Dutch tax saving possibilities for Ukrainian MNC’s. Juan Telting
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Transcript of Dutch tax saving possibilities for Ukrainian MNC’s. Juan Telting
Dutch tax saving possibilities for Ukrainian MNC’s
Juan Telting
STP Tax Lawyers
Kiev
October 2015
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Agenda
- Dutch (tax) features- International structures with Dutch companies
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Dutch (tax) features
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The NetherlandsKey benefits
Attractive tax facilities
Legal and economic stability
Outstanding legal and financial
services and personnel
Extensive bilateral investment
treaties network (including Russia,
Ukraine, Kazakhstan)
Extensive bilateral tax treaty network
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The NetherlandsCorporate income tax system
Dutch participation exemption
Key features:
All benefits (dividends and capital gains) arising from a qualifying shareholding are exempt from Dutch Corporate Income Tax.
Conditions: at least 5% of the paid up nominal share capital of a company with a capital
dividend into shares;
the taxpayer does not qualify as an investment institution; and
the subsidiary does not qualify as a so-called low taxed passive subsidiary.
Costs related to the acquisition or disposal of a participation such as legal fees, compensations, notary fees, etc. are not deductible.
Losses arising from the liquidation of a (foreign) subsidiary are deductible (provided certain conditions are met).
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The NetherlandsKey tax features (1)
No withholding tax on dividends and royalties
Participation exemption
Loss compensation
Group relief
Financing with hybrid loans
Extensive tax treaty network
Access to EU law and protection (Parent/Subsidiary Directive &
Interest/Royalty Directive)
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The NetherlandsKey tax features (II)
Transfer Pricing Modeling
Asset protection by use of foundation
Use of the tax-friendly Coöperation
Ruling practice
No capital tax or stamp duty
30% ruling for expats
Innovation Box regime
High level investment protection
No exchange control
Flexible corporate law
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The NetherlandsUBO-register and shareholders-register
Fourth anti money laundering Directive: Member States should
register the ultimate beneficial owners (>25%) of entities
Information to be disclosed:
Name
Date of birth
Nationality
Residence state
Interest in entity
UBO-register is open for governments bodies and persons with a ‘legitimate
interest’
UBO-register should be opened in the course of 2017 at the latest
Next to the UBO-register, the Netherlands will register the direct shareholders
(>25%) of Dutch entities as from 1 January 2016. 8
Foreign investment company taxed at >10%
CIT
Corporate income tax systemInternational holding structure with applicability of the Dutch Participation Exemption
Dutch subsidiary Foreign active trading company
Dutch Holding Company
0% dividend withholding tax
Received dividends and capital gains fully tax exempt
In case of liquidation: liquidation loss deductible
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International structures with Dutch companies
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Ukraine/The NetherlandsDouble Tax Convention
• Acces to DTC: Companies taxresident in Ukraine or NL
• Tie breaker: Place of effective management
• Intra-group transactions: Arms’ length principle
• Dividends NL ↔ Ukraine: 5%WHT (0% if >50% and >300.000 USD)
• Interest NL ↔ Ukraine: 10% WHT (2% on loans from financial institutions)
• Royalties NL ↔ Ukraine: 0% WHT (for industrial royalties)
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SFI-structure
Ukrainian company Dutch SFIInterest
WHT reduced to 2%
Dutch-Ukraine tax treaty: reduced withholding tax of 2% on interest payments to an SFI (Special Financial Institution)
ForeigncoInterest
No WHT
Foreignshareholder
Definition of SFI: “a resident enterprise or institution, irrespective of its legal form, in which non-residents hold a direct or indirect participating interest through a shareholding or otherwise and whose objective is or whose business consists to a major extent of receiving funds from non-residents and channeling them to non-residents”.
STP Tax Lawyers has experience with obtaining the required Application of the Dutch Central Bank.
