Netherlands

The Netherlands offshore zone only partially meets the criteria of the concept itself. There is a flexible system of taxation here, but it is not completely excluded.

The country does not have currency controls in relation to foreign companies (hence it is not uncommon to talk about offshore companies in the Netherlands), but they are not exempt from the obligation to keep records and generate reports.

6 simple steps to purchase a company

  1. choosing a country

  2. choosing a bank

  3. payment (by any method)

  4. sending documents

  5. company registration

  6. bank account opening

Organisational and legal forms

  1. A joint stock company (Besloten Vennootschap, BV) is the standard legal form of a legal entity whose capital is divided into shares. Shareholders may be individuals or legal entities of any nationality or tax residency. The liability of shareholders for the company's obligations is limited to the amount of their contribution to the company's capital.
  2. A public limited company (Naamloze Vennootschap, NV) is a company whose shares may be listed on the stock exchange. The minimum amount of paid-in share capital is 45,000 euros. From 2019, only registered shares can be issued; previously issued bearer shares are subject to exchange for registered shares.
  3. Full partnership (Vennootschap onder Firma, VOF) is a legal entity without the formation of a legal entity, in the structure of which there must be at least two partners (general and limited). Partners may be individuals or legal entities of any nationality or tax residency. A partnership agreement is mandatory for the establishment of a VOF.
  4. Limited partnership (Commanditaire vennootschap, CV) – in general this form is similar to a VOF with one significant difference: the requirement to enter into a partnership agreement is not mandatory when establishing a partnership. When registering a CV, limited partners are not required to provide detailed information about themselves (name, address, etc.) for inclusion in the register, unlike the general partner.
  5. Cooperative (Dutch: Coöperatie) is a legal entity with at least two members. There are no requirements for the size and payment of the share capital, and the liability for the cooperative's obligations in some cases lies directly with the cooperative itself, rather than with its constituent members.
  6. European Society.

The process of registering a private company takes approximately 1-1.5 months. There is also an option of purchasing a ready-made company, in this case, the paperwork takes 3-4 weeks. When buying a ready-made company, the procedure to change the corporate shareholder appointed at incorporation to a real shareholder must be carried out. Such a change is made through a local notary and the costs of preparing the documents for the change of shareholder should be taken into account if you choose the option of buying a ready-made company.

A private company must have at least one director. The director may be an individual or a legal entity, with no restrictions as to nationality or country of registration. However, the details of the company directors are must be filed with the Trade Register and become available to third parties. In addition, the tax residency of directors affects the residency of the company itself.

Shareholders in a private company may be individuals or legal entities who are residents or have citizenship/registration of any country. Information about the shareholders must also be submitted to the Trade Register. Since 2013, the minimum share capital requirement for Dutch companies has been abolished and the amount of such capital can be any size.

Thanks to the tax incentives provided by both Dutch domestic law and EU directives, it is advantageous for Dutch holding companies that own shares or interests in subsidiaries, real estate and intellectual property.

Reduced taxation is possible for income derived from both the ownership and the disposal of the assets listed above.

With the extensive network of double taxation treaties in the Netherlands, it is possible to apply quite favourable structures in which the subsidiaries of the holding company are entities from foreign countries, including non-EU countries.

Main characteristics of BV joint stock companies in the Netherlands

Shareholders

As mentioned earlier, BV shareholders can be individuals or legal entities, regardless of their nationality, state of registration and state of tax residence. The minimum number of shareholders is 1, no nominal service is provided.

Share capital

Current Dutch law does not impose a minimum authorised capital requirement on a BV company. A minimum capital payment of 1 euro cent (in cash or property) can be made at the time of registration. The capital is divided into shares and their value can be denominated either in euros or in foreign currencies.

Charter

BV's main corporate document, written in Dutch. A BV company is incorporated upon the approval of the Charter by a Dutch notary, who in most cases also completes the company registration procedure by filing an application to the Commercial Register and registering the company with the Dutch Tax and Customs Administration.

Directors

The director of a BV company may be an individual or legal entity, regardless of their nationality, state of incorporation or state of tax residency. The minimum number of directors is 1. The same person is entitled to act as sole shareholder and sole director at the same time.

The opportunity to start operations before the final registration of the BV

Dutch law allows for the entrance into transactions on behalf of a BV company that is in the process of registration. The actual moment of incorporation of the BV company is considered to be the approval of the Charter by a notary, it can start operating from this date, and not from the date of the entry of the BV company in the Commercial Register.

