Royalty Company Netherlands

Advantages to establishing a royalty company in the Netherlands

The main advantage of establishing a royalty company in the Netherlands is that the Netherlands does not levy withholding tax on royalties. The purpose of a royalty company in the Netherlands is to centralize and facilitate the licensing of international intellectual property rights (IP).

Intellectual property, such as a trademark, copyright or patent, grants a license to the royalty company based in the Netherlands for usage of the IP rights.

The royalty company in the Netherlands, in turn, sub-licenses the IP rights to companies all over the world. The royalties paid (free of withholding taxes) may be deducted from received royalties, thus leaving a small taxable gain in the Netherlands.

The main feature for establishing a royalty company in the Netherlands is to lower the liability of global taxation, this is because on receipt of the IP royalties via a royalty company the DTT or double tax treaties with the Netherlands overrule local regulations, thus becoming an effective tool for tax planning.

Not only royalty structures are routed through the Netherlands, the Dutch trust providers also facilitate the formation of international holding companies.

Holding company in the Netherlands

Intermediate holding companies, holding shares of subsidiaries located outside of the Netherlands have the following benefits:

1. Dividends received from any foreign participation can be exempt from corporate income tax. The same exemption rules that sales of shares of foreign participation may also be exempt from corporate income tax.

2. Dividends paid to a foreign parent company by a Netherlands holding have low withholding tax.

3. Various tax treaties under the EU parent-daughter company directive.

4. You may use the royalty company for holding patents, intellectual property, assets and stocks.

Finance company in the Netherlands

In the Netherlands, there is no withholding tax levied on interest. A finance intermediary with the purpose to provide intra-group financial transactions or inter-company loans may lend or borrow funds within its group of companies (internal leveraging). The Dutch tax paid and received on the interest, related to loans can be reduced to near nil, as the paid interest can be deducted from the received interest. Again, a small taxable spread is taken into account for the income tax.

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