Cairo

European Regional Meeting 2009 – Cairo

European holding company regimes

Jeroen van der Linden
HLB Schippers – Amsterdam, the Netherlands

January 31, 2009

Program:

• Introduction;
• European holding regimes;

• How to make use of a holding company?

• End.

Country/Firm report:

• HLB Schippers, largest firm within Dutch federation;

• HLB Schippers has 5 office locations, including Amsterdam;

• 250 people, including 15 partners;

• Audit, tax and legal services;

• Seperate International Business Desk, focus Asia and trust offices.
• Turnover 2008 approx. € 23 million

Reasons for holding companies:

• desire to consolidate foreign subsidiaries;

• creation of platform for future acquisitions;

• vehicle for cash redeployment;

• enabling access to EC Directives and Tax Treaties

• in order to save tax.

Key requirements for holding company jurisdiction:

• no or low tax on capital contributions;

• exemption for dividend income and capital gains;

• no withholding tax on dividends, interest and royalty outflows;

• access to EC Directives and strong network of Tax Treaties;

• no CFC legislation or anti tax haven legislation;

• political and economic stability.

Example of benefits of proper holding structure 1/2

Dividend is taxed with 15% Italian
withholding tax (WHT)
India

Italy

Example of benefits of proper holding structure 2/2

India
0% WHT

EU
holdco 0% Italian WHT

Italy

How about tax havens?

• no treaty available to reduce withholding taxes paid to tax haven;

• EU Member states agreed to phase out tax havens;

• can be obstacle in obtaining rulings from tax authorities;

• “smell factor” / lack of transparency;

• nevertheless combination tax haven with EU jurisdiction can have
best result.

EU holding locations to be discussed:

• Cyprus

• Ireland

• Luxemburg

• The Netherlands

• Spain
• Belgium
• Denmark


• Cyprus

• Ireland

• Luxemburg

• The Netherlands
• Spain
• Belgium
• Denmark


• Cyprus

• Ireland

• Luxemburg

• The Netherlands
• Spain
• Belgium

• Denmark

Tax on capital contributions:

Parent

Cash
EU
holdco

Shares
Subs

Tax treatment of capital contributions

• Cyprus 0.6%, but exemptions may apply

• Ireland exempt

• Luxemburg exempt

• The Netherlands exempt

• Spain 1%, but exemptions may apply
• Belgium exempt
• Denmark exempt

Corporate Income Tax (“CIT) rates

• Cyprus 10%, (or 15% defense tax)

• Ireland 25% on passive income, 12.5%
only on trading income
• Luxemburg 28.59% (combined)
• The Netherlands 20% - 25.5%

• Spain 30%
• Belgium 24.98% - 33.99%
• Denmark 25%

Dividend regime (participation exemption)

India

EU
To what extent is dividend taxed in
holdco
EU holdco?

Italy

Dividend regime
Cyprus

• Full exemption

• Requires: shareholding of 1% or more
no minimum holding period

• Exemption denied if: >50% of activities of sub
(defence tax again) generate passive income and
are taxed less than 5%

Dividend regime
Ireland

• No exemption, but credit for Dividend WHT and CIT of sub

• Requires shareholding of 5% or more

• To the extent the underlying tax in the participation is below 25%,
Irish tax will be payable.

Dividend regime
Luxemburg

• Full exemption

• Requires: shareholding of 10% or more, or

acquisition of at least Eur 1.2mio

minimum holding of 12 months

• Exemption denied if tax rate of sub is below 11%
(unless EU sub)

Dividend regime
the Netherlands

• Full exemption


• no minimum withholding period

• Exemption denied if: >50% of assets of sub generate
passive income and are taxed
less than 10%

Dividend regime
Spain

• Full exemption
acquisition of at least Eur 6mio
• minimum holding of 12 months
• sub should be non-Spanish and
not from tax haven, subject to tax
• sub must have 85% operating
income

Dividend regime
Belgium

• 95% exemption

acquisition of at least Eur 1.2mio
• minimum holding of 12 months
• sub is “financial fixed asset”

• Exemption denied if tax rate of sub is below 15%
(unless EU sub)

Dividend regime
Denmark

• 100% exemption

minimum holding of 12 months

• Exemption denied if shareholding company resides
outside EU and no tax treaty
exists with the resident country
(Denmark has app. 60 treaties
with countries outside EU)

Gains on shares (if participation exemption applies)

India

EU
To what extent are capital gains on
holdco
shares taxed in EU holdco?

Italy


• Cyprus exempt

• Ireland exempt, but

minimum holding period 1 year,
sub must be operating company,
and EU resident or Treaty
country.

