March 2004 - The Netherlands

New tax treaty with the United States

On 8 March the Dutch and the American authorities have signed a new protocol to the existing bilateral tax treaty which was originally concluded in 1992. The most important change is that the dividend withholding tax between the two countries has been reduced to 0%. Also the USA branch tax can be reduced from 5 to 0% and the fiscal hurdles for the assignment of employees to the other country will be reduced. The treaty is intended to enter into force no later than on 1 January 2005.

By virtue of the renewed treaty the Netherlands has regained a leading position as favorable jurisdiction for investments into the USA or from the USA into the European Union.

Important requirements for the 0% withholding tax are that the shareholding should reflect at least 80% of the voting power during a holding period of at least one year and that certain substance is required in the country in which the dividends are being received.

Introduction of the Act on the Supervision of Trust Offices

On 1 March the Act on the Supervision of Trust Offices ("the Act") has entered into force. The purpose of the Act is to safeguard the integrity of the trust business in the Netherlands.

Dutch trust offices will have to obtain a license, issued by the Dutch Central Bank ("the DCB") in order to be allowed to provide trust services. The conditions under which the license can be obtained see to the integrity of the persons having interest in or control over the trust office and to the administrative organisation of the trust office.

The requirements by the DCB relating to the administrative organisation see to the trust office's knowledge of the identity and acceptability of its clients and of the clients' source of wealth and funds. Furthermore there should be a clear understanding of the role of the client's Dutch company in the entire corporate structure.

After obtaining the license the trust offices will be subject to ongoing supervision of the DCB. FTC Trust has been closely involved in the process leading up to the Act and we are convinced that this Act will benefit the Dutch trust business.

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FTC Corporate Services B.V.

As a consequence of the above mentioned act we have concentrated our activities for foreign enterprises wishing to establish an active business in the Netherlands in a separate legal entity; FTC Corporate Services B.V. For further information on FTC Corporate Services B.V. and the services it can render I refer to its website www.ftc-cs.nl

Dutch holding companies still attractive for Swedish shareholders.

Recently Sweden has introduced a new holding regime which can be considered competitive to the well known and long existing Dutch favorable tax regime.

One of the main objects of the Swedish government when introducing this new regime was to convince Swedish entrepreneurs not to obtain a non-Swedish holding company. This should result in a decreased capital flow from Sweden to other European countries such as the Netherlands and Luxembourg.

Even under the new Swedish regime the Netherlands can still be attractive for Swedish clients because of, amongst others, the following features:

• The sale of Swedish holding companies of which the assets consist of more than 50% of cash will trigger Swedish private taxation if sold by a Swedish resident. This can be avoided by using a Dutch holding company.
• The high Swedish private taxation upon the sale of a Swedish holding company by clients who plan to or already have emigrated from Sweden. If structured carefully this can be done by using a Dutch holding company which will be directly owned by the client.
• The possibility to take up loans from the Dutch holding company the shareholder/private individual.

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March 2004 - Belgium

We are pleased to announce that we have opened an office in Brussels where we can offer our management and domiciliation services. The office is located in the bi-lingual part of Brussels which means that two official languages, Dutch or French, may apply to the corporate documents such as the articles of association.

Contact us

If you wish to receive more information on these subjects please call your contact person at FTC Trust B.V. in Wassenaar (+31 70 5140267) or in Amstelveen (+31 20 6400361) or contact Mr Eric Hendrickx of Corporate Services Belgium CVBA in Antwerp (+32 3 2260883).

The information in this News Flash is informative and should not be relied upon in decision making. International tax planning and financial structuring are subject to constant changes and therefore FTC Trust B.V. (FTC) and Corporate Services Belgium CVBA (CSB) strongly recommend that each potential user of its services seeks professional tax and legal advice in his/her country of origin before deciding on the use of international financial structures.

FTC and CSB will not be liable for any damages, costs and expenses resulting from or incurred with any action taken, or any action omitted, based upon any information contained in this News Flash.

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