The Netherlands has a highly developed diversified economy and infrastructure. As of 2013, the country ranks 17th in the ranking of the most economically free countries (according to The Heritage Foundation) and 18th in the world in terms of GDP for 2012 (according to the World Bank). The Netherlands is one of the recognized jurisdictions for registering holding companies. The country hosts the head offices of a number of multinational and European corporations.
In international tax planning, Dutch companies are usually used to own assets (in particular, shares/shares in companies, real estate) and receive income from them or alienate them, as well as to issue loans and grant rights to intellectual property.
Dutch business company forms
Organizational and legal forms legal entities defined in book 2 Dutch Civil Code 1992 (as amended 2012)
1. Private limited company(Dutch. Besloten Vennootschap, BV) - one of the most commonly used forms, an approximate analogue of the Russian CJSC or LLC. The minimum number of BV founders is one. The founder can have any citizenship or country of registration. The deed of incorporation, which includes the text of the company's articles of association (statuten), is completed in Dutch in the presence of a notary. When creating a company, the founders can be represented by persons by proxy.
There are no minimum paid-up capital requirements (previously the paid-up share capital at the time of incorporation had to be at least EUR 18,000). The capital of the BV is divided into shares with a nominal value expressed in euros or another currency. The shares are registered. Mandatory restrictions on the transfer of shares have been abolished, although they may be provided for by the charter.
In its day-to-day activities, the company is governed by a board of directors (if there are more than one shareholders). Large companies must have a supervisory board in addition to the board of directors. For some decisions of directors, the company's articles of association may require the approval of shareholders or the supervisory board (if there is one). Directors can be residents of any state, both individuals and legal entities. Information about directors is publicly available. Data on founders is available to the Dutch Ministry of Justice and is also open to interested parties.
The minimum number of shareholders is one (citizen or legal entity of any nationality). The accounting of shareholders is carried out in the form of a register of shareholders, which is maintained by the directors and kept at the company's office. If the company has a single shareholder, he may also be the only director.
The company must have a registered office in the Netherlands. Financial records must also be kept in the Netherlands.
Came into force on October 1, 2012 “Law on simplifying and increasing the flexibility of legal regulation of BV companies”(Dutch Wet vereenvoudiging en flexibilisering BV-recht, English Flex BV Act), amending Book 2 of the Dutch Civil Code (“Legal Entities”) and aimed at simplifying the process of registration and management of BV companies. In accordance with this law:
1) the minimum size requirement has been canceled authorized capital(which was 18,000 euros), when creating a company, it is allowed to issue one share worth 1 euro cent; upon incorporation, a bank statement on the contribution of the authorized capital is no longer required;
2) the authorized capital can now be denominated in a currency other than the euro;
3) the mechanism for making corporate decisions without a meeting of the shareholders’ meeting has been simplified (for example, through email), holding shareholder meetings outside the Netherlands is allowed, mandatory annual meetings shareholders;
4) the obligation to provide in the charter for restrictions on the alienation (transfer) of shares has been cancelled;
5) the procedure for making a decision on the distribution of dividends has been simplified: such a decision is now made at the discretion of the directors;
7) independent assessment of non-monetary contributions of participants has been cancelled.
In addition, at the stage of creating a company, a special procedure for the approval of directors and shareholders by the Ministry of Justice is no longer required, and the same applies to the procedure for changing shareholders. The Ministry, however, retained the functions of selective supervision over the activities of corporate structures throughout their existence.
2. Public limited company(joint stock company) (Dutch. Naamloze Vennootschap, NV). The minimum paid-up share capital for such a company is 45,000 euros. In addition to registered shares, NV can also issue bearer shares. NV shares can be freely alienated and listed on the stock exchange. The rules regarding company management are generally the same as those described above for BV.
3. Partnerships in the Netherlands they can be full (vennootschap onder firma, VOF) or limited (commanditaire vennootschap, CV). They can be created by two or more partners, both individuals and legal entities, by concluding a partnership agreement.
A limited liability partnership (CV) is a contractual entity that consists of two (or more) founders: one general partner (managing partner) and one limited liability partner. A limited partner can be either an individual or a legal entity of any residence (in practice, often an offshore company).
CV can carry out any professional or commercial activities not prohibited by law. Accounting and annual reporting are required.
The income of a CV is not subject to tax in the Netherlands, provided that the CV does not receive income from a source in the Netherlands and neither partner is tax resident in the Netherlands. CVs are transparent to the Dutch tax system, and the profits they receive are subject to taxation only at the partner level (in their country of incorporation). If the latter are offshore companies, then the CV profits are not taxed in the Netherlands.
However, several clarifications need to be made here. With respect to the general partner, a CV is always tax transparent: the partner's share of income derived from participation in the CV is taxed as if it had been received by the partner directly. For limited partners, their tax status depends on the status of the partnership itself. For tax purposes, two types of CV can be distinguished: a) CV, in which partners can freely transfer participation, enter or leave the partnership (so-called “open” CV) and b) “closed” CV, where these actions are not allowed. Open CVs are subject to corporate tax on income payable to the limited partner.
Whereas in a closed CV, the limited partner (like the general) pays tax on income from participation in the CV independently, and the CV itself does not pay tax (in this sense, the Dutch CV is similar to the English LLP). Consequently, the use of tax opportunities of a partnership depends on its legal proper organization(fixed in the partnership agreement).
4. Co-op(Dutch Cooperatief) is a form of joint business that combines the characteristics of a partnership and a limited liability company. The number of mandatory requirements for the charter of a cooperative is not large, which leaves significant freedom to organize the cooperative in accordance with the goals of the parties. A cooperative is a legal entity, can act as a holding company, and is widely used in international holding activities. The minimum number of participants in the cooperative is two (there can be both Dutch and foreign individuals or legal entities). There are no requirements for the size and payment of the authorized capital.
When a cooperative is used in a holding structure, its purpose is usually to generate profit through investment. To do this, the cooperative enters into a contribution agreement with its participants, according to which the participants contribute capital (money or other property) to the cooperative. The cooperative may distribute profits among its members, the amount of which usually depends on the size of the contribution made.
An important advantage of a cooperative is that the profits distributed by the cooperative are not subject to withholding tax in the Netherlands, since the cooperative does not have share capital and therefore the distributed profits are not considered dividends. In addition, cooperatives are subject to Dutch tax treaties. However, it is necessary to keep in mind that the main condition for using tax exemption is the real nature of the business of the cooperative itself, its members and subsidiaries, and the main stop factor is abuse of the tax exemption regime (for more details, see below).
5. In addition to the above forms, in the Netherlands it is also possible to create European Company(Societas Europaea, SE) in accordance with EU legislation. In particular, the creation of such a company is possible by merging two existing companies from different EU countries; by creating a holding company SE with two subsidiaries from different countries EU; by converting a Dutch NV into an SE, etc. The minimum share capital is 120,000 euros.
A foreign (i.e. non-Dutch) company must be registered as branch or representative office in the Trade Register (Handelsregister) of the local Chamber of Commerce (Kamer van Koophandel).
Dutch companies have general legal capacity, that is, they can carry out any activity not prohibited by law. A number of activities require licensing, including banking, insurance and other financial activities.
Reporting and audit
Accounting is mandatory. Financial statements must be prepared annually within 5 months after the end of the financial year and submitted to the Trade Register of the Chamber of Commerce within 8 days after their approval by the general meeting of shareholders or participants.
The audit is mandatory and must be carried out by a local certified auditor in cases where the company is medium or large in terms of its performance. Small companies that are not subject to the audit requirement are those that meet two or three of the following criteria: 1) whose assets are less than 4.4 million euros, 2) their net turnover is less than 8.8 million euros, 3) the number employees are less than 50.
Taxpaying companies are required to file a tax return within 6 months following the end of the financial year. The financial (tax) year usually coincides with the calendar year, unless otherwise provided by the company's charter. Penalties are provided for failure to file or late filing of a tax return, late payment or non-payment of taxes.
Taxation
Residents of the Netherlands for tax purposes are considered to be persons incorporated under the laws of the Netherlands (“incorporation criterion”). For persons not registered in the Netherlands, residence is determined based on circumstances indicating the actual connection of the person with the Netherlands or its absence (for example, depending on the place of effective management, residence of directors, etc.).
