The use of a Dutch Coop as a financial instrument

Due to its gain in popularity, we would like to inform you in this newsflash about some of the corporate characteristics of the Dutch Cooperative and in general the tax aspects of this advantageous entity.

A Dutch Cooperative (Coop, in Dutch: ‘coöperatie’) is established by a notarial deed. The Coop must have at least two members and the corporate seat must be located in the Netherlands. The members of the Coop can both be private persons and corporate entities. There are no statutory minimum capital requirements and the Coop can be incorporated at a much shorter notice than a BV company.

A commonly used structure is when the Coop is the shareholder of one or more Dutch BV’s as a holding company of foreign companies. Please see the figure for clarification.

Using the Coop in a structure like this safeguards the absence of withholding taxes on dividend distributions by the Coop and also that the participation exemption applies to qualifying shareholdings owned by the Coop. As can be seen in the figure the technique can be used to upstream foreign sourced dividends or capital gains through a Dutch holding company to its foreign corporate shareholder involving the Coop as an interposition between the foreign shareholder and the Dutch holding company.

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 may 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.

Upon request we would be happy to answer any questions concerning this subject.
 

VAT 2010: overview of rule changes at 1 January 2010

As part of a large-scale phased amendment of the VAT rules at EC level, a large number of VAT rules will change with effect from 1 January 2010. The most significant change concerns the rules for determining the place where a service is supplied according to the VAT rules, and which country therefore taxes the service (the "place of supply" rules). Business to business supplies of services (B2B) will become taxed in the country where the customer is located. For cross-border transactions between two member states, the recipient will be liable to account for VAT under the reverse charge mechanism. Whereas business-to-consumer supplies of services (B2C) will, in principle, continue to be taxed where the supplier is located.

Apart from the place-of-supply changes, the VAT package contains:

• new procedures for VAT refunds to EU businesses outside their home country. As from 2010 it will be possible for companies to reclaim foreign VAT electronically in their own member state;

• and additional arrangements for the exchange of information between member states' tax authorities, to allow them to keep control under the new rules.

The changes mostly enter into force on 1 January 2010, except for the implementation of some specific items.