The Dutch B.V. For Tax Planning By Robert Hek Paritax International Tax Advisors (Cyprus) / Fundatio B.V. (the Netherlands)

The Dutch B.V. For Tax Planning

By Robert HekParitax International Tax Advisors (Cyprus) / Fundatio B.V. (the Netherlands)

EU memberNatural hub for logistics and headquarter

functions High educated, multi cultural and multi-lingual

workforceHigh 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 countriesGood Banking systemAdvantageous Tax System especially with

respect to taxation of dividends, royalties and interest

Tax Rulings possible

The Netherlands

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.

AuditThe 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 FrameThe 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 non-resident 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.


SUBSTANCE REQUIREMENTSSubstance requirements that should be met by so-called 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;


• 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.

• 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.


The current corporate income tax rates are:

Taxable profit up to and including € 200.000: 20%

Taxable profit above € 200.000: 25%


The loss carry forward period is restricted to 9 years

The loss carry back period is restricted to 1 year.


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.


Thin capitalization rules are applicable for alltaxpayers. 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;


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.


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”)


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.


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.


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)


Double Tax Treaties with 91 countries are in force per October 1, 2013, including;- Russia- Ukraine- Belarus- Georgia- Latvia- Lithuania- Estonia


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 Withholding tax

Netherlands -> Russia

- Dividend5% * / 15%

- Interest0%

- Royalties0%

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 -> NetherlandsWithholding tax

- Dividend0%*/5% ** / 15%

- Interest2%*** / 10%

- Royalties0%****/10%


* 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:


and

- the investment in the capital of the dividend paying company is at least USD 300.000.


** 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:



*** 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.


****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).


Netherlands -> UkraineWithholding tax

- Dividend0%*/5%** / 15%

- Interest0%

- Royalties0%

Beneficial Owner

Cyprus Company

Dutch Company

Dividend 0%Interest 0%Royalties 0%

Russian / Ukraine

CompanyDividend 0%Interest 0%Royalties 0%

Dividend Interest Royalties Subsidiaries

The rate of the withholding tax depends on the specific tax treaty or the EU parent – subsidiary directive.

Documents

The Dutch B.V. For Tax Planning By Robert Hek Paritax International Tax Advisors (Cyprus) / Fundatio B.V. (the Netherlands)