Companies resident in the Netherlands pay corporate income tax on their worldwide income. Non-resident companies are subject to this tax only on certain income received from sources in the Netherlands.
Company income tax is levied based on Corporation Income Tax Act 1969 (Wet op de vennootschapsbelasting 1969). This tax is paid by all types of companies, with the exception of partnerships, in which each of the partners pays the tax independently at the place of their incorporation.
Corporate income tax rate in the Netherlands is 25%. A reduced rate of 20% applies to income not exceeding €200,000.
The Netherlands, like other EU countries, has a participation exemption regime, which allows Dutch companies receive dividends, without paying corporate income tax, subject to qualified participation in subsidiaries.
In other words, income received by a Dutch company from a foreign subsidiary (in the form of dividends or capital gains) is exempt from tax in the Netherlands if the Dutch company owns at least 5% of the subsidiary's share capital and the subsidiary:
1) is predominantly operating (that is, its assets do not consist of more than 50% of portfolio investments); or
2) is subject to tax at a reasonable effective tax rate calculated on the basis of Dutch tax principles (that is, the subsidiary must not be registered in a low-tax jurisdiction).
Capital gains resulting from the disposal of shares (as part of a qualified participation relationship) are also exempt from income tax.
Standard dividend withholding tax rate foreign shareholders is 15%. This rate may be reduced in accordance with the avoidance agreements concluded by the Netherlands. double taxation.
Paid Dutch company dividends are exempt from withholding tax if the relationship between the Dutch company and the company receiving the dividends (including offshore companies) satisfies the qualifying participation criteria (see above).
Exemption from withholding tax on dividend payments also applies in relations between companies from EU member states, when, firstly, each of the companies is a resident of the EU or the European Economic Area (EEA), and secondly, the company receiving the dividends owns in a Dutch company shares of at least 5%. In addition, the company receiving the dividends must belong to one of the legal forms listed in the annex to the EU Parent and Subsidiary Directive.
Withholding tax on interest payments absent, with the exception of so-called “hybrid” loans, in cases where the interest can be classified as a dividend for tax purposes. In the latter case, dividend rules will apply.
Withholding tax on royalty payments absent.
Withholding tax for cooperatives. As already mentioned, Dutch cooperatives are not subject to withholding tax on dividends. However, there are exceptions to this rule. A profit-distributing cooperative will be taxed at a rate of 15% if: a) there is a structure that “abuses” the tax regime (that is, the cooperative directly or indirectly owns shares in the company with the main purpose of avoiding Dutch withholding tax or foreign tax; b ) participation interest in a cooperative cannot be attributed to the “active business” of its participant.
Taxation of cooperative members. In some cases, the foreign co-operative member himself (non-Dutch resident) may become liable for corporate income tax (or personal income tax) on the income he receives from his membership in the Dutch co-operative. Under the Corporation Income Tax Act, non-resident corporations are subject to tax on income they derive from a “substantial interest” in a Dutch resident company (which includes cooperatives), unless such a “substantial interest” can be qualified as a share of a “business enterprise”. A “substantial” share is considered when a non-resident owns, directly or indirectly, at least 5% in a Dutch company. The concept of “business enterprise” (for the purposes of this rule) is not defined by law. In practice, a passive holding company registered in a classic offshore zone is not considered a “business enterprise”.
In these cases, especially if the member company of the cooperative is registered in a country that does not have a tax treaty with the Netherlands, it is recommended to obtain a preliminary tax opinion from the Dutch tax authority, which will explain: 1) whether the profits distributed by the cooperative to non-residents will be taxed withholding tax; 2) whether the “release due to participation” regime will apply; 3) whether foreign members of the cooperative will be required to pay Dutch corporate income tax. At the same time, it is important to show that all members of the cooperative are active business and are sufficiently involved in the business of the cooperative, and the cooperative's subsidiaries are also active (operational).
Standard VAT rate in the Netherlands is 21%. For certain categories of goods and services, reduced rates of 6% and 0% are provided. A zero VAT rate also applies to exports of goods and deliveries within the EU. The VAT report is submitted (depending on the tax amounts) monthly, quarterly or annually.
Income of individuals are taxed on a progressive scale. The maximum bet is 52 %.
The Dutch tax authorities can provide the taxpayer, upon request, with an advice (advance tax ruling) with information on the rates and other tax conditions that will be applied in the scheme or transaction proposed by the taxpayer (for example, on the issues of structuring holdings and applying the participation exemption regime to them, international loans, working conditions of a permanent representative office of a foreign company, etc.).
In the Netherlands, it is also possible to combine several Dutch companies into a consolidated group, which will be treated as a single taxpayer, and taxes will be calculated on the basis of consolidated accounting, which makes it possible to redistribute profits and losses within the group.
Dutch tax treaties
The Netherlands has more than 80 double tax treaties, in particular with countries such as Russia, Armenia, Azerbaijan, Austria, Belgium, Belarus, Great Britain, Hungary, Germany, Georgia, Denmark, Ireland, Spain, Kazakhstan, China (except Hong Kong and Macau), Latvia, Lithuania, Luxembourg, Moldova, Malta, Norway, New Zealand, USA, Singapore, Uzbekistan, France, Finland, Czech Republic, Sweden, Estonia, etc.
The Netherlands has also entered into Tax Information Exchange Agreements (TIEA) with the following states and territories: Andorra, Anguilla, Antigua and Barbuda, Bahamas, Belize, Bermuda, British Virgin Islands, Cayman Islands, Cook Islands, Costa Rica, Dominica, Gibraltar, Grenada, Guernsey, Isle of Man, Jersey, Liberia, Liechtenstein, Marshall Islands, Monaco, Montserrat, Samoa, St. Kitts and Nevis, St. Lucia, St. -Vincent and the Grenadines, Turks and Caicos Islands.
Agreement with Russia on the avoidance of double taxation
The Agreement between the Governments of the Russian Federation and the Netherlands on the avoidance of double taxation and the prevention of tax evasion in relation to taxes on income and property was concluded in 1996 and came into force in 1998.
In accordance with this Agreement, the profits of an enterprise of one Contracting State are taxed only in that state, except in cases where the enterprise carries on activities in the other Contracting State through a permanent establishment located there (Article 7).
Profits from the operation of ships or aircraft in international traffic are taxed only in the Contracting State in which the enterprise receiving such profits is a resident (Article 8).
Dividends paid by a company from one state to a resident of another state may be subject to taxes in both of those states. However, the tax levied in the state of the company paying the dividends (i.e. withholding tax) must not exceed:
a) 5% of the total amount of dividends, if the recipient of the dividends is a company (other than a partnership) whose direct participation in the capital of the company paying the dividends is at least 25% and which has invested in it at least 75 thousand euros or an equivalent amount in the national currency of the Contracting Parties states;
b) 15% of the total amount of dividends in other cases (Article 10).
The Agreement also establishes the rules for the exchange of information and assistance in collecting taxes by the competent authorities of Russia and the Netherlands.
Application of Dutch companies in holding schemes
There are various options for building holding structures with the participation of Dutch companies. Taking into account the provisions of the tax agreement between the Russian Federation and the Netherlands, as well as the Euro Directive on parent and subsidiary companies, it is possible to construct the following dividend payment structure.
A Russian company pays dividends to a Dutch company (withholding tax in the Russian Federation will be 5 or 15%). The Dutch company distributes dividends to the Cyprus company (without withholding tax based on the EU Directive). Dividends received by a Cyprus company are exempt from income tax in Cyprus. In turn, the Cyprus company, also without withholding tax at source, pays dividends to its shareholder - an offshore company (where there is no income tax).
Another option would be to use the following ownership chain: Maltese holding company - Dutch company - Russian company. A Russian company pays dividends to a Dutch company, withholding tax at source at 5% (according to Article 10 of the Tax Treaty). A Dutch company is exempt from tax on dividends received if it owns at least 5% of a foreign company - not offshore or passive, in this case - Russian. In the Netherlands, dividends paid to Malta will be subject to 0% withholding tax if there is a qualified participation in accordance with EU rules. Dividends received by a Maltese holding company from a qualified interest in a Dutch company are exempt from tax in Malta.
