Taxation and File Sharing in Mergers and Acquisitions for the Netherlands

The Dutch tax framework for international mergers and acquisitions has seen significant changes in recent years. These changes will affect essential decisions a potential buyer must take. This includes whether to purchase assets or shares, as well as what is the best vehicle for acquisition. This article will discuss these changes in a brief manner, based on current tax laws, up to and including Tax Plan 2021, which mainly came into effect 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. This is often a share-for-share swap, but can also involve securities (e.g. convertible instruments and bonds are two examples of securities that may be traded. In rare cases an offer can be made on securities that comprise less than 30% of voting rights within the target. America Movil’s bid for KPN, in 2012 as well as Pon Holdings in its bid for Accell in November 2018.

A statutory merger is yet another option to take control of a Dutch company. The surviving company acquiring by law all assets and liabilities of one or more disappearing firms, while dissenting shareholder have appraisal rights which allow them to leave in exchange for cash compensation. The post-bid cash out merger of 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. a Delaware corporation).

The company that acquires the rights must be a Dutch public liability company (NV) based in the Netherlands or, in cases of misuse, a hybrid entity according to the terms of a Tax Treaty between the Netherlands and the EEA. In addition, the WHT equal to the highest CIT applies to royalties and interest made between an affiliated https://rietvelddejong.nl/onehub-ansarada-firmex-top-vdr-providers-in-the-netherlands/ entity located in the Netherlands and a subsidiary located outside the Netherlands unless the payment is due to a permanent establishment in the country that is acquiring.