Advantages to Register in
The Netherlands

Important aspects of the Dutch limited BV Company

A BV is a legal entity. This means that the BV has its own legal rights and obligations.

The minimum capital requirement for Dutch BV has been abolished.

It is therefore not required to open a bank account for the Dutch BV and transfer the minimum issued share capital prior to the incorporation.

This is an important difference with the public limited company (Naamloze vennootschap), the NV, for which there is a minimum paid-up capital of EUR 45,000.

The incorporation of a BV must be done by notarial deed containing the articles of association of the BV (we take care of this process on our clients’ behalf).

The BV is able to create types of shares, including variable voting rights.

A BV can issue non-voting shares and shares without profit rights, if the articles of association allow that possibility (non-voting shares and shares without profit rights are not possible for the NV).

The shares of a BV may be freely transferable or subject to transfer restrictions (rights of first refusal or any other rights), depending on the articles of association.

The BV has to be registered with the Dutch trade register. It also has to file its annual report yearly at the trade register.

The shares of a BV can be denominated in another currency than euro.

Tax planning through the Netherlands

The Netherlands can in no way be considered an offshore finance centre. Corporate rates of tax are high: 20% or 25% tax is levied on worldwide income. However, concessionary treatment of some forms of income coupled with the extremely wide network of double taxation treaties signed by The Netherlands (over 90 taxation treaties have currently been concluded including treaties with most of the major developed nations of the world) provide outstanding opportunities to use Netherlands corporations in structuring international financial transactions. Netherlands companies may be advantageously put to the following uses:

Holding Companies

Subject to certain conditions a resident Dutch company may qualify for the “participation exemption” which exempts such companies from corporate tax on income and capital gains resulting from the holding or disposal of qualifying shareholdings.

Finance Companies

The Netherlands imposes no withholding taxes on interest paid by a Netherlands company to a non-resident. Additionally, many of the Dutch tax treaties allow foreign companies to pay interest to a Netherlands company without a requirement to withhold tax or subject to a requirement to withhold tax at a reduced level. The Netherlands may therefore provide a suitable conduit through which inter-company loans may be made. The Netherlands require that the margin of profit on loans received and made must be (subject to a decreasing sliding scale) of between 1/6% and 1/8% for inter group loans and between 1/32% and 1/4% on third party loans. The amount of this margin would be taxable at normal Dutch rates but the balance of the interest received will escape Dutch taxation.

Licensing Companies

There is no withholding tax on royalty payments made by a Dutch company to a non-resident and, as with interest payments, many of the tax treaties signed by The Netherlands allow foreign companies to make royalty payments to a Netherlands company without a requirement to withhold tax or subject to only a reduced rate of withholding tax. Where the Dutch company is related to the payee or payer then a margin on basis of a sliding scale ranging from 2%-7% (6% for lump sum payments and film royalties) must be maintained between the royalties received and the expenses paid out. The amount of this margin would be taxable at normal Dutch rates but the balance of the royalties received will escape Dutch taxation.