Companies for royalty purposes
In the Netherlands there is no withholding tax on outgoing royalties. Based on this, a traditional royalty payment scheme is built with the participation of a Dutch company. The owner of the trademark is a foreign (for example, offshore) company, which, on the basis of a license agreement, transfers to the Dutch company the rights to use the trademark, including the conclusion of sublicensing agreements. A sublicense agreement is concluded between the Dutch and Russian company (the end user of the trademark), according to which the Russian company transfers royalties to the Dutch company. The Dutch company then pays the royalty to the ultimate rights holder (in this case, the offshore company).
In Russia, paid royalties are not subject to withholding tax in accordance with Art. 12 of the tax agreement between the Russian Federation and the Netherlands. In the Netherlands, only the difference between royalties received and royalties paid is taxed at the standard rate. There is also no withholding tax when paying royalties to an offshore company. In the latter, income is not subject to income tax.
Please note that the described scheme has a number of restrictions and conditions of application established in order to combat abuse and the use of the Dutch company solely as a transit element.
Dutch companies for financing purposes
A scheme involving a Dutch transit company might look like this. A Dutch company receives a loan from one foreign company and then issues a loan to another foreign company. There is no withholding tax on interest payments to a non-resident in the Netherlands. Income tax at the standard rate in the Netherlands is only levied on the difference between the interest received and the interest paid.
However, when using Dutch companies for financing purposes, it is important to remember the regulatory restrictions on the expense of interest paid, as well as the requirements for the size of the difference between interest income received and paid. Interest paid may not be deductible as an expense in some cases (based on thin capitalization rules).
Use of Dutch companies in trading schemes
When receiving active income (for example, from trading) from profits, companies of the BV and NV type pay tax at the usual rate, therefore, in trading schemes, it is advisable to use agency schemes or partnership structures (partnerships with the rights of a legal entity), which are characterized by the principle of “tax transparency” .
Partnerships can be used instead of classic offshore companies in most popular schemes for international trade transactions. The partnership can operate as a trading company interacting with counterparties from jurisdictions with regular taxation (EU, USA, Canada, Russia, etc.).
The classic (“English”) agency scheme is also applicable to Dutch companies. Thus, a Dutch company can act as an agent carrying out its activities (supply of goods, provision of services) on the basis of an agreement with the principal - an offshore company. For example, a Dutch trading company acts as an agent, while the principal company is located in a jurisdiction with low or zero taxation, where the main profit is concentrated. In this case, clients interact with the Dutch company.
Let’s summarize by identifying the main advantages of Dutch companies in international tax planning:
1) The Netherlands is a respectable European jurisdiction with regular taxation (not offshore);
2) There are various options for tax exemption or tax reduction provided for by domestic and EU law, as well as international tax treaties;
3) Special taxation regime for holding companies;
4) No withholding tax on payments of interest and royalties to non-residents;
5) The procedure for registering and managing private limited liability companies (BV) has been significantly simplified;
6) Availability of flexible corporate instruments for various purposes (eg partnerships, cooperatives).
In conclusion, it should be noted that the construction of any schemes with the participation of Dutch companies aimed at minimizing the tax burden should be carried out taking into account the rather complex provisions of Dutch tax legislation and existing practice, in particular, the rules on “thin capitalization”, “hybrid” debt instruments , restrictions on interest deductions, transfer pricing, etc.
Over the past few years, Holland has finally recovered from the global financial crisis at the end of the last decade and today the country's GDP shows stable positive dynamics. In terms of economic size, the Kingdom of the Netherlands ranks sixth place in the European Union. Moreover, both industry and agriculture are equally well developed.
It’s no wonder that business in Holland attracts investors from different parts of the world. The country has access to the sea and borders Germany and Belgium. In terms of export volume it ranks 9th place in the world. In addition to border states, the main flow of goods is directed to Great Britain and France. And in principle, the development of trade relations with European countries is at the highest level. In 2019, unemployment is around 3.5% and inflation is 2%.
To conduct effective business in Holland, do not forget to familiarize yourself with the peculiarities of the local business culture and the mentality of the Dutch. As you know, this is one of the most free, democratic and law-abiding nations. Many things, such as corruption and other illegal activities, are unacceptable in this country.
Procedure and cost of registering a company in Holland
According to the agency Doing Business in 2019, out of 190 countries in the world in terms of accessibility to starting a business, Holland ranks 36th place . In general terms, the stages of registering a company are as follows:
Choosing a unique company name that complies with local law " About trading"and the requirements of the Chamber of Commerce and Industry (hereinafter referred to as the Chamber of Commerce and Industry) of Holland. The procedure is free.
Notarization of the Company Incorporation Act. The cost of services depends on the notary, on average about 1750 euros.
Registration of a company with the Chamber of Commerce and Industry and obtaining a registration number. Done online within a few hours, or by mail or in person, in which case it may be necessary up to 5 days. Price 50 euros.
Registration with tax authorities. Documents are submitted within a day, but the period for providing a certificate may take longer up to 1-1.5 months.
In case of hiring workers, registration with the social insurance service.
During and after registering a business in Holland, in most cases, you will need to use the services of local accountants, lawyers and auditors.
One of the main steps when registering a company in Holland, even at the initial stage of creating a business, is choosing the most effective form of ownership for future development. 
Local laws provide foreigners with a wide range of types of companies almost on par with Dutch businessmen. Let's look at the most popular:
Private limited company (BV). There are no minimum requirements for the authorized capital; previously (until 2012) at least 18 thousand euros were provided. Shareholders are liable to the extent of their personal contributions. Owners of more than 5% of shares are given additional obligations, for example, in the form of payment of dividends or profits from the sale of securities.
General partnership (VOF). Involves the joint conduct of business by several persons. Usually a special agreement is drawn up that regulates the shares of deposits, distribution of income and other obligations of the partners.
Individual entrepreneur (Eenmanszaak). As a rule, the activity is carried out by one person, although employees are allowed. Responsibility for the company's obligations is fully transferred to the property of the owner.
In addition to the above forms of ownership, foreign businessmen can create funds, cooperatives, branches of foreign companies, associations, partnerships and corporations in Holland. It all depends on your professional goals and the amount of investment.
Taxes in Holland in 2019
The Netherlands has a fairly flexible taxation system, in particular, a progressive income tax scale is used, many different rates depending on the scale of the business, types of activities, and so on. To optimize the process of calculating and paying taxes, a foreign entrepreneur will most likely have to use the services of local consultants or hire a specialized employee on staff.
Basic tax rates in Holland in 2019
Corporate income tax- 24.3% (from January 1, 2019). For companies carrying out innovative activity, with an annual income of less than 200 thousand euros, the rate is 19%.
VAT. The basic rate is 21%. Reduced rates - 0 and 9% apply, for example, to food products, pharmaceutical products, printed publications and some other services.
Tax on dividends - 15%
Income tax. Progressive rates depending on annual income level:
- Up to 20,384 euros - 36.65%
- From 20,384 to 68,507 euros - 38.10%
- More than 68,507 euros - 51.75%
General social insurance rate (per employee) - 27,65%
The Netherlands has signed agreements with a large number of countries to avoid double taxation and cooperate in the search for tax evaders.
Active involvement in trade relations with the most powerful economies of the European Union, such as Germany and France, allows foreign businessmen in the Netherlands to enter large markets with high purchasing demand from local residents. Actually, the Dutch territory is considered one of the most densely populated in Europe. In 2019, the population of the Netherlands is approx. 17.1 million people. These are all potential consumers of goods and services with a high level of income.
On the other hand, competition in various niches is also very high. It is not at all possible to break into some areas. The food industry is considered the most attractive area for foreigners to open a business in Holland. The country occupies a leading position in the world in terms of agricultural exports. Other manufacturing sectors - mechanical engineering, oil and chemical industries - are also in great demand.
Today, opening various startup projects in Holland is becoming increasingly popular. In addition, local authorities do their best to stimulate young and talented foreign entrepreneurs in this field. Behind last years in Amsterdam alone, about 1,000 new start-up companies and several thousand investors were registered, and this in turn created hundreds of new jobs for Holland. Analysis of the local market, a good business idea and start-up capital are the main components for starting a business and subsequent immigration to the Netherlands.
