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

Doing Business in the Netherlands 2012
Cooperative is in principle not subject to Dutch dividend withholding
tax. (we refer to 18.1.6)
18.4.8 Hybrid Instruments
Whether the participation exemption applies to proceeds from hybrid
debt instruments in cross-border situations used to be contingent on
the requirement that these proceeds were non-deductible at the level of
the debtor. The rationale of this requirement was the prevention of
double dip structures resulting from mismatches in the classification
of debt instruments in the jurisdictions involved. The abolishment of
this condition and the extension of the participation exemption regime
to hybrid instruments with certain characteristics might result in
double dip structures allowing a Dutch parent company to derive
exempt benefits from instruments, whereas the remuneration on the
hybrid instrument is deductible in the country of issuance.
18.4.9 Real Estate Companies
Finally, the amendments in 2007 to the participation exemption
regime with respect to real estate companies were particularly
favorable. If more than 90% of the property of the subsidiary (on a
consolidated basis) consists of real estate and that real estate is not
directly or indirectly owned by a fiscal investment institution, the
participation exemption would apply, provided that the parent
company holds at least 5% of the shares in the subsidiary. This “90%
test” must be considered on the basis of the subsidiary’s consolidated
balance sheet, with intercompany receivables and debts being set off
against each other, meaning, they will not have any effect on the
minimum real estate percentage.
The value of the assets must be determined on the basis of their fair
market value. For the years 2007–2009, it is therefore important to
separate, as far as possible, real estate investments from business
activities such as property management. If this is done properly, both
the investment activities (real estate investment) and the business
activities will qualify for the participation exemption.
Baker & McKenzie 175