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Company Formation In The Netherlands
A BV may be incorporated by one or more shareholders, either being individuals or corporate bodies.
An individual or company, whether Dutch or foreign, may be the sole shareholder and full Board of Management at the same time; no Company Secretary is required.
If there is only one shareholder, this fact will not entail personal liability, but his name will be registered as such in the Certificates of Registration of the BV issued by the Trade Register.
Each Incorporator shall contribute to the initial capital for a certain number of shares; at least 20% of each contribution must be paid upon incorporation. No share certificates may be issued; shareholdings are registered in the shareholders register, that must be kept in the office of the company.
Tax Planning Through The Netherlands
The Netherlands can in no way be considered an offshore finance centre. Corporate rates of tax are high: 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:-
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.
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.
The Dutch licensing company is a frequently used and reliable tax planning instrument.
There are many companies in the Netherlands which main activity is to receive royalties from or on behalf of group companies. The main reason to use the Netherlands as the location for such a "group licensing company" is the favourable Dutch tax regime for licensing activities (tax ruling) and the excellent legal and financial infrastructure.
We have extensive knowledge and expertise in the area of Dutch licensing companies and we are gladly prepared to advice you on this subject or to guide you to other professionals who can help you in other specialized areas (like international lawyers, accountants or trust companies).
The Activities Of A Dutch Licensing Company
The activities of a Dutch licensing company primarily consist of receiving royalties from or on behalf of group companies.
There are no virtually no limitations with regard to the activities of a Dutch licensing company. The licensing activities can be combined with holding activities, financing activities or actual operating activities, like trading or manufacturing.
The centralization of activities in a Dutch licensing company will make the structure more robust and resistant to the international tendency to deny tax advantages to purely tax driven vehicles. We refer also to the page The Dutch holding company plus.
The activities of the licensing company can differ depending on the purpose of the structure. Roughly speaking one can distinguish the Dutch royalty conduit company and the Dutch IP company.
The Dutch Royalty Conduit Company
The main activity of the Dutch royalty conduit company consists of receiving royalties on behalf of group companies.
The Dutch company is typically not the owner of intellectual property rights, but it only obtains a license from a group company which it then sub-licenses to other parties.
The owner of the IP is a group company. In order to avoid a high tax burden at the level of the owner of the IP, it is quite common that the company which owns the IP (and thus receives royalties from the Dutch company) is established in a jurisdiction which levies no or only few taxes over the IP income (tax haven). The Dutch tax system allows an easy transit of royalties to a tax haven company.
The ultimate licensee can be either a non-related party or a group company.
The primary motive for this structure is the reduction of foreign withholding taxes by virtue of applicable tax treaties or the EU Directive for Interest and Royalties.
The Patent Box
As from 1 January 2007, Dutch tax law provides for a special tax regime for Research & Development activities in relation to patents.
This optional regime can only be applied for by the taxpayer in connection to income derived from self-developed intangible assets, including plant breeder’s rights, which are patented in The Netherlands or abroad (but according to Dutch standards) and which are capitalized after 31 December 2006. As of 1 January 2008 this regime will also apply to so called R&D intangibles ("Speur- en Ontwikkelingswerk activa"), originated from a so-called R&D project for which a "R&D declaration" has been obtained. Self-developed trademarks, logos and other similar assets are excluded from the patent box.
An effective tax rate of 10% is achieved by using the following formula: 10/25.5 (regular corporate income tax rate) of the total amount of net earnings stemming from the intangible asset that has been allocated to the patent box is recognized as taxable profit which is taxed at the regular corporate income tax rate.
The total amount of net earnings from intangibles that could be taxed at the low rate cannot exceed a threshold of four times the total amount of the capitalized development costs of the intangible assets allocated to the patent box. Note that for budgetary reasons the amount of net earnings derived from R&D intangibles is capped at EUR 400,000 per year.
