The Bill initiated by Snels (Groenlinks) aims to secure the dividend tax claim on the (deferred) profit reserves of multinationals' headquarters established in the Netherlands by means of a final settlement obligation for the following four types of cross-border reorganisations:
• The first cross-border restructuring to which the proposed conditional final settlement obligation applies concerns the transfer of the registered office of a company established in the Netherlands to a qualifying state.
• The second cross-border reorganization that triggers the proposed conditional final settlement obligation is a cross-border legal merger whereby a company established in the Netherlands disappears and the assets are transferred under general title to a company established in a qualifying state.
• The third cross-border restructuring that leads to the proposed conditional final settlement in the dividend tax is a cross-border division in which the assets of a company established in the Netherlands are transferred under a general title to a company established in a qualifying state. It may concern a pure cross-border division in which the company established in the Netherlands disappears or a cross-border division in which the company established in the Netherlands continues to exist.
• The fourth cross-border restructuring brought under dividend tax under the proposed conditional final settlement obligation is a cross-border share merger. In short, such a merger is described in the bill as the takeover of more than 50% of the shares in a Dutch company by a company in a qualifying state against the issue of own shares.
The proposed final settlement obligation only applies if the company is located in a so-called «qualifying state» that the Dutch dividend tax claim does not typically «after a transfer of registered office, the acquiring company in the event of a legal merger or division or the acquiring company in the case of a share merger. takes over »as a result of which the dividend tax claim falls between two stools. In these cases, there is an international fiscal mismatch because the tax systems of countries do not match. It is important that the proposed final settlement obligation does not result in an international double withholding tax and that the avoidance of tax on dividend income by shareholders worldwide is (partly) prevented by means of a withholding tax on dividends.
Qualifying states are primarily states that have no withholding tax on dividends comparable to the Dividend Tax Act 1965. Secondly, states that qualify the transferred (deferred) profit reserves in the context of a cross-border reorganization as paid-up capital for the levying of a withholding tax similar to the Dividend Tax Act 1965 ("step-up countries").
The conditional final settlement obligation has been formulated on the basis of an assumed distribution of the «pure profit» present at the company. By this is meant everything that is more than the paid-up capital, so that it includes not only open but also undisclosed reserves.
The bill contains an additional measure partly with a view to securing the Dutch dividend tax claim upon seat transfer. The additional measure means that a company that is incorporated under foreign law and that has been established in the Netherlands for at least two years after the transfer of the registered office (actual management) abroad for a period of ten years for the application of the The Dividend Tax Act 1965 is deemed to be established in the Netherlands.
The conditional final settlement obligation included in the bill and the extension of the location fiction will take effect retroactively up to and including the submission of the bill to the House of Representatives.
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NAZALI TAX & LEGAL |