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

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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 190 Baker & McKenzie
Doing Business in the Netherlands 2012 companies are basically amalgamated into one, without the need to liquidate the absorbed company. Alternatively, a new third company can absorb the assets and liabilities of the two former companies. One of the conditions for a legal merger is that the qualifying companies involved are tax resident in the Netherlands, the EU, Iceland or Norway. In practice, the tax treatment of a legal merger will be similar to that of a business merger. 18.12.4 Demerger In general, the legal demerger of companies allows the transfer of all or part of the property, rights, interest and liabilities of one legal entity to one or more other legal entities by means of a universal transfer of title, i.e., without the separate transfer of all of the assets and liabilities. The main principle is that the shareholders of the legal entity being demerged all become shareholders of the transfereecompany (i.e., the acquiring company or companies). In general, two main types of demerger may be distinguished: a) A full demerger whereby the property, rights, interests and liabilities of a legal entity that ceases to exist on completion of the demerger are acquired by two or more other legal entities. b) A partial demerger involving a split whereby all or part of the property, rights, interests and liabilities of one legal entity are acquired by one or more other legal entities (the original legal entity does not cease to exist on completion of the demerger). Demergers may be effected without incurring corporate income tax under certain conditions, which is quite similar to the condition for the transfer of assets. 18.13 Fiscal Unity The CITA 1969 provides for a fiscal unity regime that, subject to certain conditions, permits companies that are members of a fiscal unity to file a consolidated tax return. Upon request, companies that are tax residents of the Netherlands (a NV, BV, a cooperative, or a mutual guarantee association) may form a fiscal unity with Baker & McKenzie 191
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Editorial Contributions Robert van
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Innovative ways to inform you Doing
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1 The Netherlands Doing Business in
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Steady-Course Policy Doing Business
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2 Legal Forms of Doing Business Doi
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2.3 Branch versus Subsidiary Doing
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4 The Subsidiary 4.1 Incorporation
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8 Commercial Contracts 8.1 General
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9 Real Estate 9.1 Ownership Doing B
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9.7 Leases Doing Business in the Ne
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10.5 The European Economic Area Doi
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12 Telecommunications 12.1 Market S
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12.9 Net Neutrality Doing Business
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14 Labor Law 14.1 Term Doing Busine
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14.4 Works Council Doing Business i
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23.3.3 Product Liability Doing Busi
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24.13 Arbitration Doing Business in
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Tax Corporate & International Tax H
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