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

Doing Business in the Netherlands 2012
shares in the vehicle, unless this latter entity is quoted on a
financial market under the Financial Supervision Act.
With regard to requirements (e) and (f), we note that under certain
conditions, the Dutch tax authorities accept that these requirements are
not yet fulfilled during the two years following the incorporation of
the FBI. Fiscal reserves or goodwill will be taxed at the moment the
FBI regime becomes applicable. However, the regime cannot apply
automatically.
Real estate development activities are now allowed by the FBI or by
100% subsidiaries of a FBI, under the following limitations:
a) The FBI is allowed to hold shares in a subsidiary that
conducts real estate development activities. Such subsidiary
will be taxed against the regular 25% corporate income tax
rate. The FBI is explicitly not allowed to develop real estate
in the FBI itself.
b) If the FBI wishes to develop its own real estate investments,
the subsidiary may develop the real estate held by the FBI in
exchange for an arm’s-length remuneration. The result is a
taxable development activity at the level of the subsidiary and
exempt Passive Investment income at the level of the FBI.
c) The renovation of real estate by the FBI itself is also allowed
as long as the costs related to the renovation stay within 30%
of the fair market value of the real estate.
As of 1 January 2008, a new credit mechanism has been introduced
for FBIs. Based on this credit mechanism, Dutch dividend
withholding tax to be paid by the FBI to the tax authorities may be
reduced by the Dutch and foreign withholding tax levied on the
investment income of the FBI.
If an FBI no longer meets one or more of the above-mentioned
requirements in a certain financial year, it loses its status as FBI.
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