The changes to the Dutch participation exemption regime per 1/1/2007 had a deeper impact on international tax structurings via the Netherlands than was anticipated by the Dutch Ministry of Finance. In fact, the Dutch government, by making several substantial changes to the participation exemption system which the Netherlands employs to avoid international double taxation of company profits, has unintentionally introduced a ”notional interest deduction” into the Dutch corporate income tax system.

This tax product is only available on a success fee basis. We will arrange for the country specific tax research including confirmations that this tax product works from reputable firms in the country of the investor and the country of the investment. We will also help create, with our licensed fiduciary services partners, the ”key” Dutch legal entities needed in the structure and arrange for the tax paragraphs in the intercompany agreements. Once this ”package” is complete, the top company, and therewith the entire structure, will be sold by the Dutch incorporators (a fiduciary services provider) to the investor, against an earn-out which equals a percentage of the annual tax savings which the investor is able to achieve with the structure. This percentage is negotiable but will be between 10 and 25% depending on investment size and the client’s bottom line tax reduction.

Detailed information on this opportunity, which is available for investments in very many countries in very many types of industries, for investors all over the world, is available from jos@merlyn.eu.

Tax advisers who bring clients to us for this ”tax product” will be able to do so under an ongoing profit sharing arrangement. Tax advisers who are prepared to provide us with initial tax research on the relevant tax rules of their country, as an investment location, including issuing a tax opinion or comfort letter thereon, will be able to do so under an ongoing profit sharing agreement as well. So do not hesitate to contact us to find out more about this exciting opportunity. Holland still offers a 100% participation exemption (versus e.g. Belgium and France who offer only a 95% exemption) also for dividends resulting from low taxed or even non-taxed foreign profits such as from the Cayman Islands or the UAE. Many countries, such as the UK, France, Belgium and Luxembourg still demand underlying tax before their participation exemption can be invoked.

Before showing you how it works, we may ask you to sign a confidentiality / non-diclosure agreement. In our 2008 contribution to the Euromoney Corporate Tax Handbook (Chapter 21, third paragraph) we have already, albeit briefly, described the basics of our idea. Please have a look at this article in our Publications section, elsewhere on this website.