In recent years the Dutch tax environment for mergers and acquisitions with a foreign partner has undergone major changes. These changes affect fundamental choices that buyers must take. This includes whether to purchase assets or shares, and what will be the appropriate vehicle to purchase. This article discusses these developments briefly, with reference to the current tax legislation including Tax Plan 2021, which was largely implemented 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 comprise less than 30% of voting rights within a targeted. America Movil’s bid for KPN in 2012 as well as Pon Holdings’ bid for Accell in November 2018.
A Statutory merger is an alternative way to acquire control of a Dutch-incorporated business. This entails a surviving company taking over all the liabilities and assets of one or more disappearing companies by operation of law, and shareholders who do not agree with the merger being granted appraisal rights allowing them to exit against cash compensation (e.g. 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 the acquiring company must be a Dutch public limited liability company (NV) established in the Netherlands or, in abuse circumstances the hybrid entity must be a member of an agreement on taxation between the EU and Netherlands. Additionally WHT — which is equal to the highest CIT rate — will apply to interest paid at arm’s length as well as royalty payments between an affiliated entity established in the Netherlands and an affiliate established outside of the Netherlands, except if they are attributed to a permanent establishment (PE) in the acquiring country.