What is a trust?
"Trust" means the management of a company and the administration of the company by the trust's own staff or its director. The trust office staff consists of lawyers, tax consultants, notaries, attorneys, accountants and secretaries. The trust office receives a large number of confidential information from their clients and hence the name “trust”, “to trust”.
Trust offices are involved, among other things, in the implementation of client decisions, day-to-day management of the company, bookkeeping, provision of director services for various types of companies, registration and management of new companies and special purpose companies, filing of annual financial statements and the provision of other similar services.
Benefits of Using a Trust
There are the following reasons for using a trust:
- tax reasons: separation of ownership and management brings tax advantages
- international tax reasons: tax advantages associated with structuring international groups companies through the use of a combination of national legislation and the use of bilateral treaties for the avoidance of double taxation
- legal reasons: limiting liability and protecting assets from creditors and others
- financial reasons: centralization of the company's financial departments into a single department to simplify the management and direction of cash flows in the company
- labor reasons: managing the distribution of pensions between employees
- family reasons: proper distribution of assets/income among family members, as well as distribution of assets among heirs to avoid unnecessary waste.
Selecting the Netherlands as jurisdiction:
The Netherlands is a legally and economically stable state with an impeccable reputation in international business. Thanks to the extensive number of agreements concluded with most countries, the Netherlands provides certainty to international entrepreneurs. Also, financial mechanisms and royalty structures favorable for holding companies make this jurisdiction attractive to foreign companies and entrepreneurs. Through the establishment of a holding company by foreign companies in the Netherlands, the latter can significantly reduce or eliminate the tax burden on dividends, royalties and interest payments at a relatively low cost of establishing and maintaining the structure.
Additionally, it is possible to negotiate tax payments with the Dutch tax authorities. For example, it is possible to obtain certainty in advance regarding the financial continuity of the price that a Dutch group company pays or receives from a foreign group company for the receipt or delivery of services or goods. It is also possible to enter into an agreement that will describe the international corporate structure, which will allow, for example, to obtain certainty on the application of the participation exception or on the exception for the payment of income tax when using a cooperative.
Tax International Treaties
The Netherlands has entered into a significant number of international treaties to prevent double taxation. Despite the fact that the Netherlands has one of the most developed networks of double tax treaties, this moment The government of the Netherlands continues to pursue a policy of expanding active cooperation in the field of concluding international tax treaties.
It often happens that a company operating internationally may be subject to certain taxes twice. International treaties concluded by the Netherlands contain provisions governing such situations. In the event of double taxation, the competent Dutch authority will use every effort to avoid double taxation.
Through international treaties concluded by the Netherlands, the following tax advantages can be achieved:
- avoiding dual residence;
- avoidance of capital gains tax in the country where the subsidiary is located when a Dutch shareholder sells shares;
- reducing the tax burden on dividend payments in the country where the subsidiary is located;
- reducing the tax burden on dividend payments by a Dutch holding to the country where the investor is located;
- other benefits, depending on the jurisdiction.
Tax Treaties European Union
Due to the fact that the Netherlands is a member of the European Union, a holding company located in the Netherlands can benefit from the tax advantages of the European Union. Such benefits include access to European directives:
- Parent-Subsidiary Directive
- Merger Directive
- Interest & Royalty Directive
Using, for example, the European Parent-Subsidiary Directive, Dutch companies can receive tax-free dividends from their subsidiaries in the European Union.
Basic Dutch Taxes
The main taxes payable in the Netherlands include:
- Income tax: profits up to €200,000 are taxed at a rate of 20%, profits over €200,000 are taxed at a rate of 25%
- Innovation Box: 5% tax on income derived from intellectual property created by a Dutch company
- Dividend tax: 15% tax on dividend distributions, which can often be reduced to 0% if a double tax treaty or the European Parent-Subsidiary Directive applies
- Value Added Tax: The rate on most products and services is 21%
- Income tax: rate changes every year
Features of the Dutch tax system
The Dutch tax system has the following characteristics:
- No tax on interest
- No royalty tax
- No capital tax
- No stamp duty
- No local income taxes
- Availability of a participation exclusion regime: 100% tax exclusion on dividends and capital gains from participation
- Possibility of creating financial unity
- There is no difference between regular income and capital gains
- Opportunity to receive a 30% tax discount for foreign workers who have specific knowledge
- Possibility of agreement with tax authorities
Agreements with Tax Authorities
The Netherlands recognizes two types of arrangements with tax authorities:
Advance Tax Ruling is the opinion of the tax authority on the characteristics of certain taxes for international corporate structures, which allows one to obtain certainty regarding the possibility of obtaining an exception of participation and recognition of a permanent enterprise.
Advance Pricing Agreement is an agreement between the taxpayer and the tax authority, which allows for advance determination of the appropriate transfer pricing methods for certain transactions over a certain period of time.
Agreements with the Dutch tax authorities are legally binding and binding.
Creation of the Netherlands Holding
When creating a holding company, there will be at least 2 companies: a working company and a holding company. The work company is engaged in the execution and conclusion of contracts, hiring personnel and thus represents the main production unit. The holding is engaged in the storage of valuable assets, such as shares of the working company, profit reserves, patents and so on. It is also possible to accumulate a pension through a holding.
Thus, if the financial situation of the working company is bad or there is a threat of bankruptcy, the holding allows you to preserve valuable assets without being declared bankrupt.
Advantages of a Dutch holding
The main advantages of the Dutch holding are:
- Participation exclusion - complete elimination of the tax burden on capital gains on shares and on distribution of dividends in subsidiaries
- Zero tax on dividends when using a holding together with a cooperative;
- Low or zero tax on profit repatriation
- No tax on royalty and interest payments
- Risk sharing
- Favorable tax regime compared to other countries
- Opportunity to negotiate with tax authorities by receiving an individual tax calculation
- Financial unity
- Using a holding as management company or property administrator
- Tax deduction expenses and losses
- Regulation of income tax rates
- No restrictions on foreign currency exchange
Participation exclusion
One of the biggest advantages of a Dutch holding company is the elimination of participation. This advantage is to exclude from the obligation to pay corporate income tax on any profit received from investing in the share capital of another local or foreign company. Dividends and capital gains arising from such holding of shares are tax deductible, while capital losses and acquisition and disposal expenses are not deductible.
The participation exclusion applies to both participations in Dutch companies and participations in foreign companies. Because profits will not be re-taxed, foreign subsidiaries will be able to compete with local businesses on the basis of a similar financial position.
Compliance with the following conditions provides the opportunity to obtain an exclusion from participation:
1) The shareholder holds at least 5% of the nominal paid-up capital in another company 2) The principal activities of the subsidiary should not be regarded as “passive investment activities”. The existence of a passive investment activity depends on the taxpayer's objectives 3) A subsidiary cannot be a "financial investment trust"
Risk sharing
A holding structure is often used to spread risk. This is done by creating a simple structure including a holding company and an operating company. The bankruptcy of a work company does not automatically lead to the bankruptcy of the holding company. By transferring real estate and investments to a holding company, the risk of losing assets if the operating company's financial situation worsens is reduced.
If a holding exists, it is possible to maintain consolidated financial statements.
Profit reserves
A holding can be used to ensure the safety of profit reserves. If a production company suffers losses or is at the stage of bankruptcy, profit reserves will be lost. To avoid this, the profit is transferred to the holding and thus the profit will not be at risk and at the same time the financial settlement will be postponed. Reserves can be used again as capital at any time. The holding also allows you to use the funds of a working company to provide for another working company when there is a need for financing the latter.
Financial unity
Provided that the holding company holds 95% of the shares in the operating company, it is possible to create a so-called financial unity. In this case, the parent company is taxed as a group together with its subsidiaries. From an income tax perspective, this means that subsidiaries are considered to be absorbed by the parent company. Permission to create a financial unity is issued tax office. When there are several work companies and using financial unity, it is possible to offset profits from one work company with losses from another work company. Thus, income tax is reduced.
