Taxation and File Sharing in Mergers and Acquisitions for the Netherlands

In recent years, the Dutch tax regime for mergers and acquisitions that cross borders has seen major changes. These changes impact the fundamental decisions that prospective buyers must take. This includes deciding whether or not to purchase shares or assets and what acquisition vehicle is used. This article briefly outlines some of these developments, which are based on the tax laws in place up to and including the Tax Plan 2021, which was enacted in 2019.

The most common way for a party to acquire control over a Netherlands-incorporated company is through a public bid for all issued shares. It is typically the form of a swap for shares however, it can also include securities. bonds and convertible instruments). In rare cases an offer can be made on securities that represent less than 30% of voting rights within the target. America Movil’s partial bid for KPN in 2012, and Pon Holding’s bid to purchase Accell Group in November 2018).

A statutory merger is another option to take control of the assets of a Dutch company. The surviving company taking over by law all assets and liabilities of one or more of the disappearing companies and shareholders who are dissident have appraisal rights that allow them to leave in exchange for cash compensation. The post-bid cash out merger between Wright Medical Group with a Stryker subordinate in 2020. Statutory mergers can be domestic or cross-border within the European Economic Area (EEA) but not between a Netherlands-incorporated company and a foreign company (e.g. an Delaware corporation).

The acquiring company must be a Dutch public liability company (NV) with its headquarters in the Netherlands, or in cases of abuse, a hybrid entity as defined in a Dutch/EEA Tax Treaty. Furthermore WHT — equal to the highest CIT rate — will apply to arm’s-length interest and royalty payments between an affiliated entity based data room services for business development initiatives amsterdam in the Netherlands and an affiliate that is based outside of the Netherlands, unless they are attributable to a permanent establishment (PE) in the acquiring country.