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| The Netherlands | ||
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| The Netherlands has played a pioneering role in
international tax planning and offers a number of attractive facilities to non-resident companies
and individuals. The most important ones are participation exemption, lower withholding tax on
interest and royalty payments, and an extensive number of bilateral tax treaties aimed at
avoiding double taxation. The participation exemption means that no corporate tax is payable
on dividends and capital gains earned by qualifying subsidiaries. That makes it potentially
attractive to incorporate a holding or finance company in the Netherlands as part of an
international corporate structure. Royalty Structures Dutch companies are frequently used as vehicles in collecting royalties, for example on intellectual property licenses and copyright. The attractions of the Netherlands include its extensive tax treaty network, which can result in a substantial reduction in the amount of foreign royalty withholding tax due on total royalty payments. In addition, the Netherlands does not levy a withholding tax on outbound royalty payments. Additionally, paid royalties can be deducted from royalties received, enabling corporate administrators to manage cross-border flows in such a way that only a small spread remains in the Netherlands, thus ensuring fiscal optimisation. For companies considering the Netherlands as a conduit for international royalty payments, New Millennium Trust acts as an unrelated third party to collect royalties in their own name and at their own risk. We also act as collection agent on behalf of third parties. Alternatively, we can create separate special-purpose royalty collection companies on clients' behalf. Trading Structures Its geographic location, well developed infrastructure and favourable international business climate make the Netherlands an ideal central distribution point for all Europe. In addition, the Netherlands offers scope for high fiscal efficiency when structuring trading and service companies. In practice the foreign entity, which is usually off shore, signs a service & mandate agreement with a Dutch BV (limited liability company) for hiring the expertise, knowledge and infrastructure in the Netherlands. As a result of the agreement, the Dutch BV will have no commercial risks. It will merely assist the off-shore company in issuing invoices in the BV’s own name, but on behalf of the off-shore company. In turn, the BV will purchase the goods at a low price from various international firms. All negotiations are coordinated by the client, and the client instructs the BV which companies to purchase the goods from. It is the client’s role, also, to ensure that enough funds are available in the Netherlands to guarantee the purchase, and to negotiate the sales. The Dutch BV is 100% owned by a Dutch individual and is remunerated for the services rendered by the off-shore company at competitive negotiable rates. |
Holding Structures Holding structures are a stape feature of international tax structures involving the Netherlands. Often a Netherlands intermediate holding company is created to hold the shares of subsidiaries located outside the Netherlands in order to reduce the level of tax payable on income generated by the subsidiaries. As a result of the participation exemption facility, no corporate tax is payable on dividends or capital gains received by the subsidiaries. New Millennium Trust implements holding structures on behalf of clients in close consultation with fiscal advisers. Finance Structures Dutch finance companies are often used for borrowing and lending purposes within a group structure. The main attraction is the possibility to reduce tax payable on interest received and paid substantially, in some cases to zero. New Millennium Trust incorporates finance companies on behalf of clients. Sale of Dutch cash companies Profits of Dutch cash companies are in principle subject to 25% Dutch dividend withholding tax if they are transferred to the (foreign) shareholder of the Dutch company. Under bilateral and/or multilateral tax treaties, for instance under the EU parent/subsidiary directive, this rate can be reduced. If the Dutch dividend withholding tax rate cannot be reduced to zero and it is not possible to credit these taxes at the level of the shareholder, these Dutch taxes can be a real cost. This situation can be avoided through the sale of the Dutch cash company to an external party. However, if not structured correctly there is always a risk that Dutch dividend withholding taxes will be payable after all, including interest and penalties. New Millennium Trust N.V. has ample experience in structuring the sale and acquisition of cash companies in an efficient way. New Millennium Trust implements and coordinates the transaction properly on behalf of the client in close consultation with fiscal advisors. We do this in such a way that there is no risk of dividend withholding tax. |
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| Amsterdam Claude Debussylaan 44 NL-1082 MD Amsterdam P.O. Box 741 NL-1000 AS Amsterdam The Netherlands tel +31 (0) 20 522 62 00 fax +31 (0) 20 522 69 69 Rotterdam Wings House Steupelstraat 16 P.O. Box 4276 NL-3006 AG Rotterdam The Netherlands tel +31 (0) 10 447 33 78 fax +31 (0) 10 447 33 79  contact our office
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