The Best legal and tax offshore jurisdiction. Advantages of Company and domiciliation in the Netherlands.
Why is The Netherlands the best offshore jurisdiction ?
Holland provides a strategic location to serve markets within Europe, the Middle East and Africa. Indeed, The Netherlands has a central geographical position, combined with accessibility and an excellent infrastructure. These are only few reasons why numerous European, American and Asian companies are establishing their facilities in the Netherlands. Below, we describe why the best strategy of offshore jurisdiction is to make your investment in or via the Netherlands. The main reasons relate to the exceptional tax and legal environment.
A competitive Tax climate
The Dutch tax system has a number of features, being very beneficial in international tax planning. Generally, these items are concerning both natural as well as legal persons.
First, the corporate income tax rate in the Netherlands is of 20 percent on the first €200,000. Even if it reaches 25 percent for taxable profits exceeding €200,000, it makes it one the lowest in Europe. Secondly, the Dutch ruling practice provides clarity and certainty in advance on future tax positions. Indeed, this is a pre-requisite for any foreigners willing to establish in an offshore jurisdiction.
Moreover, in respect of R&D, companies benefit from the innovation box resulting in an effective corporate tax rate of only 5 percent. In addition, the R&D allowance WBSO, taking the form of wage tax and social security contribution deductions foster the attractively of the Netherlands. Furthermore, it includes a corporate income tax deduction facility for R&D costs (RDA).
The Dutch tax law also provides the participation exemption. This scheme states that all benefits like dividends and capital gains related to shareholding are tax exempt from CIT. Presently, tax consolidation relating to the fiscal unity regime, freely offset profits and losses among group members.
The Netherlands has very low or no withholding taxes on royalties, dividends and interest. Indeed, this enable actors to benefit from interesting tax planning opportunities. These advantages are involving tax efficient structures for royalties, dividends and interest.
Finally, there is the 30 percent ruling, which is a tax-free reimbursement of 30 percent of the employee’s salary. This is the case if the employee results in a recruitment from abroad. The worker has to demonstrate a specific expertise scarce in the Dutch labor market. Basically, the top 30% of the income from employment benefits from a conversion into a tax free remuneration.
An International Treaty Network
The tax systems in Netherlands provides real advantages in debt and loss structuring. In addition, the country has a a wide tax treaty network. As a consequence, it is resulting in reduction of withholding taxes on dividends, interests and royalties.
At the same time, the wide network of Bilateral Investment Treaties (BIT’s) are protecting investments made by a Dutch (legal) person in other countries. This safety protects against expropriation or unfair treatment with a basis for a direct claim against a country.
A competitive and flexible company legal system
Since the new company law of October 1st, 2012, the new legal system changes in a favorable way. As a result, the Netherlands offers a greater flexibility when setting up a local company.
First, there is no minimum capital required anymore to create a dutch company. Additionally, there is no requirements for an accountants declaration regarding contributions in kind.
Secondly, the new reform is modifying the bank system. Indeed, there is no requirements for bank declaration anymore regarding initial cash contributions. Furthermore, the denomination of the shares are now possible in other currency than the euro.
Concerning the share framework, it is possible since 2012 to issue shares without voting rights. This also the case for shares without profit right. Finally, shareholders meetings do not have the obligation to be formally occurring within the Netherlands territory anymore.
For foreign companies wishing to establish their business in the Netherlands and to take advantage of the Dutch business environment as a strategic base to cover Europe, contact us.