Other rules apply for gains on shares in companies owning
immovable property


• Cyprus exempt

• Ireland exempt, but

• Luxemburg exempt

• The Netherlands exempt

• Spain exempt, but not to tax haven
• Belgium exempt

• Denmark exempt, when held for 3 years

Interest payments relating to the acquisition of the Subs

Interest on the loan deductible?
Parent
• Cyprus yes
Loan • Ireland in principle yes
EU • Luxemburg yes
holdco • The Netherlands in principle yes
• Spain in principle yes
• Belgium yes
Subs • Denmark more or less

Interest payments to non-EU shareholder

WHT on interest on shareholder’s loan?
Parent
• Cyprus 0%
Loan
• Ireland 15% - 0%
EU
• Luxemburg 0% (Soparfi)
holdco
• The Netherlands 0%
• Spain 18% - 0%
Subs
• Belgium 15% - 0%
• Denmark 30% - 0%

Certainty in advance for the applicability of the participation
exemption?

• Cyprus clearance upon request

• Ireland non-binding opinions

• Luxemburg clearance likely upon request

• The Netherlands advance tax rulings available

• Spain advance tax rulings available
• Belgium advance tax rulings available

• Denmark advance tax rulings available

Withholding taxes payable on dividends paid by the holding
company?

• Cyprus 0%
Parent • Ireland 15% - 0%
• Luxemburg 15% - 0%
• The Netherlands 15% - 0% (BV) or 0% (Coop)
EU
holdco • Spain 18% - 0%
• Belgium 25% - 0%

Subs • Denmark 28% - 0%

Number of Tax Treaties in force (per 1 jan 2008)

• Cyprus 42

• Ireland 46

• Luxemburg 51

• The Netherlands 86

• Spain 68
• Belgium 88

• Denmark 85

Concluding remarks

And the winner is ……………………………….

Although the Netherlands seem the best location for a holding company
it always depends on the case at hand….

How to make use of a holding company?

1. For which types of clients or potential clients?
2. What are the advantages for you?
3. Create an international client team;
4. Some examples.

1. For which types of companies?

• Companies that sell products internationally;
• Companies with foreign subsidiaries;
• Companies with foreign branches;
• Companies with intellectual property (royalty);
• Companies with (intragroup) financing activities.


• You can make your client happy (lower effective tax rate);


• You can make your client happy (lower effective tax rate);

• Show the strengths of our international network to your client;

• Opens the door for future international tax projects (e.g. transfer
pricing, supply chain management services, reorgs, etc);

• Use the succes as a showcase for attracting new clients.

3. Create an international client team

• Representatives from key countries where the company is active;

• Share client information within the team (e.g. group structure);

• Set up a conference call to discuss the opportunities;

• Define the communication strategy;

• Share examples with the client / target in order to build trust.

4. Some examples

a) New clients;

b) Existing clients.

Targeting new clients

• Creation of cross border target team
Example 1: End 2007 HLB Schippers and
HLB Ler Lum have jointly targeted a large
Malaysian palm oil company with
various plants in the Netherlands

Targeting new clients Potential client wishes to
move:
1) EU HQ functions
Malaysia
and
2) Non Dutch subsidiaries to
a country outside Malaysia
NL BV
Problem:
Is there a treaty between
•NL 2 BVs third country (for instance
ROW Egypt
Singapore) and
Netherlands/ROW

Proposal 1:
Malaysia
In case Singapore will be
the new HQ:
Egypt should be held by
??? NL BV, to avoid 15% WHT
between Egypt and
Singapore.
NL BV

ROW •NL 2 BVs Egypt

Proposal 2:
Malaysia
To avoid dividend tax from
Netherlands to ???
(perhaps no 0% treaty
rate), the use of a Dutch
???
cooperative was
proposed.
HQ will be moved while
Coop
holding function remains
in Europe.

ROW •NL 2 BVs Egypt


US LLC

Coop

Cyprus Ltd UK ltd Dutch BV


Private
indiv.

Cyprus

Latvia

To existing clients

• Example 1: Analysis of international legal structure
HLB Schippers will perform an initial quick scan of your client’s
existing structure and provide advice how to optimise the
structure (i.e. create cash savings for your client). We are
currently doing the follow-up on a quick scan for a client of HLB
Australia.

To existing clients
Proposal:
Private
International holding
individual (Fiji)
structure that lowered the
effective tax burden.
NA NV
Dividend tax from Fiji
+ eventually from NA
Coop

Fiji comp

To existing clients

• Example 2: Entry into Europe
Your client is considering an entry into Europe for doing
business. This could be a natural moment to consider a
European holding structure. We have done this recently for a
large Russian investor which was referred to us by Vantis UK.

To existing clients
Proposal:
BVI
Acquisition vehicle that
could set of its finance
costs with profits of the
Dutch target.
Coop Jersey
BV had enough substance
for Austrian tax purposes.
BV

•NL 2 BVs Austria

Questions?

• Jeroen van der Linden (tax);

j.linden@hlb-schippers.com;

• Pascal Belfroid (audit)

p.belfroid@hlb-schippers.com.

Cairo

Recommandé

Contenu connexe

Tendances

Tendances (9)

Similaire à Cairo

Similaire à Cairo (20)

Cairo