Shareholders' meetings

There is no requirement for the frequency of shareholder meetings. They are permitted outside the territory of the Netherlands.

For investment and international business purposes, two formats are the most suitable - BV and CV.

Details about them are given below.
Characteristics Dutch Limited Liability Company Dutch Limited Liability Partnership
Share capital Formal, from EUR 0.01 There are no requirements
Own registered office Required Same
Types of shares There are options, details-from our experts Not applicable
Participants, minimum requirements 1 director, 1 shareholder (Individual / Legal Entity) 2 partners (Individual / Legal Entity)
Nominal service Allowed Same
General meetings Required, without geographical reference Same
Taxes For profit (25%, possible exemption), for dividends (15%, 0% or under the DTT agreement) At the personal income level of partners, corporate governance is absent
Access to information In the Netherlands, the register of directors is open, shareholder information is private. A classic limited liability company would therefore be well suited to an offshore business. Not applicable
Accounting services Required Same
Annual report Required Same
Where company documents are stored There are no restrictions Same
Duration of the document processing procedure Standard – 1-2 weeks Same

Disclosure of corporate information

The shareholders and directors of Dutch companies are entered into a centralised register, of which the Commercial Register is the authorised body. The names of directors, shareholders and proxies, information on share capital, branches, etc., are publicly available and are made available to third parties for a fee after registration on the official portal of the Commercial Register.

Without registration and payment of the registry statement, it is possible to obtain information about the company in a limited amount, namely the name, registration number and registration address. The portal is searched by the company name or registration number, and some pages are only available in Dutch.

Regarding the register of beneficial owners of Dutch companies, legislation introducing this institution is currently in the final stages of being adopted. It stipulates that a beneficial owner is an individual who directly or indirectly owns more than 25% of the shares, stock or voting rights in a company, or who otherwise exercises control over the company.

The beneficial ownership register in the Netherlands will also be publicly accessible, whereby third parties will be able to obtain the following information on the beneficiaries: name, month and year of birth, nationality and country of tax residency. At the moment there is no precise information on when the centralised register itself will be established and what the conditions for access to it will be (registration, payment, etc.), since the consideration of the relevant draft law has been postponed indefinitely.

Taxation

Income tax

Companies registered in accordance with the laws of the Netherlands (the"criterion of the place of incorporation") are recognised as residents of the Netherlands. In certain cases, foreign organisations that are managed and controlled from the territory of the Netherlands (under the "place of management" criterion) may also be recognised as residents.

The object of taxation is the global income of resident companies. In the case of non-resident companies, income from sources in the Netherlands is subject to taxation. The tax base is defined as income reduced by the amount of expenses. As of 1 January 2019, it is possible to carry forward a loss to the 1st preceding tax period, or to the subsequent 6 tax periods.

The Netherlands applies a progressive income tax scale – in 2020, 16.5% is charged on profits up to 200,000 euros and 25% on profits over 200,000 euros. In 2021, there will be a reduction of 15% for amounts up to 200,000 euros and 21.7% for amounts over 200,000 euros. Further revisions of tax rates are also possible.

The tax period for corporation tax is generally recognised as the calendar year, unless the company's Charter provides for a different "12-month" period. Companies have the right to set a period that does not correspond to 12 months (upwards or downwards) in the year of incorporation.

Dividends

Dividends and capital gains received by a Dutch company from its subsidiaries as a result of the alienation of property or property rights may be exempt from income tax if several conditions are met:

  1. the Dutch company owns at least 5% of the capital of the subsidiary; and
  2. less than 50% of the subsidiary's assets are portfolio investments. In other words, the activities of the subsidiary must be operational (active); or
  3. the activities of the subsidiary are taxed at a "reasonable" rate based on Dutch tax principles (i.e., not located in an offshore or low-tax jurisdiction).
Withholding tax at the source of payment

As a general rule, dividend payments to non-residents are subject to withholding tax in the Netherlands. The basic rate is 15%, but can be reduced if the Netherlands has a valid DTT with the State of which the recipient of the dividend is a resident.

It is also possible to be fully exempt from the withholding tax obligation under the EU Parent Subsidiary Directive. This exemption applies if a company resident in any EU member state or the European Economic Area owns more than 5% of the capital of a Dutch company.