Regulation of income tax rates
By dividing profits among several companies, you can reduce your income tax. Profits up to €200,000 are subject to income tax at 20%, while profits over €200,000 are subject to 25%.
Innovative Box
The Innovative Box regime allows you to significantly reduce the income tax rate, provided that the profit is derived from intellectual property. In accordance with this regime, income from a company’s intellectual property is taxed at a rate of 5% if income from intellectual property exceeds the costs of developing intellectual property. If income from intellectual property does not exceed the costs of developing intellectual property, then the standard income tax rate is applied. Expenses incurred when using intellectual property are equivalent to development costs. Capital gains from intangible assets are also subject to this regime.
Holding as a management company
The holding can act as a management company. This is convenient when there are several large shareholders. Each such shareholder can create his own holding company, which will act as a management company. For such activities, the holding receives compensation, which will be taxed. Subsequently, each major shareholder will be able to determine, within his own holding, the amount of wages, the payment procedure and the amount of dividends.
In order to avoid double taxation, the holding is not required to pay income tax and dividends on profits received.
Dutch financial company
The favorable tax climate of the Netherlands is used to create financial companies. The group finance company is used as an intermediary to provide loans necessary for the expansion of international companies and minimize their international tax payments.
So you can create financial company in a country with low interest tax.
Additionally, it is possible to use a loan within the limits of participation. A participation loan is a design whereby the Dutch parent company provides a loan to a foreign subsidiary, subject to the existence of a participation. For Dutch fiscal purposes, such a loan will be regarded as a contribution to capital. As a result, interest received by the parent company on the loan will be treated as a participation dividend and loan repayment payments will be treated as a return of capital. The interest thus received will not be taxed.
Dutch Cooperative
A Dutch cooperative is recognized as a legal form by the European Parent-Subsidiary Directive, which means that the cooperative has the right to receive dividends from European subsidiaries without having to pay any taxes on dividends in the country where the subsidiary is located.
Although a cooperative is required to pay income tax, if structured correctly, a Dutch cooperative provides the opportunity to exclude tax on the profits distributed by the cooperative to its members. Additionally, the cooperative may receive the right to exclude participation.
Requirements for Dutch Companies
Dutch companies must be registered with the Dutch Chamber of Commerce, have at least one personal or corporate director and one shareholder. To have access to double tax treaties and European directives, a Dutch company must be tax resident in the Netherlands. Tax residence is determined by finding the place of effective management.
A place of effective management must meet the following requirements to be considered as such:
- administration and accounting must be carried out in the Netherlands
- The company's head office is located in the Netherlands
- the majority of members of the board of directors must be residents of the Netherlands
- board meetings are held in the Netherlands
Overview of the Partner Services of this website
The partners of this website specialize in providing trust services. They have impressive experience in providing business services, management services, fiduciary services and real estate services to international and Dutch clients.
They also provide services in the following jurisdictions:
British Virgin Islands, Great Britain, Germany, Cyprus, Curacao, Luxembourg, Malta, Netherlands, New Zealand, Singapore, USA, Switzerland.
The range of services is exceptional and includes, among others, the following services:
- provision of domicile, telephone/fax, communication infrastructure
- assistance in creating new companies and registering entries in the commercial register
- processing of daily accounting and correspondence in conjunction with the preparation and submission of annual reports and company data
- VAT and income tax refund request
- provision of personal/corporate director
- acting as a company representative (through power of attorney and power of attorney to sign)
- opening and maintaining a bank account
- provision of specialized legal and secretarial services
- coordination and control of assets and real estate
This list of services is not exhaustive. According to your wishes, partners of this website can send you full list. In addition, they can prepare a fixed offer for you.
The information provided is current as of March 2017.
Netherlands . Company registration. Dutchcompanies and holdings international tax planning
Registering a company in the Netherlands has become significantly easier since 2019. Geographically, the Kingdom of the Netherlands is located in Western Europe between Belgium and Germany. The state was formed in 1815. In 1830 after liberation from Belgium, a new state was established. The form of government is constitutional monarchy. The population is about 16,500,000 people. The official languages are Dutch and Frisian, but English is also widely spoken. The capital of Holland is Amsterdam, but the seat of government is in The Hague. The Netherlands was among the first countries to join NATO and a founding member of the EEC, the current European Community. The official currency is the Euro.
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Types of registered companies |
When deciding to create your own holding, also pay attention to Danish holding companies - all other things being equal, they have more advantages over holdings in the Netherlands, and also carefully read the general overview of holding companies and clearly determine what goals you set for the holding. Most of the tax benefits provided for by legislation and treaties on the avoidance of double taxation are of a very conditional nature and are poorly applicable in practice. Some types of transactions may fall under the definition of “money laundering” from the point of view of our legislation and attract close attention from regulatory authorities. |
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GENERAL INFORMATION
General information
Kingdom of the Netherlands located in the western part of Europe, bordering Belgium and Germany.
Netherlands Square is 41,543 sq. km, and the population is 16,805,037 people (2013). By ethnic composition the majority of the population is Dutch (80.7%), about 5% are residents of different EU countries, and the rest is represented by nationalities such as Indonesians, Turks, Surinamese, Moroccans, as well as residents of the Caribbean, etc.
Capital Netherlands - Amsterdam. The official language is Dutch.
National currency– euro (EUR).
Climate in the Netherlands temperate, maritime, with cool summer and mild winter. Average maximum air temperature in summer (July) +17 °C; average minimum temperature(January) +1°C. In winter, the air temperature rarely drops below zero for a long period of time.
Difference in time with Moscow is minus 3 hours.
Literacy Rate- 99%.
Telephone code – +31.
Story
The United Provinces of the Netherlands declared independence from Spain in 1579. The 17th century was a century of breakthroughs in navigation and commerce for the Netherlands; the Netherlands had settlements and colonies all over the world. In 1815, after twenty years of French occupation, the Kingdom of the Netherlands was created. In 1830, Belgium was separated into a separate kingdom. The Netherlands declared its neutrality during World War I, but was nevertheless invaded and occupied by Germany. Today the Netherlands is modern, developed country, as well as one of the key exporters of agricultural products. The Netherlands was one of the founders of NATO and the EU, and also took an active part in the introduction of the new currency - the euro. In 2010, the Netherlands Antilles ceased to exist as a state. The smaller islands, Bonaire, St. Eustatius and Saba, became special municipal units of the Netherlands. And more large islands, Sint Maarten and Curacao, received, like Aruba before them, status apart, that is, they became self-governing states with significant autonomy within the Kingdom of the Netherlands.
State structure
The Kingdom of the Netherlands is divided into 12 provinces. In addition, the kingdom includes the Caribbean islands of Aruba, Curacao and Sint Maarten, which have the status of self-governing state entities
The Netherlands is a constitutional monarchy.
Head of State is a hereditary monarch who has very limited powers.
Executive branch belongs to the council of ministers, the advisory council of the cabinet of ministers of the Netherlands. The cabinet usually consists of 13 to 16 ministers, as well as a number of secretaries of state. The head of government is the prime minister.
Legislature represented by a bicameral parliament - the Estates General, which consists of the upper house, the so-called. The first chamber (75 seats, members of this chamber are elected by the councils of 12 provinces for a four-year term), and the lower chamber, the so-called. Second Chamber (150 seats, members of this chamber are elected by popular vote for a four-year term).
Judicial branch includes: 19 district courts (courts of first instance), 5 courts of appeal (in Amsterdam, Arnhem and others major cities) and the Supreme Court. These courts hear civil, criminal and tax cases. Judges are appointed by the monarch from a list drawn up by the Second Chamber of the Estates General; The appointment is for life, but the age limit for holding office is 70 years.
Economy
The Dutch economy is the sixth largest in the eurozone and is characterized by stable industry, moderate levels of unemployment and inflation, and significant foreign trade turnover. The financial sector and transport services make a significant contribution to the welfare of the Netherlands: Amsterdam is one of the largest financial centers in the world, and Rotterdam has a major port. The main industries are food, chemical, oil refining and engineering. The highly mechanized agricultural sector employs only 2% of the working population, but it largely supplies the country's food industry and accounts for a significant portion of its merchandise exports.
