In Holland a professional investor may use various vehicles on the funds market. UCITS (Undertakings for Collective Investments in Transferable Securities) and AIF (Alternative Investment Fund) are the most common vehicles that can be marketed in the European Union.

Taxation is among the main considerations in investment fund set-up. In this respect Holland is a very attractive jurisdiction.

If you need further information on the taxation of investment funds in Holland, please, contact our advisors in company formation.

Tax treatment of investment funds (IFs) in Holland

Dutch IFs can qualify for one of three tax categories:

1. tax-exempt IFs;
2. fiscal IFs;
3. tax-transparent IFs.

Each category brings particular tax advantages.

Tax exempt Dutch IFs

Under particular conditions hedge funds and open-end retail funds may be exempt from withholding and corporate income taxes. A main requirement that needs to be fulfilled is the issue of a license by the National Authority for the Financial Markets (AFM).

Fiscal IFs taxation in Holland

Fiscal IFs are not subject to corporate income tax. A withholding tax of 15% applies to the dividends distribution, unless provided otherwise by a treaty for double tax avoidance signed by Holland. In order to receive such tax treatment, the fund has to be incorporated as a public or private Dutch company with limited liability.

Our local registration agents can assist foreign investors in establishing Dutch investment funds.

Tax-transparent IFs in Holland

For the purposes of taxation, a Dutch IF may be deemed transparent if:

1.  the IF is not considered a legal entity with respect to withholding and corporate income tax;
2. the IF is a closed-end fund for mutual account (in Dutch : fonds voor gemene rekening, FGR);
3. the IF or its managers do not have a registered Dutch seat;
4. the IF is not licensed by the National Authority for the Financial Markets.

If you need further information regarding the tax requirements for Dutch investment funds, please, contact us

Have you been thinking about starting a company? But has the whole Brexit situation left you confused and a bit unmotivated? Don’t worry; you are not the only one. Many start-ups as well as already existing business owners in the UK are contemplating their next move, figuratively as well as literally speaking.

Most business owners want to avoid becoming detached from the EU, since this would entail a significant loss in various benefits. Just think about factors such as the single market, the free trade possibilities and freedom of movement you would suddenly miss out on. To ensure you can still benefit from owning a business in one of the EU-member states, consider starting a Dutch business. In this article, will explain why this is a good idea.

What do most start-ups and aspiring entrepreneurs deem important?

The New York Times published an article exactly in the middle of 2016, in which was already foreseen that a lot of UK entrepreneurs would be actively looking for a new home for their businesses. They also published a list of criteria that seem to be important during the decision-making process:

• A high proficiency of the English language
• A good regulatory environment
• An excellent transportation infrastructure
• An equally good communications infrastructure
• Possibility to acquire prime office space
• Luxury housing options
• High quality schools
• Excellent restaurants and cultural opportunities
• “An intangible quality that includes a certain energy level and openness to an influx of highly paid, competitive City of London-Wall Street types.”[1]

Not surprisingly, Amsterdam was then named the winning city for relocation!

Why would you choose the Netherlands to start your company?

According to the same article, the Netherlands and specifically Amsterdam really is the best alternative for London: “Not only do 90 percent of the Dutch speak English, many speak it better than the English themselves. Its schools are ranked the best in Europe, and there are plenty of English-language options. The city has beautiful architecture and housing options, picturesque canals, excellent restaurants, music and theater, lively night life, and a cosmopolitan and tolerant attitude cultivated over centuries as a major global trading center. It has one of Europe’s best airports, ranked just behind Frankfurt and Vienna, and an excellent rail network connecting major European capitals, including London. It’s a short train ride to Brussels, the capital of the European Union. Amsterdam is already a center of international commerce and the financial and political capital of the Netherlands.”[2]

Intercompany Solutions can help you with the entire procedure of setting up your business in the Netherlands

Next to the country-specific benefits, the fact that the Netherlands is a highly valued member of the EU will also have a hugely positive impact on your business. Also; until 29^th of March and probably during the transition period too, you will still be able to apply for a self-employed or start-up permit as an EU-citizen. So use this opportunity to start a Dutch business easily. We will help you every step of the way, simply get in touch with us to initiate the process.

[1] Stewart, J. B. (2016, 30 June). After ‘Brexit,’ Finding a New London for the Financial World to Call Home. Link: https://www.nytimes.com/2016/07/01/business/after-brexit-finding-a-new-london-for-the-financial-world-to-call-home.html?_r=0.

