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After the Brexit The Dutch Option
The Opportunity to Open a Company in the Netherlands after the Brexit
The investors, who consider that their business may be affected by Brexit, can consider a business-friendly jurisdiction – the Netherlands.
There are a few important reasons why foreign investors choose theNetherlandsforopening a company: low corporate tax rate, tax-free investment companies, double taxation agreements with a wide range of countries, tax incentives, no restrictions for foreign-owned companies that want to start a business in the Netherlands.
The STAK Structure in the Netherlands
ASTAK structure (Stichting Administratiekantoor)is a voting trust foundation, having alegal entity,in which there are no shareholders. The foundation requires a notarial deed, written in Dutch, in which it will be stipulated the name of the structure (that will include the word “stichting”), the main activity of the foundation, appointment of the directors and many others.
Main characteristics of a STAK structure
Themain characteristic of a STAK foundationis that it can be used to buyshares of a company by issuing exchangeable depositary receipts. TheSTAKwill then hold theshares for administration purposes, but will also have the rights arisen from theowning of the shares.
Generally speaking, thedirectors of a foundation are not liable for the debts incurred by the foundation, but there are few exceptions that may apply in this case. They can become liable in the situation in which administrative or management rules weren’t performed.
The purpose of STAK structure
Althoughfoundationswere first created as a way topromote charitable or non-profit events, they now have turned into alegal method for the protection of assets. ASTAK structurehas the purpose to separate the beneficial ownership from the legal one.
ASTAK structurehas the following functions:
- Acquire and manage assets on its own name;
- Issue certificates attesting the economic value of the assets;
- The certificates are binding under a contractual relationship;
- The main regulatory document of a STAK structureis the trust conditions.
Thetrust conditions documentdoes not respect a certain model, as each STAK structure may be incorporated for a different purpose. As such, the drafting of the trust conditions must only respect theDutch contract law.
If you need further information on the STAK structure in the Netherlands, please contact one of our experts, who will provide you full assistance in this matter.
The Dutch Foundation as a
Tax Minimizing Vehicle
Foundationsfall under the regulations of the Civil Code and not the Dutch Commercial Code like any other usual company. Even if the resemblance with other types of Dutch companies is important,foundations or “stichting” have no members. They will also have a certain capital, but their main purpose is not to carry out business activities.Dutch foundationsare allowed to make profits, but the use of such profits is subject to restrictions.
Even if their main purpose is a social one,foundations registered with the Dutch Companies Registrar are allowed to carry out regular commercial activities. However,foundationsare excellent structures suitable for tax minimization purposes, as they are considered Special Purpose Entities (SPEs).
Among these are also Dutch holding companies. Both foundations and holding companies are usually associated with the avoidance of dividend and capital gains taxes, due to Netherlands’ double taxation agreements.
Setting up foundations in the Netherlands
Foundations are very easy to set up and do not require governmental approval, hence the name ofnon-governmental organizations or non-profit organizations. Foreign citizens wanting to set up foundations in the Netherlands are required to draft a deed of formation and the Articles of Association and notarize them. While the deed of formation represents the Memorandum and establishes the creation of the organization, the Articles of Association will determine the activities and the management of theDutch stichting. An important aspect to keep in mind is that the Articles of Association must be in Dutch.
Dutch foundations as tax minimization vehicles
If registered for commercial purposes,foundations will be required to pay the corporate tax in the Netherlands. However, being a Special Purpose Enterprise, a foundation can also be established as an intermediate holding and thus provide investment protection to its settlors. Dutch Special Purpose Enterprises, thereforefoundation, may also receive external funds and thus avoid being withheld the tax on interest payments.Dutch charitable foundationsmay also own corporate structures and thus benefit from a reduced corporate tax rate.Foundations associated with Dutch private limited companies may also benefit from exemptions from the corporate and dividend taxes.
For information about other tax optimization solutions, pleasecontactone of our experts, who will be extremely pleased to provide you all the assistance you may need.