GENERAL CORPORATE INFORMATION
Legal system
The legal system of the Netherlands is based on Romano-Germanic law and includes elements of French criminal law theory.
The Constitution does not allow judicial review of legislative acts of Parliament.
The Netherlands accepts compulsory jurisdiction international court UN with reservations.
Organizational and legal forms
The legislation of the Netherlands provides for the possibility of creating the following organizational and legal forms:
- private company with limited liability (Besloten Vennootschap, B.V.);
- public limited liability company (Naamloze Vennootschap, N.V.);
- cooperative (Coöperatief met wettelijke aansprakelijkheid/beperkte aansprakelijkheid/uitgesloten aansprakelijkheid, W.A./B.A./U.A.);
- limited partnership (Commanditaire Vennootschap, C.V.);
- individual entrepreneur.
REGISTRATION
Company name
The company name must comply with the requirements of the Dutch Law on Names of Legal Entities (Handelsnaamwet), which are as follows:
- A mandatory element of the name, indicating the legal form of a limited liability company, is the phrase “Besloten Vennootschap” (or “BV” for short).
- The name may use Dutch or any other language, provided that the name is written in Latin letters. The use of names in Russian (i.e. using the Cyrillic alphabet) is unacceptable.
- The name must not be misleading, meaning that you cannot use a name that is the same or similar to the names of already registered companies. In other words, the name must be unique in the area and region where the company plans to operate. Therefore, the proposed name must first be checked with the Chamber of Commerce registry of the county where the company will be located. The Chamber of Commerce, for a fee, can also check the name for uniqueness throughout the Kingdom.
- The name must not coincide with existing trademarks. It is worth noting that when registering companies, the Chamber of Commerce does not monitor this fact, since the Benelux Patent Office located in The Hague is responsible for the protection of trademarks.
- Obtaining a permit or license is required the following elements names, their derivatives or equivalents in foreign languages: Bank, Building Society, Savings, Loans, Insurance, Assurance, Reinsurance, Fund Management, Investment Fund, Trust, Trustees, Chamber of Commerce, Co-operation, Council, Municipal, as well as any other elements suggesting a connection with banking or insurance activities .
Company registration
To register a BV in the Netherlands, you must go through the following steps:
- Check name: As of July 2011, the Chamber of Commerce no longer checks company names. Now you can do this yourself on the Chamber of Commerce website for free.
- Draw up and sign the Company Incorporation Act with a Dutch notary:The act of incorporation must include: the articles of association of the company; Company name; location of the company; main goals (activities) of the company; the size of the declared authorized capital and information about the shares issued upon registration; powers of directors to represent the interests of the company (jointly or separately); details of the founder(s)/shareholder(s); appointment of the first managing director(s); as well as the first reporting period.
- Register your company with your local Chamber of Commerce and obtain a registration number: Chamber of Commerce registration can be done online or in person. Registration online takes a few hours, in person – one week. Membership in the local chamber of commerce is required.
- Register with tax authorities and social protection authorities: registration with the tax authorities takes 4-6 weeks. Income tax requires a separate registration, which also takes 4 weeks.
Shelf companies are allowed. However, the removal of the requirement to obtain permission from the Ministry of Justice, the minimum capital (18 thousand euros), as well as a bank or audit report has increased the tendency to register new companies instead of buying shelf ones.
Bank account
Dutch banks have a strict policy for accepting new clients, for example, they require information about the ultimate beneficiary. If the beneficiary, director and shareholder are not EU residents, the bank may also request additional information on the company structure, beneficiaries and company managers. Especially if there is a relationship with offshore jurisdictions. Connection with high-risk countries - Cuba, Iran, Myanmar, North Korea, Sudan and Syria - may cause refusal. Some banks open accounts for non-resident companies, but this service is usually not actively promoted.
Limitation of activities
There are also a number of restrictions on the activities of private companies. They cannot, without special permission, conduct banking and insurance activities, provide financial services and services related to the provision of consumer loans, and also operate as employment agencies.
Registered office
Dutch companies must have a registered office (legal address) in the Netherlands. The register of shareholders, minutes and resolutions, share transfer documents, administrative documents and accounting documents must be kept at this registered office address.
Seal
There are no mandatory requirements for the presence of a company seal.
Redomiciliation
Redomiciliation of companies to or from the Netherlands is not permitted.
THE STRUCTURE OF THE COMPANY
Director
The minimum number of directors of a Dutch company B.V. - one. They can be either an individual or a legal entity. Information about directors is entered into an open register. The law does not establish requirements regarding the residence of directors. However, in order for a company to be considered resident and therefore benefit from double taxation treaties, it is recommended that management and control take place in the Netherlands. This means that the majority of the company's directors must be resident in the Netherlands, and all board meetings must also be held in the Kingdom. Moreover, it is recommended that at least one director be a resident to deal with day-to-day issues, such as updating or changing bank contracts, opening additional bank accounts, closing or changing contracts related to telephone or Internet subscriptions, changing information in the chamber of commerce and industry .
Secretary
Companies registered in the Netherlands are not required to appoint a company secretary.
Shareholder
Dutch company B.V. may have one or more shareholders, who may be individuals or legal entities, residents of the Netherlands or non-residents. Shareholder details are reported to the local agent, but are not entered into the public register, unless the company has only one shareholder. However, it should be noted that the founders of the company will be listed in the open register, regardless of their number. General meetings of shareholders must be held annually at the place specified in the company's charter, or in the municipality where the company's registered office is located. The place of meetings specified in the articles of association can be located either in the Netherlands or outside the Netherlands (the latter became possible with the entry into force of simplified legislation for BV companies). In the event of a general meeting being held at a location other than the one established, decisions can only be made if the shareholders present represent the entire issued share capital of the company.
Beneficiary
Information about the beneficial owner of a Dutch company is considered strictly confidential and is disclosed, as part of the mandatory due diligence procedure, only to the local agent and the bank in which the account is opened for payment of the authorized capital, as well as to the auditor (if there is one). These persons have the right to disclose information about the beneficiary only in cases provided for by law and in compliance with a certain procedure.
Authorized capital and shares
The simplification of legislation for BV companies, which came into force on October 1, 2012, introduced a number of significant changes related to the authorized capital of BVs. Previously, the minimum declared authorized capital was 18,000 euros. This requirement for the presence of a minimum authorized capital and its payment has been canceled.
Another change was the emergence of the opportunity to nominate the company’s authorized capital not only in euros, but also in other currencies.
The requirement for the mandatory inclusion in the BV charter of a clause limiting the transfer of shares was also canceled; now shares can be transferred/traded completely freely.
A BV can only issue registered shares; The issue of bearer shares or shares without specifying their par value is not permitted. The nominal value of shares is usually 1 euro.
Annual renewal
Renewal of Dutch companies is carried out annually and usually includes: payment for the services of nominee directors and shareholders (if any), services for providing the company with a legal address and payment of a fee to the Chamber of Commerce (the amount of the fee depends on the size of the authorized capital and the number of employees).
LIQUIDATION
Grounds for liquidation
A Dutch company can be liquidated:
- voluntarily - by a special decision of the general meeting;
- in the event of an event which, according to the articles of association, leads to the liquidation of the company;
- if the company is declared bankrupt;
- by a decision of the Chamber of Commerce in the event of a company's failure to comply with certain administrative obligations;
- by a court decision in cases provided for by law.
Voluntary liquidation
The decision of the general meeting to liquidate the company must be registered in the trade register of the Chamber of Commerce along with information about the liquidator(s). If liquidators are not appointed, then the duties of the liquidation commission are performed by the board of directors. In all publications, letters, documents and announcements issued from this moment on, the words In the process of liquidation.
After the commencement of liquidation proceedings, the company continues to operate only to the extent necessary to liquidate its property and settle its obligations. The liquidator prepares a liquidation balance sheet and, if the company has more than one shareholder, a plan of distribution, which sets out how the company's assets and liabilities will be distributed among those entitled to them. The liquidation balance sheet and distribution plan are registered in the commercial register and posted at the company's office or at another address so that interested parties can familiarize themselves with them.
