Netherland BV

[Bluepearl]

Good afternoon,

could somebody explain me taxation benefits of BV company in Holland? If services from company were made outside the country, like in Italy or Spain for example, profit taxes are zero, right?
How about subsidary registred in BVI where taxes are zero, can dividends be transfered in Holland and still no taxes?

Thank you in advance!

 

[JustAnotherNomad]

I don’t know to be honest, but I very strongly doubt that there is no CIT if the work is carried out outside the Netherlands, unless there is a permanent establishment, which is taxed in Italy/Spain. So the whole point with the Netherlands not taxing such profits would be to avoid double taxation.
With a BVI subsidiary, you can bet that it will be covered by Dutch CFC rules.
But I don’t know anything about the Netherlands, that’s just my general hunch. Anything else would be a crazy loophole.

 

[neweraoffshore]

That's the the tax scheme you want to build:

However this will cost you a lot of maintenance and you need the substances to make this work, too. If you do a correct invoicing and have the necessary substances then this will work. Maintaining this system is mostly only possible for international enterprises.

 

[Marzio]

Thanks for posting this, it's a very interesting scheme

 

[Martin Everson]

could somebody explain me taxation benefits of BV company in Holland?

Sure

None.

 

[neweraoffshore]

Sure

None.

Hahaha, made my day. Actually almost also wanted to post something like this, but then I thought, ok, actually there is a way to get a tax benefit even if it is absolutely unrealistic to achieve

 

[Bluepearl]

Well, as far as I am informed by different articles there are many benefits in Holland/

“The Netherlands offers significant taxation discounts on Intellectual property (patents, copyrights, software, etc.) related businesses. In 2010, the Dutch government had decreased the amount of intellectual property related taxes, from 10% to 5%”

There are different articles about taxation when services are made outside NL ( like Delaware for example) thats why I tried to get some useful info here.

 

[Martin Everson]

You need to firstly look at the updated Dutch Substance Requirements for a company (introduced in 2018) and also demonstrate to Dutch taxman a structure is not abusive even after substance requirements are met.

Basically if you can afford to meet the minimum 100k a year in labour costs you must show also then please just setup in a tax free country and be done with it.

 

[Bluepearl]

Well, this is why I am doing a research
Its written that non residents, owners of BV with bussines done outside NL are tax free.
I would obviously need to ask official Dutch tax advisors

 

[JustAnotherNomad]

Where is that written? It sounds a lot like that is about corporate tax residency/permanent establishment.

 

[Martin Everson]

Its written that non residents, owners of BV with bussines done outside NL are tax free.

Well if the company is not considered tax resident in Netherlands then you don't pay tax there. However you pay it where the company is considered resident (via control and operations) i.e your home country 99.9% of time...lol. Also under EU DAC6 the Netherlands will share your cross border company affairs with your home country taxman automatically....lol.

DAC6: The EU Directive on cross-border tax arrangements

I would obviously need to ask official Dutch tax advisors

Please do so. But trust me if your not resident there or your not a Fortune 500 company with the money to establish a real presence in Netherlands don't waste your time.

P.S Like I said there is no benefit but keep the research going.

 

[ih8socialism]

Well if the company is not considered tax resident in Netherlands then you don't pay tax there. However you pay it where the company is considered resident (via control and operations) i.e your home country 99.9% of time...lol. Also under EU DAC6 the Netherlands will share your cross border company affairs with your home country taxman automatically....lol.

DAC6: The EU Directive on cross-border tax arrangements



Please do so. But trust me if your not resident there or your not a Fortune 500 company with the money to establish a real presence in Netherlands don't waste your time.

P.S Like I said there is no benefit but keep the research going.

Interesting subject, I'm part of an startup in the logistics sector, located in Germany, however Rotterdam is also very interesting for us due the big port. Building a real presence is not an isseu since we would require office + warehouse in Rotterdam, expansion for NL is planned for next year. However, having an HQ in a 0 Tax country is an better and cheaper option lol

 

[GPT]

You need to firstly look at the updated Dutch Substance Requirements for a company (introduced in 2018) and also demonstrate to Dutch taxman a structure is not abusive even after substance requirements are met.

Basically if you can afford to meet the minimum 100k a year in labour costs you must show also then please just setup in a tax free country and be done with it.

Where does the 100k come from? All I am aware of is to pay a directors salary which is about half of the 100k. 60-70k (that includes all the social and tax payments) would then be more realistic.

 

[Martin Everson]

Where does the 100k come from? All I am aware of is to pay a directors salary which is about half of the 100k. 60-70k (that includes all the social and tax payments) would then be more realistic.

Read the under point 4 in bdo link.

 

[GPT]

Read the under point 4 in bdo link.

Clear.

I call bs.
For a fact BDO isn’t the party to trust in cases like this.

Over 10 years we dealt with a setup with multiple entities in NL and never was it questioned. And yes, we were audited, and were in litigation with the government about multiple tax issues (which the NL gov all lost btw).

BDO is a theoretical party. I wouldn’t rely on them.

 

[Martin Everson]

The rules announced in 2019 actually came into force on 1st Jan 2021 for Netherland service companies.

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Qualification as a service company​

A Dutch tax resident entity is considered to be a service company if the activities predominantly (more than 70%), consist of directly or indirectly, receiving and paying interest, royalties, rent or leasing instalments from and to non-Dutch tax resident group entities.

......

Substance requirements​

From financial year 2021, the following two requirements will be added to the existing list of substance requirements:

• The service company carries a minimum amount of EUR 100,000 of wage expenses; and
• The service company has an office space at its disposal for a period of at least 24 months.

Non-compliance​

In case the service company does not meet one or more of the substance requirements, it has to disclose this information in its Dutch corporate income tax return.

This information consists of an explanation which of the substance requirements are not met, information based on which it can be determined whether the other substance requirements are met and an overview of the incoming interest, royalty, rent or lease payments. This information will subsequently be exchanged by the Dutch tax authorities with the relevant foreign authorities.

Failure to comply with any of these information requirements intentionally or as result of gross negligence is an offence, which may result in a penalty being imposed amounting to maximum EUR 20,750 (applicable in 2020).


.....

Annex I​

As of 2021, the substance requirements applicable to a service company that claims or could have claimed the benefits of a double tax treaty, the EU interest /royalty Directive, or a domestic provision implementing the Directive in relation to incoming interest, royalty, rent or lease payments will be as follows:

• At least 50% of the members of the board of directors with decision taking powers must be resident of the Netherlands.
• The board members must be sufficiently competent and qualified to perform their tasks.
• The (most important) board decisions must be taken in the Netherlands.
• The company should have qualified staff (own or outsourced) at its disposal, attending to an adequate processing and registration of the transactions the company will perform.
• The (main) bank account of the Dutch company is in the Netherlands.
• The bookkeeping of the Dutch company must take place in the Netherlands.
• The service company has at least EUR 100,000 wage expenses.
• The service company has an office space at its disposal for a period of at least 24 months.
• The company should incur sufficient risk with respect to the financing/licensing/renting/leasing activities as further defined in Dutch tax law (i.e., at least 1% of the outstanding loan or EUR 2 million for financing activities).
• The Dutch company must have a level of equity which fits with its functions.

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[GPT]

Lets see how that plays out. I am still not convinced. NL has a very bad trackrecord when it comes to these cases.