The Use of a Dutch Cooperative in International Tax Planning
The most important moment of a corporate structure is when the dividends or capital gains are to be distributed to the shareholders. Especially the distribution of dividends however can incur a large tax burden due to the withholding taxes levied upon distribution. Avoiding these is therefore very beneficial and can be achieved quite easily with the use of a Dutch Cooperative.
A Dutch Cooperative (Coop, in Dutch: 'coöperatie') is an association incorporated by a notarial deed and has legal personality. It should have at least two members at incorporation. After incorporation the Coop can have one member. The liability of the members can be equal, limited to their contribution or excluded. Also a Coop has no minimum capital requirements and it can carry out any type of activity and can act as holding company or finance company.
 The main benefit of using a Coop is that no dividend withholding taxes are levied on dividend distributions by a Coop and that the participation exemption applies to qualifying shareholdings owned by a Coop.
A Coop is subject to Dutch corporate income tax (it is equally taxed as a Dutch BV or NV) and is a qualifying entity under tax treaties as well as for the EU Parent Subsidiary Directive. It can be recommendable to interpose a Dutch BV to avoid unclarities on the use of a Coop with the tax authorities at the level of the subsidiaries. It is possible to obtain an advance ruling on the tax treatment of a Coop.
If structured properly the following structure can be achieved:
The absence of taxes on dividends makes the use of a Coop very attractive in international tax planning as it can be used in holding structures but for instance also in private equity structures.
Private individuals can also act as member of a Coop. With some additional tax planning private individuals may then also benefit from this absence of Dutch dividend tax .
General attractions of Dutch international taxation as from 1 January 2007
 Participation exemption applies if
- BV has ≥ 5% shareholding in subsidiary even if subsidiary is not taxed.
- BV has ≥ 5% shareholding in real estate subsidiary if ≥ 90% of balance total consists of real estate.
Exception: passive finance subsidiary effectively taxed at rate under 10%
 Hybrid Loans
BV grants so called hybrid loan:
- Subordinated
- Indefinite period of time
- Interest depending on profit debtor
In BV interest income treated as tax free capital income.
In subsidiaries interest costs tax deductible.
 Group Interest Box
Possible introduction of group interest box whereby the net income in intra-group loans is taxed in The Netherlands at an effective rate of 5% only.
If opted for, all Dutch group companies are eligible for this tax treatment for a minimum period of 3 years.
Please note that the introduction depends on approval by the European Commission.
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