[2] Idem

If you ever dreamed about setting up an your own business as a young entrepreneur, the Netherlands might just be the place to initiate your endeavor. Not only will you have access to the entire European single market, but this technologically advanced country offers many benefits that will quickly help your business grow. There are many opportunities available, for example to start an online business; you just need to know where to look and when to take action. Read on for some tips and valuable information that will help you during the process of setting up a Dutch online business as a young entrepreneur.

Why choose the Netherlands to start a new business?

The Dutch have continuously proven to be stable, dependable and welcoming to foreign investors and entrepreneurs. But Holland also excels in innovative technologies, IT and e-commerce. If there is a new gadget, app or tool on the market; chances are at least part of it might have been developed here. This makes the Netherlands extremely suitable for an online business. The Dutch population is also known to be quite internet savvy and knowledgeable, making them perfect potential clients.

Young entrepreneurs have the advantage of naturally being comfortable with many technologies and having an edge over older organisations. This is especially true with disruptive innovations, new approaches and innovating business models in the web and IT sector.

Access to amazing marketing companies

The Netherlands is home to an enormous amount of excellent marketing companies and sales operations. Thus, the online industry is thriving and offer many possibilities for new entrepreneurs. You can count on finding the perfect commercial partner to boost your business to a high level. This will make it possible for you to reach a large amount of national as well as international clients, as most marketing companies offer bilingual or even trilingual services.

The Dutch have access to a high quality IT infrastructure

One of the main factors you will probably be looking for is a technologically advanced country with an excellent infrastructure. An online company cannot exist without these basics, which makes Holland the perfect fit. The Netherlands has multiple airport and seaports, a fantastic road and rail network and a digital telecommunications network that is seen as one of the best in the world regarding speed, quality, and reliability. In other words; you will have access to one of the best infrastructures worldwide. [1]

Lots of opportunities for young freelancers

Online businesses are very versatile nowadays, which means you can sell practically every imaginable product and service online. Especially creative freelancers benefit from the internet as a medium, because it became a lot easier to sell your products to a much wider audience. Creative freelancers will have a grand time in Holland, as the country is bursting with likeminded creative professionals and companies. If you are looking for interesting possibilities for collaboration; look no further. The Dutch creative sector ranks among the world’s top 10 in terms of job opportunities, brands and trade options. [2]

E-commerce and affiliate marketing for startups

Another market that has been thriving is the e-commerce business. In the Netherlands web shops are booming, since a large portion of the population actually prefers to do their shopping online. You can easily create a startup to sell unique handcrafted products, as well as general wholesale items. Another option is to set up a blogging site and become an affiliate for already existing large corporations like Bol.com for example. This is basically a hugely successful Dutch version of Amazon. Becoming an affiliate will allow you to make money by referring clients to their website. The only thing you need is a Dutch online company with a chamber of commerce number and you are good to go.

Economic advantages of youthfull entrepreneurship

The Dutch government is stimulating (youth) entrepreneurship to help combat unemployment and stimulate the economy. It does so by making the regulations increasingly simple, attractive for starting entrepreneurs as well as provide decent possibilities of education in terms of small business management.

So how can our government further improve if effort? Youth Business International made a study with Yecontexts to answer just this question. Providing guidance, performing research on effectivity and identifying the opportunities. Some of these opportunities include;

• Focus on the local target audience
• Keep in mind that ''youth'' is a very diverse target group, with different education backgrounds, experience, interests and values
• Involve the key audiences that can make a positive contribution to the end goal
• Identify specific needs to stimulate female entrepreneurship
• Include cultural biases that might affect your audience

Setting up an online business in the Netherlands is fast and easy

Intercompany Solutions can set up your online company in just a few working days. It’s wise to do some research about the products you wish to sell, if your plan is to set up a web shop. There are certain restrictions or products that require a permit. In all other cases you can start making money almost immediately. If you are interested, you can always contact us for detailed information.

Also see our complete Guide for starting a business in the Netherlands

[1] Infrastructure assets in the Netherlands can help your company grow. Link: https://investinholland.com/infrastructure/

[2] Netherlands Enterprise Agency, RVO. How to start an online business - a checklist. Link: https://business.gov.nl/starting-your-business/checklists-for-starting-a-business/how-to-start-an-online-business-a-checklist/

Tax on income generated by substantial shareholding (Income tax box 2)

If a resident of the Netherlands has a “substantial shareholding” (“aanmerkelijk belang”) with respect to an eligible foreign or Dutch corporation, then the income generated by this shareholding needs to be declared in Box No. 2 of the tax return form for personal income.

In case a taxpayer holds directly or indirectly a substantial share of a corporation, then any income obtained from loans or asset provisions to the corporation is taxable and needs to be reported as derived from other labour in Box No. 1 of the tax return form for personal income.

Read more on Box 2 for Foreign shareholders.

What is a substantial shareholding?

