In recent years, the Dutch tax regime for mergers and acquisitions across borders has seen major changes. These changes affect fundamental choices that buyers must take. This includes deciding whether to buy shares or assets and what acquisition vehicle is used. This article discusses these developments in a brief manner, based on current tax law, up to and 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 usually the form of a swap for shares but could also involve securities. Bonds and convertible instruments are two examples of securities that can be traded. In rare instances tender offers can be made for securities that comprise less than 30% of the voting rights of the target (e.g. America Movil’s bid for KPN, in 2012 as well as Pon Holdings the bid for Accell in November 2018.
A statutory merger is another option to take control of the Dutch company. The surviving company acquiring by law all assets and liabilities from one or more disappearing firms, while shareholders who disagree are granted appraisal rights, which permit the company to withdraw in exchange for cash compensation. 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. Delaware corporation).
The acquiring entity must be a Dutch public liability company (NV) with its headquarters in the Netherlands or, in the event of abuse, a hybrid company as defined in a Dutch/EEA Tax Treaty. Moreover WHT — equal to the highest CIT rate — will apply to interest at arm’s length and royalty payments between an affiliated entity located in the Netherlands and an affiliate that is based outside the Netherlands, provided they are not attributed to an establishment permanent (PE) in the country of acquisition.
file sharing in mergers and acquisitions for the Netherlands
