Doing Business in the Netherlands 2012 - American Chamber of ...

Under the grandfathering rules, foreign losses that have been deducted
prior to the introduction of the base exemption will not be subject to
immediate recapture and will continue to be subjected to the old
recapture rules.
18.3 Branch versus Subsidiary
As indicated above, branches and subsidiaries are taxed virtually on
the same basis, especially once the announced foreign branch
exemption will be introduced.
The main differences are described below.
a) Most tax treaties provide that certain auxiliary activities
carried out in the Netherlands do not constitute a branch for
corporate income tax purposes and, as a result, do not give
rise to Dutch taxation. This exception does not apply to
Dutch subsidiaries.
b) Profits from a Dutch branch may be transferred to its
headquarters free from any withholding tax. Dividends paid
to a foreign parent company are, however, subject to Dutch
dividend withholding tax at the ordinary rate of 15% (reduced
to a lower percentage, or even to zero, by virtue of a tax treaty
or EU regulations).
c) Interest paid by a subsidiary on loans and royalties is, in
general, tax deductible if it is at arm’s length (however, see
section 18.6 Limitations on deductions of interest of this
chapter). Internal interest and royalty payments are not taken
into account between a branch and its headquarters.
18.4 Dutch Participation Exemption
18.4.1 Basic Rule
The Dutch participation exemption provides for a full exemption of all
benefits (both dividends as capital gains) derived from a qualifying
170 Baker & McKenzie