What is a trust?
Under the “Trust” means the management of the company and the conduct of the administration of the trust’s own staff or its director. Trust office staff consists of lawyers, tax advisors, notaries, lawyers, accountants and secretaries. Trust Office receives a large amount of confidential information from its customers and hence the name “trust”, “trust”.
Trust offices, including those dealing with the embodiment of the decisions of customers, the daily management of the company, accounting, service delivery director for different sorts of companies, registration and administration of new companies and special purpose, delivery of annual financial statements and providing other similar services.
The advantages of using a trust
The following reasons for the use of a trust:
- tax reasons: the separation of ownership and management brings tax advantages
- international tax reasons: tax benefits related to the structuring of international groups of companies by using a combination of national legislation and the use of bilateral agreements on avoidance of double taxation
- legal reasons: the limitation of liability and asset protection from creditors and others
- financial reasons: the centralization of the finance department of the company in a single department to simplify the management and direction of cash flows in the company
- labor causes: control the spread of pensions between workers
- family reasons: the correct distribution of assets / income among family members, as well as the distribution of assets between the heirs to avoid unnecessary waste of.
The choice of the Netherlands as jurisdiction:
Netherlands is a stable, legal and economic point of view, the state has an impeccable reputation in the international business. Due to the vast number of concluded agreements with most countries, the Netherlands provide confidence to international entrepreneurs. Also favorable for holding companies and financial mechanisms royalty structure to the attractiveness of this jurisdiction for foreign companies and entrepreneurs. Through the base of the holding company by foreign companies in the Netherlands, the latter can significantly reduce or eliminate the tax burden on dividends, royalties and interest at a relatively low cost of building and maintaining the structure.
Additionally, there is an opportunity to negotiate with the Dutch tax authorities on tax payments. For example, possible to obtain certainty in advance about the financial continuity of the price that the Dutch group company pays to or receives from a foreign group company for the receipt or delivery of goods or services. It is also possible to sign a contract, which will be characterized by an international corporate structure that will allow, for example, to obtain certainty on the application of an exception or exclusion of participation in the payment of income taxes using the cooperative.
International Tax Treaties
Netherlands concluded a considerable number of international treaties to prevent double taxation. Despite the fact that the Netherlands has one of the most developed networks of agreements to avoid double taxation, at the moment the Dutch government continues to pursue a policy of increasing the active co-operation in the field to enter into tax treaties.
It often happens that a company operating in the international space may be subject to certain taxes twice. International agreements concluded by the Netherlands, contain provisions governing such situations. In case of double taxation, the competent authority of the Netherlands uses best efforts to avoid double taxation.
Through international agreements concluded by the Netherlands, you can achieve the following tax benefits:
- avoidance of double residency;
- avoidance of capital gains tax in the country where the subsidiary, the sale of the Dutch shareholder of shares;
- reducing the tax burden on dividend payments in the country where the subsidiary;
- reducing the tax burden on dividends Dutch holdings in the country of the investor;
- other benefits, depending on the jurisdiction.
Tax Treaties of the European Union
Due to the fact that the Netherlands is a member of the European Union, the holding company based in the Netherlands can enjoy tax benefits of the European Union. These benefits include access to the European Directives:
- Parent-Subsidiary Directive (Directive on the relationship of parent and subsidiary companies)
- Merger Directive (Directive on the merger)
- Interest & Royalty Directive (Directive on interest and royalties)
Using, for example, the European directive Parent-Subsidiary Directive, Dutch companies can get tax-free dividends from its subsidiaries in the European Union.
