Weller has a great deal of experience in helping Dutch companies setting up constructions using locations abroad. Or if you’re a foreign company looking to open a branch in the Netherlands, we can help you, too.
Tax treaties and tax treatment
The Netherlands has tax treaties in place with a good number of countries to prevent you from paying double taxation on your income or assets. Thanks to this extensive network of tax treaties in combination with the Dutch participation exemption, in many cases a Dutch holding can receive dividends and revenues from the sale of a foreign subsidiary tax-free.
Discussion with the tax authorities on the question of whether to allocate the profits from your foreign branch to the Netherlands is something you want to avoid. That’s why you need to fix arms-length prices with your business units as if they were independent third parties. Tax authorities, both those in the Netherlands and other countries, are becoming increasingly concerned with this subject.
Weller is a specialist in this transfer pricing issue.
Another important requirement is to create ‘substance’ in the foreign country. This means appointing a management board locally, hiring local personnel and opening a local office. This is also something that tax authorities are taking a closer look at.
Weller has the knowledge to give you the right advice on this.
Although the legislation on this is in the process of being changed, the Netherlands still does not (for now) levy withholding tax on royalties and interest. This is why many companies choose to route their foreign royalty and interest cash flow through a Dutch intermediate holding entity, as a way of reducing the foreign profit. By establishing a royalty company in a country with lower tax rates, what you are effectively doing is skimming the cream from the Dutch profits, and lowering your tax burden here.
Weller can investigate your best options for anticipating the upcoming tightening of the regulations on this issue.
The Dutch tax authorities allocate assets placed in a trust to the underlying trustees. An exception to this, however, is a trust that operates a business and is subject to local profit tax. We can advise you about your options – and risks – in terms of tax purposes.
If any of these questions are things you are concerned with, or if you have other questions that we might be able to answer, call us! We have experience in helping set up tax constructions using locations abroad. And that is knowledge and experience we will be happy to share with you. Setting up branches in multiple countries means you have to really know what you’re doing. Weller knows!
Weller can advise you on the best routes to the maximum profit.