Interest and royalties are by default not subject to withholding tax, however, in certain cases interest on intra-group loans between related persons (so-called "hybrid loans") may be reclassified as dividends for withholding tax purposes.

Value Added Tax (hereinafter referred to as VAT)

The sale of goods, their acquisition for business purposes and the provision of services are subject to VAT. The basic rate is 21%, and for certain types of goods, such as food, medicines and books, a reduced rate of 9% may be applied.

There is no minimum turnover threshold under Dutch law for VAT registration, therefore, all Dutch companies that are VAT payers are required to be registered for VAT. In contrast, the tax period for VAT is determined on the basis of a company's turnover and may be a month, a quarter or a calendar year. After the end of the tax period, a VAT return must be submitted and the tax must be paid to the budget.

Reporting

As mentioned above, the most common tax period for income tax is a calendar year. Within 5 months after the end of the year, companies in the Netherlands must submit an income tax return to the tax authorities.

There is also a requirement to produce financial statements and keep them for at least 7 years at any address at the discretion of the company directors (not necessarily in the Netherlands). Companies are allowed to report both in euros and in other currencies chosen as the operating currency. Similarly, both Dutch and other languages are acceptable for reporting.

The scope of financial reporting depends on whether the company in question is classified as a micro, small, medium or large company according to the following criteria:

Microenterprises Small companies Medium-sized companies Large companies
Net turnover (in euros) No more than 700,000 From 700,001 to 12,000,000 From 12,000,001 to 40,000,000 Over 40,000,000
Net asset value (in euros) No more than 350.000 From 350.001 to 6.000.000 From 6.000.001 to 20.000.000 Over 20.000.000
Number of employees No more than 10 From 11 to 50 From 51 to 250 Over 250

Micro-enterprises only have to draw up and submit a balance sheet and notes to the tax authorities, while small companies have to draw up a balance sheet and notes to the tax authorities. The scope of reporting for medium and large companies is broader: the director's report, financial statements (balance sheet and profit and loss statement with notes), and the auditor's report must be filed. The auditor's report can be drawn up by competent experts both in the Netherlands and in any foreign country.

DTT of Russia and the Netherlands

The Agreement between the Government of the Russian Federation and the Government of the Kingdom of the Netherlands of 16.12.1996 on the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and Property applies between Russia and the Netherlands.

In accordance with this Tax code, dividends are taxable both in the state of tax residency of the dividend payer and in the state of tax residency of the recipient. However, the withholding tax cannot be exceeded:

  1. 5% of the dividend amount if the dividend recipient company holds at least 25% of the capital of the company paying the dividend and its investment in the capital of such company is at least €75,000;
  2. 15% in all other cases.

The traditional double taxation mechanism then applies: the tax withheld at source in the payer's state is deducted from the amount of tax payable in the state of the recipient of the dividends.

Under the DTT, interest and royalties are taxed only in the state of the recipient of these types of income according to its domestic legislation, i.e., they are not subject to withholding tax in either Russia or the Netherlands.

Note that in 2020 the Russian authorities announced a programme to revise certain DTTs to impose a 15% withholding tax on all payments of both dividends and interest from Russia abroad. There is no precise information on the applicability of this programme specifically to the DTT of Russia and the Netherlands, however, the Russian position is that a unilateral withdrawal by Russia from the DTT is possible if the request to modify the relevant conditions of the DTT is refused.

Participation of the Netherlands in the international exchange of information

Most of the current Dutch DTTs contain conditions for the exchange of information on request for the implementation of tax administration of the international activities of residents of the Netherlands. In addition to the DTT, the Netherlands has also entered into separate bilateral tax information exchange agreements on request with several offshore jurisdictions (Anguilla, Antigua and Barbuda, British Virgin Islands, Belize, Bermuda, Grenada, Dominica, Cayman Islands, etc.).

The Netherlands also carries out the automatic exchange of tax information as a signatory to the Multilateral Competent Authority Agreement, MCAA). Under the MCAA, the Netherlands put the automatic exchange into practice in 2017.

According to the official portal of the Organisation for Economic Cooperation and Development (OECD), the Netherlands has automatic exchanges with 70 jurisdictions, including Russia. Therefore, the accounts of Russian tax residents and the accounts of foreign companies controlled by them opened with Dutch banks and other financial institutions can be sent to the Russian tax authorities.

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