Royalty and Licencing Special Purpose Entities
(R&L SPEs) in the Netherlands
Bram de Boo & Tom van Venrooij
9th AEG Meeting
8-10 September 2014, Washington DC
Starting point of the paper
The paper is drafted on request of the ISWGNA (and not
the TFGP)
– Point of reference is the work done by the MUNA and
HC-HO-SPE Task Forces
– Highlights some of the specific features encountered in
the Netherlands:
‐ The Netherlands have quite a long history of
establishing tax agreements with a wide range of
countries.
‐ Which has led to the presence of a various kinds of
SPEs.
Background
2001 national accounts revision:
– All SPEs (financing, holding, R&L) classified under ‘other
financial institutions’ (ESA 1995, S.123)
– Limited data sources (BoP Survey, small SPEs sample),
this situation improved in more recent years
– Practical solution for GFCF estimations
2010 national accounts revision:
– Given new guidance R&L SPEs must be classified under
the non-financial corporations (S.11) as they hold nonfinancial assets and are providing (IPP) related services.
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Sector classification of R&L SPEs
– MUNA/HC-HO-SPE: SPEs owning non-financial assets
should be classified under S.11, however,
‐ Ownership is not well understood;
‐ SPE’s may own financial and non-financial assets
– Statistics Netherland uses the following two criteria:
‐ Ownership follows reported balance sheet positions
(legal ownership)
‐ Primary activity follows the dominance of reported
(R&L) revenues
– Out of 14,000 SPEs identified in the Netherlands, only 20
report substantive R&L imports and exports.
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Further examination of these 20 suspects leads to
the following three categories of SPEs:
1. Those reporting R&L flows but no ownership of IPPs (Google
Netherlands Holding).
‐ The company balance sheets do not report IPPs or trademarks
or other forms of intangible assets;
‐ R&L inflows equal outflows.
2. Those of which Income from financial assets exceed R&L
receipts (Mosaic Global Netherlands);
3. Those reporting IPP ownership and R&L turnover (U2L).
Conclusions:
Suspected R&L SPEs are predominantly involved in re-allocating
R&L from on country to another (i.e. the Double Irish/Bermuda
structure).
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Sub-licences are not reported on these entity’s balance sheets.
Solutions taken by Statistics Netherlands
– Ultimately all R&L SPE suspects are classified as financial
entities, i.e. their activities are considered to be similar
to invoicing or holding SPEs;
– A net recording is used for ‘re-exports’ of R&L;
– Output is measured by the sum of costs;
– Requires in some cases a downward adjustment in
reported intra-company flows.
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Suggested points for discussion by the EAG:
– Does the AEG support the suggested classification of those
SPEs mainly engaged in the re-routing of R&L services as
financial corporations?
– Does the AEG support the pragmatic approach in which
balance sheet information is being considered crucial in
determining economic ownership of intellectual property?
– Does the recording of significant receipts of royalties,
however without the observation any of IPPs or brand
names ownership imply that maybe the observed unit ought
to be categorised as a R&L SPE? If so, what additional
decision rules can be formulated to properly assist national
accounts compilers?
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