Basic Netherlands Taxes
Basic tax that may be payable in the Netherlands include:
- Income tax: income to € 200.000 is taxed at 20%, the profit of over € 200.000 is taxed at a rate of 25%
- Innovation Box: tax of 5% on income derived from intellectual property created by the Dutch company
- Tax on dividends: tax of 15% on the distribution of dividends, which can often be reduced to 0% with the application of the agreement on avoidance of double taxation or the European Directive Parent-Subsidiary Directive
- Value added tax: the rate on most products and services is 21%
- Income tax: The rate changes every year
Features of the tax system of the Netherlands
The Dutch tax system has the following characteristics:
- No tax on interest
- No tax on royalties
- No tax on capital
- No stamp duty
- The lack of local income taxes
- Availability bypass mode of participation: 100% tax exemption on dividends and capital gains from participation
- Ability to create financial unity
- There is no difference between a regular income and capital gains
- The opportunity to get 30% tax credit for foreign workers who have specific knowledge
- The possibility of an agreement with the tax authorities
Agreement with the tax authorities
The Netherlands recognizes two kinds of agreements with the tax authorities:
Advance Tax Ruling – the view of the tax authority on the characteristics of certain taxes for international corporate structures, which allows to obtain certainty as possible for an exemption of participation and recognition of a permanent establishment.
Advance Pricing Agreement – an agreement between the taxpayer and the tax authority, which allows you to get a pre-determined by the appropriate methods of transfer pricing for certain transactions during a given period.
Agreement with the Dutch tax authorities are legally binding and enforceable.
Create Netherlands Holding
When creating a holding company will continue to exist for at least 2 of: operating company and holding company. Operating company is engaged in the execution and conclusion of contracts, recruitment and is, thus, the basic unit of production. Holding is engaged in storage of valuable assets, such as shares of labor, profit reserves, patents and so on. It is also possible the accumulation of pension by the holding company.
Thus, when the poor financial situation of the working or threat of bankruptcy, holding allows you to save valuable assets, and yet not be declared bankrupt.
Advantages of the Dutch holding company
The main advantages of the Dutch holding company are:
- Exception of participation – the complete elimination of the tax burden on capital gains on shares and the distribution of dividends of subsidiaries
- Zero tax on dividends when used in conjunction with the holding co-operative;
- Low or zero tax on repatriation of profits
- No tax on royalty payments and interest
- Risk Allocation
- Favorable tax treatment in comparison with other countries
- The opportunity to negotiate with the tax authorities, having individual tax calculation
- Financial unity
- Use of the holding as a management company or property administrator
- Tax deduction of expenses and losses
- Tariff regulation of income tax
- No restrictions on foreign exchange
One of the biggest advantages is the elimination of the Dutch holding company participation. This advantage is the removal of the obligation to pay tax on the profit on any profits earned from investing in the equity of another local or foreign company. Dividends and capital income arising from such content shares are excluded from the tax, while capital losses and costs of acquisition and disposal of non-deductible.
Exception participation acts as to participate in the Dutch companies, as well as for participation in foreign companies. Due to the fact that the profits will not be re-taxed foreign subsidiaries will be able to on the basis of a similar financial position to compete with local businesses.
The following conditions provides an opportunity to get an exception of participation:
1) Shareholders holding at least 5% of the nominal paid-up capital in another company 2) The main business of the subsidiary should not be regarded as a “passive investment activities.” The existence of a passive investment activity depends on the purpose of the taxpayer 3) The subsidiary can not be a “financial investment fund”
Holding structure is often used to spread risks. This is done by creating a simple structure consisting of holding and operating company. Bankruptcy of working does not automatically bankrupt holding. When you transfer the real estate and investment in the holding company, the risk of loss of assets in the event of worsening of the financial situation of the working decreases.
If there is a holding company may conduct the consolidated financial statements.
Holding may be used to safeguard the reserves arrived. If a manufacturing company incurs losses or is on the verge of bankruptcy, profit reserves will be lost. To avoid this, the profit is transferred to the holding and, thus, profits will not be put at risk and at the same time, the financial settlement will be postponed. Provisions can be used at any time again as capital. Also allows the use of holding cash operating company for another company working when there is a need to finance the latter.