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International Ukrainian Holding structureUkrainian outbound investments
Ukrainian Parent company
EUSubsidiary
CzechSubsidiary
USSubsidiary
Current situation:
10% 5%5-15%
TurkishSubsidiary
5%
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Ukrainian outbound investmentsInternational holding structure with a Dutch Holding Company
Ukranian Parent company
Dutch Holding Company
Reduced to 5% / 0% dividend withholding tax*
TurkishSubsidiary
EU-subsidiary CzechSubsidiary
10% 0%
USSubsidiary
0%*0%
Proposed situation:
*LOB clause in Treaty should bechecked
14* Economic substance required
Ukrainian outbound investmentsInternational holding structure with a Dutch Holding Company and Cooperation
Ukranian Parent company
Dutch Holding Company
Reduced to 0% dividend withholding tax*
Dutch Coop
TurkishSubsidiary
EUSubsidiary
CzechSubsidiary
* Economic substance required
10% 5%
USSubsidiary
0%**0%
Proposed situation:
**LOB clause in treaty should be checked
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UkrainianCompany
ActiveCompany
Ukrainian outbound investmentsLicensing Structure
Dutch LicensingCompany
License agreement
Sublicense
0% withholding tax on royalties
0% withholding tax on royalties
Income on royalties taxable?
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UkranianCompany
Ukrainian inbound investmentsCurrent situation
Turkish Company
UkranianCompany
Czech Company
UkranianCompany
Russia
Withholding tax:Dividends 10%Interest 10%Royalties 10%
Withholding tax:Dividends 5%Interest 5%Royalties 10%
Withholding tax:Dividends 5%Interest 10%Royalties 10%
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UkrainianCompany
Ukrainian inbound investmentsProposed situation
Turkish Company
Ukrainian Company
Czech Company
UkrainianCompany
Russian Company
1. Withholding tax:Dividends 5%Interest 10%/2%Royalties 0%
1. Withholding tax:Dividends 5%Interest 10%/2%Royalties 0%
1. Withholding tax:Dividends 5%Interest 10%/2%Royalties 0%
Dutch Holding Company / Coop
Dutch Holding Company / Coop
Dutch Holding Company / Coop
1. 1. 1.
2. 2. 2.
2. Withholding tax:Dividends 0/15%Interest 0%Royalties 0%
2. Withholding tax:Dividends 0%Interest 0%Royalties 0%
2. Withholding tax:Dividends 5%Interest 0%Royalties 0%
Substance requirementsNew legislation applicable since 1 January 2014
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• At least 50% of the board of directors with decision taking powers must be resident of the Netherlands;
• Aforementioned Dutch resident board members must be sufficiently competent and qualified to perform their tasks (such duties of the board of directors include at least the decision-making on the transactions to be entered into as well as ensuring the proper handling of such transactions entered into);
• The company has qualified personnel at its disposal; • The decisions of the executive board members must be taken in the Netherlands; • The company’s main bank account is in the Netherlands (entitlement and control); • The bookkeeping of the company must take place in the Netherlands; • The company’s registered address is in the Netherlands and is not, as far known to the
company, considered as a tax resident of another country; • With regard to its activities, the company must incur real risks; • The level of equity of the company is sufficient to carry out its functions.
Tax experts cover all areas of tax lawIntertwined with almost all practices and disciplines of the legal industry
General tax practice;
Employment tax;
European tax law;
International tax planning and M&A;
Structured Finance;
Investment management / Funds;
Real estate;
Tax litigation;
Tax Assurance & Tax Control Framework;
Tax compliance;
Tax audits;
Due Diligence Investigation;
Transfer pricing;
VAT;
Estate planning & high-net-worth
individuals.
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Biography
Juan Telting Partner
E-mail: [email protected]: +31885060603Mobile: +31624760547
Juan started at Coopers & Lybrand, one of the predecessors of PwC in 1997. After working at PwC for ten years, Juan was looking for new challenges in his day-to-day work. Not only in advising clients, but particularly in using his own business skills. The next logical step was setting up his own tax advisory firm.
Juan advises in national and international areas and has affinity with Russian, Ukrainian, CIS, Turkish and Eastern European companies. He deals mainly with company restructuring and financing. Juan furthermore regularly advises real estate companies and high-net worth private individuals. Juan sits on the boards of various charities.
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