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

e) The shares acquired by the transferring company are not
disposed of within three years.
Under Dutch tax law, mergers and demergers may be exempt from
Dutch corporate income tax, provided that certain requirements are
met. In general, the legal merger and demerger exemption does not
apply if the merger/demerger is predominantly pursued with the aim
of avoiding or deferring taxation.
The Ministry of Finance issued several regulations in the form of
“standard conditions” that must be met for the merger exemption to
apply. This exemption has undergone only technical changes as a
result of the implementation of the EC Merger Directive. For
instance, the exemption is also applicable if a permanent
establishment of a non-resident company is converted into a resident
company. In principle, this exemption will apply only insofar as the
transfer of assets leads to a full financial and economic integration of
the business involved.
18.12.2 Merger by Share-for-Share Exchange
As a result of the implementation of the EU Merger Directive, it is
possible for a non-resident taxpayer (e.g., an individual) holding
shares in a Dutch corporation to exchange those shares for shares in
another EU corporation without triggering Dutch corporate income
tax. Once again, specific requirements must be fulfilled. One of the
most relevant conditions is that both EU corporations involved in the
merger must be qualified corporations. Furthermore, the (acquiring)
corporation must acquire more than 50% of the voting shares in the
Dutch corporation.
18.12.3 Legal Merger
The Corporate Income Tax Act of 1969 also provides for the “legal
merger” facility, whereby the assets and liabilities of the absorbed
company are passed on to the absorbing company and the absorbed
company itself ceases to exist. The shareholders in the absorbed
company receive shares in the absorbing company. The two
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