The liquidator publishes in Dutch Gazette and in the daily national newspaper an advertisement indicating the address where the liquidation balance sheet and distribution plan can be viewed. Within two months from the date of this publication, creditors or other interested parties can study these documents and raise their objections. After two months, if there are no objections, the remaining assets can be distributed. This action ends the liquidation procedure of the company and the existence of the company, but the company's books and documents must be kept for another seven years. The completion of the liquidation procedure must be registered in the trade register of the Chamber of Commerce, also indicating the name and address of the person responsible for keeping the records. Information about the company registered in the register at the time of liquidation is stored there for another ten years.
Re-opening of liquidation
If, after the liquidation is completed, any property is found to be unrealized or a creditor or beneficiary is dissatisfied, the liquidation may be “re-opened” by a court order. In this case, the company is "reanimated", but solely for the purpose of re-liquidating the remaining assets or liabilities. And if the beneficiaries were distributed property in excess of what was required, the liquidator has the right to claim the already distributed surplus.
Expedited liquidation
If the company does not have any liabilities or assets at the time of the decision to liquidate, it ceases to exist from the moment the decision is registered in the commercial register. Since in this case there is no actual liquidation of the property and satisfaction of the creditors’ claims, a liquidator is not appointed. The decision on liquidation is recorded in the register by the board of directors of the company. Account books and records must still be kept for seven years after the company is wound up.
Liquidation by decision of the Chamber of Commerce
A company is wound up by decision of the Chamber of Commerce if the Chamber of Commerce has reason to believe that at least two of the following circumstances apply to the company. The company has for at least one year:
- has not paid the registration fee to the commercial register since the due date;
- according to information registered in the commercial register, has no directors and no application for their registration has been submitted; or all registered directors have died or cannot be contacted for at least one year at the address shown in the commercial register and at the address shown in the municipal personal database, or if no address has been indicated in the database for at least one year at least one year;
- does not comply with its obligations to disclose annual financial statements or balance sheets with explanations;
- did not properly respond to a formal notification letter requesting the submission of an income tax return.
After eight weeks from the date of the notification, the Chamber of Commerce, by its decision, will liquidate the company unless it receives confirmation by that time that the violations specified in the notification do not apply to the company or have been eliminated.
The decision of the Chamber of Commerce is communicated to the company and its registered directors. The Chamber of Commerce also publishes a notice of company liquidation in Gazette. If the appointment of a liquidator or liquidators is not possible, the liquidation of the property is carried out by the Chamber of Commerce. At the request of the Chamber of Commerce, the court may appoint an additional one or more liquidators.
Liquidation by court decision
The district court will liquidate the company if:
- violations were committed during the establishment of the company;
- the company's charter does not comply with the requirements established by law;
- the company does not meet the requirements established for legal entities of this organizational and legal form.
The District Court has the power to dissolve a company if it violates the restrictions and prohibitions established for this type of company or if the company grossly violates the provisions of its articles of association. The court makes a decision on liquidation based on a request from an interested person or the Prosecutor's Office.
TAXATION
Taxation of individuals
Taxation of individuals depends on residence. Residents are taxed on worldwide income, while non-residents are taxed only on income earned in the Netherlands.
Income of individuals is divided into 3 categories depending on the source of income, and each of the three categories provides its own tax rates.
Category 1 represents income from labor activity and home ownership, which is taxed on a progressive scale with the following rates:
| 1 – 19,645 euros | 5,85% |
| 19,646 – 33,363 euros | 10,85% |
| 33,364 – 55,991 euros | 42% |
| From EUR 55,992 euros | 52% |
Category 2 represents income from a significant participation in the capital of a company, which is taxed only if the amount of direct or indirect participation in the capital of a person exceeds 5% of the issued capital of the company. Dividends and capital gains from the transfer of shares are taxed at 25%.
Category 3 represents income from savings and investments. Tax is charged at 30%, but not on the entire amount of such income, but only on 4% of the net asset value, resulting in the actual tax amount being 1.2% of the net asset value. In addition, income not exceeding 21,139 euros is not subject to tax. Net worth is calculated as average cost capital as of January 1 and December 31 of the corresponding year. Capital includes savings, bank balances, a second home, common stock, and other stocks.
The total tax amount is calculated by adding up the taxes for the three income categories, using general deductions.
The tax year coincides with the calendar year. The tax return must be filed by April 1 of the following year. In case of late filing or non-filing of a declaration, late payment or non-payment of taxes, administrative fines are provided. If Dutch authorities can prove fraud, criminal penalties are possible.
Income tax
Income tax is imposed on all companies established in the Netherlands (resident taxpayers), as well as some non-resident companies making profits in the Netherlands. According to the Corporate Tax Act, all companies registered under Dutch law are considered to be established in the Netherlands. Other factors taken into account when determining whether a company is incorporated in the Netherlands or not include the following: 1) place of effective management; 2) location of the head office; 3) place of holding meetings of shareholders.
Income tax is imposed on all profits received from activities, including commercial ones, income from foreign sources, passive income and capital gains.
The tax rate is 20% in case of profits not exceeding 200,000 euros, and 25% in case of exceeding this amount.
The tax return must be filed by June 1 of the following calendar year. Administrative fines are provided for late filing or failure to submit a return, as well as late payment or non-payment of taxes. If Dutch authorities can prove fraud, criminal penalties are possible.
Capital gains tax
Capital gains are included in the income tax base. Under the participation exemption rules, capital gains realized from the sale of company shares are exempt from income tax.
Losses
Losses can be carried forward for 9 years and carried back to the previous period for one year. Losses incurred between 2009 and 2011 can be carried forward for 3 years upon request, in which case the carry forward is limited to 6 years. Special restrictions apply to losses incurred by companies whose business is at least 90% financing.
Dividends
Dividends received by a Dutch resident company are exempt from taxation under the participation exemption rules (see Participation exemption rules).
Participation exemption rules
The income tax law provides for what is known as the “participation exemption,” rules designed to avoid double taxation of profits distributed by a subsidiary to its parent company. To apply the participation exemption, several conditions must be met:
- the parent company must own at least 5% of the shares of the subsidiary;
- the subsidiary must not be a “portfolio investment company from a low-tax jurisdiction”, i.e. must meet at least one of the following criteria:
- the assets of the subsidiary consist of less than 50% of “passive” assets, according to their market value (“asset criterion”); or
- if the asset criterion is not met, the actual income tax paid by the subsidiary is at least 10% of its taxable profit – translated in accordance with Dutch accounting standards (“tax criterion”); or
- if the asset test and tax test are not met, the subsidiary is an investment company real estate(i.e. at least 90% of its assets consist of real estate).
Tax benefits
There are various tax incentives in the Netherlands. Under the Innovation Category system, income derived from independently developed intellectual property is taxed at a rate of 5%.
For costs and expenses (other than salaries) directly attributable to research and development activities, the taxpayer is entitled to a research and development allowance. Thanks to this benefit, the amount of taxable income is reduced, so in 2013 the percentage of the benefit is 54% of costs and expenses for research and development. If we take the base income tax rate as 25%, then the net benefit is 13.5%.
A special system of ship dues applies to shipping companies. Investment funds that meet certain conditions are exempt from taxation.
Tax year
The tax year is usually the same as the calendar year, although a shift is possible if this is reflected in the Memorandum of Association. The tax year usually lasts 12 months, but shorter or longer periods are possible in the year the company is founded.
VAT
VAT is paid on the sale of goods and services, the acquisition of goods by enterprises, as well as on the import of goods into the Netherlands.
From October 1, 2012, the basic VAT rate was increased from 19% to 21%. A reduced rate of 6% is applied to the sale, import and purchase of certain categories of goods, including: food and medicine; works of art; books, newspapers and magazines; passenger transportation, etc. There is also a zero VAT rate for the export of goods to EU countries.
VAT accounting
In the Netherlands there is no threshold for registering for VAT.
Tax period and VAT reporting
Depending on the amount of VAT payable, returns are submitted monthly, quarterly or annually. A VAT return must be filed even if VAT has not been received or paid. So-called “zero declarations” are also mandatory for “dormant companies”. In case of late filing of a “zero return”, the tax authorities calculate the taxable amount and impose penalties, in addition, the permission to file a return quarterly or annually can be converted to a monthly basis.