Taxpayers are considered as substantial shareholders if they own, indirectly or directly, alone or with their fiscal partners:

1.  a minimum of 5% of the company’s total share capital (except repurchased shares that will be cancelled);
2. have the rights to acquisition of ≥ 5% of the shares mentioned above;
3. profit shares (or “winstbewijzen” in Dutch) giving entitlement to ≥ 5% of the annual profit or ≥ 5% of any liquidation proceeds;
4. a minimum of 5% of the rights to a vote in a Cooperative (or “Coöperatie” in Dutch) or an Association on a Cooperative Basis (“coöperatieve vereniging”).

The criteria listed above are valid both for legal and economic ownership in its various forms.

The rules for substantial shareholdings apply to options to acquire profit shares / shares in the same manner as to underlying profit shares / shares.

The principles of taxation of substantial shareholdings are basically the same for Mutual Funds (FGRs), Cooperations and Associations on a Cooperative Basis: all these entities are treated as corporations.

In case one corporation owns shares of different classes, the 5% criterion is valid for each class separately. Share classes are determined by special rules.

In case a taxpayer is classified as an indirect or direct substantial shareholder, other owned profit shares / shares issued by the subsidiary also belong to the substantial shareholding and therefore are subject to the same rules.

Substantial shareholders’ taxable income

The substantial shareholders’ taxable income is formed by the regular profits generated by the shareholding (e.g. dividends) minus allocable expenditures and by the capital gains obtained through transfers of shares included in the shareholding. Personal allowances can be deducted from this income.

If certain conditions are fulfilled, the income received from inherited substantial shareholdings can be subtracted from the price of acquisition of the shareholding for a period of two years.

Can we help you?

Our qualified tax advisors can provide consultancy on your tax position. They can also prepare and file your yearly income tax report and handle other issues related to tax compliance in your name. If you need further information or assistance, please, contact us.

A characteristic feature of the tax system in the Netherlands is the option to consider the treatment of particular transactions or operations with the tax authorities in advance. The Tax Administration may give you advanced clearance. The National Tax Authorities can conclude two types of agreements with the taxpayers: an Advance Pricing Agreement (APA) or an Advance Tax Ruling (ATR).

APAs are agreements where the Tax Authorities specify the method of pricing that will be applied by the taxpayer to company-related transactions. This programme gives taxpayers the option to resolve or avoid potential or actual disputes on transfer pricing in a cooperative, proactive manner.

ATRs are agreements with the Tax Authorities that determine the legal obligations and rights of the taxpayers in their specific situations.

APAs and ATRs are binding both for the Tax Authorities and the taxpayer. Their conclusion is subject to particular substance requirements. Generally the Tax Administration is able to process requests for ATRs, APAs and other inquiries (for instance for VAT registration, fiscal unity or facilitated merger) without significant delays.

The EU law requires the Tax Authorities in Holland to automatically exchange data on APAs and ATRs with the National Tax Authorities in other Member States. The Tax Administration has prepared standard documents that taxpayers fill in to conclude cross-border rulings or arrangements with respect to transfer pricing. All National Tax Authorities in the EU are required to exchange such information. This improves the transparency with respect to corporate taxation in the Community. Eventually the EU may also start exchanging similar information with National Tax Authorities in non-members.

Cooperative compliance

If certain conditions are fulfilled Dutch businesses can apply for the so-called horizontal monitoring (enhanced relationship with the National Tax Authorities). Horizontal monitoring is a type of voluntary cooperative compliance where the organisation concludes a specific agreement with the Tax Administration. This provides advanced assurance and security and prevents taxpayers from bad tax surprises. Still the scope of horizontal monitoring includes more than legislative compliance: the business needs to demonstrate that it controls its tax risks and processes by using a Framework for Tax Control.

The National Tax Authorities adjust their monitoring intensity and methods with respect to the taxpayer’s tax control level. Hence their audits will switch from reactive (performed for past periods) to proactive (to provide security upfront). The relationship between businesses and the Tax Authorities in horizontal monitoring rests on transparency, mutual understanding and trust.

The main advantage of this arrangement is the possibility to deal with relevant tax positions and risks at the time of their occurrence within plausible commercial deadlines. Companies are expected to behave transparently in their interactions with the Tax Authorities and, in turn, the administration responds quickly with regard to issues brought to its attention by these businesses. Furthermore the horizontal monitoring programme helps to accurately determine taxable cash flows, current and deferred taxes, and guarantees that companies have few, if any, unsure tax positions. This saves businesses both costs and time. However it is worth mentioning that the Dutch Tax Administration has not yet formulated objective principles regarding the requirements for the Framework for Tax Control.