Royalty conduit companies which enter into cross-border leasing, -licensing or -consulting agreements with affiliated companies are subject to a set of ”substance” rules in the Netherlands as from 1/1/2006; some of which are quite unfavourable and at minimum rather costly compared to the system in place in the Netherlands till 31/12/2005. See our publications section for articles we have written about these rules in International Tax Review in the past, which deal with the need to restructure such conduits to avoid an international exchange of tax information.

We offer a ”third party” royalty conduit concept which is not affected by the new rules, which were written for royalty conduit entities dealing with affiliated entites, as follows:

– you will use a dedicated Dutch legal entity (special purpose company) for your royalty conduit purposes;
this entity will be owned by Dutch residents and not by one of your own group entities;

– it can either be newly incorporated for you, or the Dutch fiduciary service provider purchases your existing entity and continues the royalty conduit business it already has, but against much less cost and tax risk than before;