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
Key Corporate Features
Dutch BV Company
Type of entity BV
Type of law Civil
Shelf company availability Yes
Our time to establish a new company 4 - 6 weeks
Minimum government fees
(excluding taxation) Nil
Double taxation treaty access Yes
Share Capital or Equivalent
Standard currency Euro
Permitted currencies Any
Minimum paid up Euro 0.1
Usual authorised Optional
Minimum number One
Local required No
Publicly accessible records Yes
Location of meetings Anywhere
Minimum number One
Publicly accessible records Yes for single member
Location of meetings Netherlands
Local or qualified No
Requirement to prepare Yes
Audit requirements Yes
Requirement to file accounts Yes
Publicly accessible accounts Excerpts for small companies, full details for large companies
Requirement to file annual return Yes
Change in domicile permitted No
The Netherlands Company Formation Services
Netherlands Company Information
Principal Corporate Legislation
Commercial Code Of The Netherlands
The Flex-BV Act 2012
Procedure To Incorporate
A Public Notary is provided with the information and documentation in order to prepare the draft Articles of Association which are then filed with the Dutch Ministry of Justice.
Before the actual incorporation can take place the Duty Ministry of Justice must first issue a “Certificate of No Objection”.
Upon receipt of the “Certificate of No Objection” the notary executes the Articles of Incorporation.
The newly incorporated BV must then be registered in the Trade Registry of the Chamber of Commerce.
The deed and articles are prepared in Dutch but an English translation can be obtained.
Restrictions On Trading
Yes, specified groups, which include for example, banking, insurance, financial services, consumer credit related services and employment agencies.
Powers Of Company
A Company incorporated in the Netherlands has the same powers as a natural person.
Language Of Legislation And Corporate Documents
Registered Office Required
Yes, must be maintained in the Netherlands.
Shelf Companies Available
Time To Incorporate
Three to Four weeks.
A name that is similar to or identical to an existing company. A well-known name that is known to exist elsewhere. A name that implies illegal activities. A name, which in the opinion of the Registrar is considered undesirable, obscene or offensive. A name that implies royal or government patronage.
Language Of Name
The name of the company can be expressed in any language using the Latin alphabet. The Registrar may request a Dutch or English translation to ensure that the proposed name does not contravene name restrictions.
Names Requiring Consent Or License
Bank, building society, savings, loans, insurance, assurance, reinsurance, fund management, investment fund, trust, trustees, Chamber of Commerce, co-operation, council, municipal or their foreign language equivalents or any name in English or a foreign language that may suggest association with the banking or insurance industries.
Suffices To Denote Limited Liability
Besloten Vennootschap (BV) and the new Flex-BV.
Disclosure Of Beneficial Ownership To Authorities
No, although if the company has a single shareholder this is a matter of public record.
Authorised And Issued Share Capital
From 1st October 2012 the minimum authorised share capital is Euro 1 cent and the share capital can be denominated in any currency.
Classes Of Shares Permitted
Registered shares with restrictions on their transferability.
From 1st October 2012 the following changes will apply:
Shares with no or limited entitlement to distributions are permissible
Shares with or without voting rights are permissible
Share transfer restrictions are no longer mandatory
Bespoke transfer restrictions, as agreed between shareholders, may be included in the articles.
Double Taxation Ahgreements
The Netherlands is party to more than 95 double tax treaties.
An Annual Return which provides details of those who have held shares throughout the year and the current directors must be filed each year.
Financial Statements Required
All Dutch companies are required to file accounts with the Chamber of Commerce. There is a requirement for Dutch private limited companies to be audited if it meets two of the following three requirements;
Assets greater than Euro 6m,
Turnover greater than Euro 12m,
And average number of employees greater than 49.
One. They may be natural persons or bodies corporate. They may be of any nationality and need not reside in the Netherlands but in order to obtain relief under the taxation treaties signed by The Netherlands it is likely that the company would need to be seen to be Dutch resident and therefore have a majority of the directors based in The Netherlands.
The minimum number of shareholders is one.
Content supplied by TBA & Associates