The Netherlands in international taxation

1. The Netherlands in international taxation ‘anti-abuse measures’ in profit and dividend taxes

2. Dutch participation exemption • Capital gains and dividends on qualifying participations exempt from corporate income tax in the Netherlands • Main conditions: • shareholding of at least 5% in participation, and • participation should not have more than 50% passive assets • If the participation has more than 50% passive assets, participation exemption still applies if it is sufficiently taxed according to Dutch standards (‘subject to tax test’) No specific CFC-legislation included in the Corporate income tax act

3. Dutch participation exemption • The following participations are considered “Passive investments”: • If more than 50% of the assets of the participation consists of < 5% investments in companies; or • If the participation is operating as intra-group finance or leasing company Assets used for intra-group financing activities; • If more than 50% of the assets of the participation consists of assets not used within the business enterprise of the participation.

4. Dutch limitations on interest deductions - Anti-abuse regulations  base erosion For intra-group interest payments in specific situations , however counterevidencepossible (business reasonor “reasonabletax test”)situations: - loans taken up forrepayments of capital and/ordividends - capitalcontribution in a subsidiary - acquisitionorenlargement of a subsidiary - Thin capitalization rules  debt-equity ratio of 3:1 - Frauslegis doctrine

5. Dutch withholding taxes Dividends: Dutch dividend tax rate of 15% - often reduced under tax treaty - structuring possibilities to avoid (reduced) rate Anti-dividend stripping rule: No reduction of Dutch dividend tax if between the Dutch company and its shareholder a new company is interposed which is entitled to a more reduced dividend tax rate than the previous shareholder Interest and royalties: no Dutch withholding taxes levied

6. Dutch concept of beneficial owner • Dutch tax law does not contain a general definition of beneficial ownership • However, Dutch corporate income tax law does contain a article that indirectly defines beneficial ownership • credit of foreign withholding tax is not allowed if a company is involved in intra-group finance activities whereby its equity at risk is the lowest of: • 1% of the debts receivable; or • € 2,000,000 • Furthermore: substance requirements should be met in order to avoid spontaneous exchange of information

7. Dutch tax treaty policy In the past, hardly no anti-abuse clauses in tax treaties The last 10-15 years: more and more anti-abuse clauses(such as “limitations-on-benefits”-clauses and specific articles in the protocol, e.g. Dutch-Maltese tax treaty protocol art. ) Recently published policy of Dutch Ministry of Finance refers specifically to inclusions of anti-abuse clauses in new to be concluded or re-negotiated treaties

8. Contact details THE HAGUE Parkhaghe Parkstraat 20 P.O. Box 177 2501 CD The Hague AMSTERDAM World Trade Center Amsterdam Tower H, 25th floor Zuidplein 206 1077 XV Amsterdam Martin Bergwerff (martin@hamelinktooren.com) Olga Tsetlina (olga@hamelinktooren.com) Tel: +31 70 310 50 70 www.hamelinktooren.com