible.
Dutch Corporate Tax Highlights
Withholding Tax
 Dividends, whether paid to resident or non-resident
recipients, are subject to withholding tax at 15%.
 A reduced percentage may be provided by a
double tax treaty.
 No withholding taxes on royalties and interest.
Dutch Corporate Tax Highlights
No withholding tax when a dividend is paid by
a Dutch company to a European parent
company that owns at least 5% of the capital
(or voting rights)
(European Parent – Subsidiary Directive)
Dutch Corporate Tax Highlights
Double Tax Treaties with 91 countries are in
force per October 1, 2013, including;
- Russia
- Ukraine
- Belarus
- Georgia
- Latvia
- Lithuania
- Estonia
Dutch Corporate Tax Highlights
 Tax Information Exchange Agreements (TIEA’s) are signed
with 29 countries, , including:
- Belize
- British Virgin Islands
- Cayman Islands
- Liechtenstein
- Marshall Islands
- Seychelles
 No Double Tax Treaty or Tax Information Exchange
Agreement is signed between the Netherlands and Cyprus;
DTT Russia – the Netherlands
Paid Russia -> Netherlands
Netherlands -> Russia
Withholding tax
- Dividend
- Interest
- Royalties
5% * / 15%
0%
0%
DTT Russia – the Netherlands
 5 per cent of the gross amount of the dividends if
the beneficial owner of the dividends is a
company (other than a partnership) which:
- holds directly at least 25 per cent of the capital
of the company paying the dividends
and
- has invested in it at least € 75,000 or its
equivalent in the national currencies of the
Contracting States;
DTT Ukraine – the Netherlands
Ukraine -> Netherlands
Withholding tax
- Dividend
- Interest
- Royalties
0%*/5% ** / 15%
2%*** / 10%
0%****/10%
DTT Ukraine – the Netherlands
 * 0 per cent of the gross amount of the dividends
if the beneficial owner of the dividends is a
company (other than a partnership) which:
- holds directly at least 50 per cent of the capital
of the company paying the dividends
and
- the investment in the capital of the dividend
paying company is at least USD 300.000.
DTT Ukraine – the Netherlands
** 5 per cent of the gross amount of the
dividends if the beneficial owner of the
dividends is a company (other than a
partnership) which:
- holds directly at least 20 per cent of the
capital of the company paying the dividends
DTT Ukraine – the Netherlands
 *** 2% rate applies to interest paid on loans
granted by a banking / financial institution
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.
DTT Ukraine – the Netherlands
 ****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 royalties paid for the use
of, or the right to use, a copyright of scientific
work, (including cinematograph film and films or
tapes for radio or television broadcasting).
DTT Ukraine – the Netherlands
Netherlands -> Ukraine
Withholding tax
- Dividend
- Interest
- Royalties
0%*/5%** / 15%
0%
0%
Beneficial
Owner
Dividend 0%
Interest 0%
Royalties 0%
Russian /
Ukraine
Company
Cyprus Company
Dividend 0%
Interest 0%
Royalties 0%
Dividend
Interest
Royalties
Dutch Company
Subsidiaries
The rate of the withholding tax
depends on the specific tax treaty
or the EU parent – subsidiary
directive.