Withholding tax
Dividends paid to residents or non-residents are subject to 15% withholding tax. For residents, withholding tax paid can be offset against the tax liabilities of the recipient - legal or individual. For non-residents, in most cases the withholding tax is the final tax amount. The 15% rate may be reduced if a double tax treaty applies, or no withholding tax may be required if the participation exemption applies or if dividends are distributed to a parent company that complies with the EU Parent-Subsidiary Directive.
There is no withholding tax on payments of interest, royalties, or fees for technical services.
Stamp Duty
There is no stamp duty in the Netherlands.
Annual fee
In the Netherlands there is no annual tax for companies.
Other taxes and fees
Anti-tax avoidance measures
Transfer pricing: intra-company pricing for goods and services must be equal, it is necessary to maintain documentation of intra-corporate transactions. It is possible to conclude an agreement to pre-establish prices in order to use a certain method of transfer education.
Thin capitalization: Thin capitalization rules were repealed and replaced by new ones effective January 1, 2013. Under the old rules, interest expense paid to affiliates that was attributable to “excess debt” (that is, debt exceeding a 3:1 debt-to-equity ratio) was not subject to withholding. Under the new rules, the deduction for interest costs associated with excess debt associated with the cost of acquiring an interest from a company is eliminated. Excess debt is calculated based on mathematical method, under which operating interests acquired from a third party are excluded.
Controlled foreign companies: There is no separate law regarding controlled foreign companies, but there is an obligation to annually reassess ownership of more than 25% of shares in low-tax companies whose assets consist of at least 90% of “passive” assets.
Other: the law is considered violated if the reason for a transaction or series of transactions is tax evasion.
Disclosure Requirements: No.
Double taxation agreements
The Netherlands has entered into double tax treaties with 126 jurisdictions through:
- 97 DTC: Australia, Azerbaijan, Albania, Argentina, Armenia, Aruba, Bangladesh, Barbados, Bahrain, Belarus, Belgium, Bulgaria, Bosnia and Herzegovina, Brazil, UK, Hungary, Venezuela, Vietnam, Ghana, Germany, Hong Kong, Greece, Georgia , Denmark, Egypt, Zambia, Zimbabwe, Israel, India, Indonesia, Jordan, Ireland, Iceland, Spain, Italy, Kazakhstan, Canada, Qatar, China, Korea, Kosovo, Kuwait, Kyrgyzstan, Curacao, Latvia, Lithuania, Luxembourg, Malawi , Malaysia, Malta, Morocco, Mexico, Moldova, Mongolia, Nigeria, New Zealand, Norway, UAE, Oman, Pakistan, Panama, Poland, Portugal, Russia, Romania, Saudi Arabia, Serbia, Singapore, Sint Maarten, Slovakia, Slovenia, Suriname, USA, Tajikistan, Thailand, Taiwan, Tunisia, Turkey, Uganda, Uzbekistan, Ukraine, Uruguay, Philippines, Finland, France, Croatia, Montenegro, Czech Republic, Switzerland, Sweden , Sri Lanka, Estonia, Ethiopia, South Africa, Japan;
- 29 TIEA: Anguilla, Andorra, Antigua and Barbuda, Bahamas, Belize, Bermuda, British Virgin Islands, Guernsey, Gibraltar, Grenada, Jersey, Dominica, Cayman Islands, Costa Rica, Cook Islands, Liberia, Liechtenstein, Marshall Islands, Monaco, Montserrat, Isle of Man, Samoa, St. Vincent and the Grenadines, St. Kitts and Nevis, St. Lucia, San Marino, Seychelles, Turk and Caicos Islands.
Currency control
There are no exchange controls in the Netherlands.
REPORTING
Financial statements
All Dutch companies are required to prepare annual financial statements and submit them to the Chamber of Commerce. The reporting must be prepared within 5 months after the end of the financial year, approved by the general meeting within 2 months after its preparation and submitted within 8 days after its approval. In any case, annual financial statements must be filed no later than 13 months from the end of the financial year. General meeting shareholders may extend the period for preparing annual reports by a maximum of 6 months.
Reporting should include the following:
- directors' report;
- financial statements (balance sheet, profit and loss account, notes);
- other information.
Requirements for the content of reporting depend on the category of the company. There are three categories in total: small, medium and large:
For example, small companies are not required to prepare or file a directors' report. Companies that meet at least two of the above three conditions for two consecutive years are considered small. These figures are determined on a consolidated basis. This means that the assets, turnover and employees of a company in which the Dutch company directly or indirectly has a controlling majority are taken into account. This rule, however, does not apply to cases where a Dutch company is exempt from the requirements for preparing consolidated financial statements due to the fact that the company is an intermediate (holding) company.
When registering a new company, the 2-year requirement does not apply. Accordingly, whether a company is small or not is established on the basis of the financial statements for the first financial year. Its results are applied to the first two financial years.
In addition, the Dutch company, part of the group of companies, in certain cases may be exempt from filing financial statements in the Netherlands. Such release requires, inter alia, that the following conditions be met:
- the parent company of the group must make a statement every year that it is liable for all debts of the company;
- The financial information of the Dutch company is included in the consolidated financial statements of the parent company.
Audit
The statements must also be certified by an independent licensed auditor. However, small companies are exempt from the audit requirement.
Annual Return
Since there is no analogue of Annual Return in Russian law, we consider it necessary to clarify this concept. Annual Return is brief information about the current structure of the company, which is prepared annually. It usually includes:
- installation data (registration date, legal address);
- information about directors and their resignations;
- information about secretaries and their resignations;
- information about the established capital, par value of shares, number of issued shares;
- information about shareholders and transfer of shares.
Tax reporting
Companies in the Netherlands must file a tax return annually within 6 months of the end of the financial year. The declaration is submitted to in electronic format. The return must be accompanied by all information necessary to determine taxable income, including a balance sheet, income statement and other information required by the taxman. If a company fails to meet these obligations or fails to file a properly completed return, the assessor may issue a tax assessment on the property.
Electronic declaration is mandatory for entrepreneurs, income tax, VAT, supplies within the EU, wage tax, customs duties, consumption tax and transportation of excisable goods.
The tax year is generally the same as the calendar year, although variations may occur if specified in the company's memorandum of association. The tax year usually lasts 12 months, but the first year (the year the company was founded) may be longer or shorter.
An administrative fine is imposed for late filing or non-filing of a declaration, as well as for late payment or non-payment. Criminal penalties are possible if the Dutch authorities can prove fraud or gross negligence.
NEW LEGISLATION ON FINANCIAL COMPANIES
Amendments to the International Tax Assistance Act (2014)
On January 1, 2014, Amendments to the International Assistance Levy Tax Act came into force in the Netherlands, allowing the country's tax authorities to automatically disclose to tax treaty partner countries information about companies benefiting from tax treaty benefits. taxation, but without sufficient actual presence (substance) in the Netherlands. This new legislation is aimed at Dutch companies performing a financial function in a group of companies, i.e. against companies that meet the following three criteria simultaneously:
- at least 70% of the Dutch company's activities during the year consist of financing operations for group companies, payment of license fees (royalties) or leasing operations;
- the Dutch company and its financial counterparties are part of the same group;
- The Dutch company does not meet the new minimum requirements for actual presence in the Netherlands, namely the following:
- at least half of the board of directors are residents of the Netherlands;
- resident Dutch directors have the necessary professional skills to properly perform their duties as required by law;
- the company has qualified personnel to carry out and administer its operations (for this purpose it is sufficient to attract external specialists);
- management decisions are made in the Netherlands;
- the company's main bank account is located in the Netherlands (this condition is also met if the bank is not Dutch, but the account is managed by Dutch management);
- the accounting books are kept in the Netherlands;
- the legal address of the company is in the Netherlands and, according to the company, it is not considered a tax resident of any other country;
- the company has sufficient equity capital to carry out activities and cover risks;
- the company bears real commercial risks in connection with its financial, licensing or leasing activities.
These requirements only apply to companies that are group finance companies and benefit from Dutch double tax treaties. Other companies are exempt from this requirement.