Under the condition of holding a 95% stake in the holding company of the working of the company, you can create a so-called fiscal unity. In this case, the parent company is taxed as a group, together with its subsidiaries. In terms of income tax, this means that the subsidiaries are considered to be absorbed in the parent company. Resolution on the establishment of a financial unity issued by the Tax Inspectorate. When several operating companies and the use of fiscal unity, there is the possibility of offsetting profits from one company working with losses from other operating companies. Thus reducing the income tax.
Regulation of tariffs income tax
By dividing the profit for several companies can reduce the income tax. Profit before € 200.000 subject to income tax at a rate of 20%, while the profit of more than € 200.000 are taxable at the rate of 25%.
Innovative Box mode can significantly reduce the rate of income tax, provided that the income derived from intellectual property. Under this regime revenues from intellectual property companies are taxed at a rate of 5%, in the case of income from intellectual property exceed the cost of the development of intellectual property. If the income from intellectual property do not exceed the costs of the development of intellectual property, the applicable standard rate of income tax. Expenses incurred by the use of intellectual property, equal to the cost of development. Capital gains on intangible assets are also subject to this regime.
Holding as a management company
Holding can act as a management company. This is convenient when there are several large shareholders. Each shareholder may create its own holding company, which will act as the management company. For such activity holding company receives payment, which will be taxed. Subsequently, each major shareholder will be able to determine, within the limits of its own holding, the amount of the salary, the order of payment and the amount of dividends.
In order to avoid double taxation, the holding is not required to pay income tax and dividends from the profits.
Dutch financial services company
Favorable tax climate of the Netherlands is used to create the financial companies. Group Finance Company is used as an intermediary for loans needed to expand international companies and minimize their international tax payments. Our partner apotheke online cialisapotheke.com.
Thus, you can create a financial company in a country with low tax rates.
Additionally, there is the possibility to use the loan within participation. Loan limits participation – is a construction using which the Dutch parent company provides a loan of a foreign subsidiary, provided that the participation. For the Dutch fiscal purposes such loan will be treated as a capital contribution. As a result, the resulting parent company, the interest on the loan will be treated as a dividend to participate and repayments of the loan will be treated as a return of capital. Obtained, so the percentage will not be taxed.
Dutch society is recognized as the legal form of the European Directive Parent-Subsidiary Directive, which means that society has the right to receive dividends from European subsidiaries without having to pay any tax on dividends in the country where the subsidiary.
Despite the fact that society is obliged to pay income tax, with proper structuring, Dutch society has the ability to eliminate the tax on profits distributed by the cooperative to its members. In addition, the cooperative may be eligible for an exception 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 access agreements for the avoidance of double taxation and the European directives, the Dutch company to be tax resident in the Netherlands. Tax residency is determined by finding the place of effective management.
Place of effective management must meet the following requirements to be treated as such:
- administration and accounting should be conducted in the Netherlands
- The company is headquartered in the Netherlands
- majority of the board of directors must be resident in the Netherlands
- meeting of the Board of Directors shall be held in the Netherlands
Services Overview Business Legal Consultancy
Business Legal Consultancy in conjunction with its partners trust specializing in the provision of trust services. Our office in collaboration with partners has an impressive track record of providing business services, management services, fiduciary services and real estate services for international and Dutch customers.
We provide our services in the following jurisdictions:
British Virgin Islands, United Kingdom, Germany, Cyprus, Curacao, Luxembourg, Malta, Netherlands, New Zealand, Singapore, United States, Switzerland.
Our range of services is exceptional and includes, inter alia, the following services:
- provision of domicile, telephone / fax numbers, and communication infrastructure
- help in the creation of new companies and registration records in the commercial register
- processing daily accounting and correspondence, together with the preparation and submission of the annual report and data about the company
- request refund of VAT and income tax
- provision of personal / corporate director
- functioning as a representative of the company (through a power of attorney and a power of attorney to sign)
- opening and maintenance of bank account
- provision of specialized legal and secretarial services
- coordination and control of assets and real estate
This service list is not exhaustive. In accordance with your request, we can send you a complete list. In addition, we can prepare for you a fixed offer.
The above information is current as of March 2013.