1. Foreign Holding Structures for Indian Outbound Investments
Brussels, 2 September 2008

2. Indian Group with Foreign Subs
Indian Parent Company
Europe
Asia
North America

3. Foreign Holding Company
Objectives are:
Tax efficient repatriation of profits
Obtaining treaty benefits (e.g. royalties)
Indian deferral planning
Tax efficient financing of foreign operations
Protection under Bilateral Investment Treaties
Organizational and business reasons
Regulatory reasons

4. Foreign Holding Company Example #1
Indian Parent Company
Singapore Holding Company
Dutch Holding Company
NL Group Companies
EU Group Companies
US Group Companies

5. Foreign Holding Company Example #2
Indian Parent Company
Mauritius Holding Company
Singapore Holding Company
Luxembourg Holding Company
Asian Group Companies
EU Group Companies

6. Ideal Holding Regime (1)
No taxes on dividend income and capital gains
Losses on participations deductible
Financing expenses deductible
No thin capitalization rules
No withholding tax on dividends paid to holding company
No withholding tax on repatriation of profits
No capital tax/stamp duties

7. Ideal Holding Regime (2)
No CFC rules
No subject-to-tax requirements
No holding period
No non-resident taxation exposure
Politically stable, no exchange controls or foreign ownership restrictions, good infrastructure
Excellent international reputation
The preferred system is simple, predictable, reliable and has a long lifetime expectancy

8. No Tax on Dividends DWHT in the source state
Non-resident taxation in the source state
Taxation in the jurisdiction of the holding company
DWHT on distributions by the holding company

9. No Tax on Capital Gains Sale of shares in a subsidiary:
Separate capital gains tax in sources state
Non-resident taxation in the source state
Taxation in the jurisdiction of the holding company
Sale of shares in the holding company:
Taxation in the jurisdiction of the shareholder

10. Financing Expenses Deductible
Thin Capitalisation or Earning Stripping Rules
Other Limitations

11. No CFC Rules
CFC Rules
(Anti) Passive Investment Rules

12. Ruling System
Which jurisdictions offer protection to (potential) investors through the issuance of advance clearance?

13. No WHT on Interest and Royalties
Under domestic law
Reduced by Tax Treaties
Through European Directives
Opportunities for group financing activities and group licensing activities

14. Comparison Holding RegimesNL
SIN
MAU
CYP UK
LUX BEL
       No taxes on dividends / capital gains
       No subject to tax requirement
       No exclusion of passive income
       Losses on participations deductible
       Financing expenses deductible
       No holding period
       No WHT on dividends paid
       No capital tax/stamp duties
       No CFC rules
       Ruling system
       No WHT on interest and royalties
       No non-resident taxation rules

15. Possible Dutch Legal Entities
Public Limited Company (naamloze vennootschap)
Bearer shares or registered shares
Minimum capital EUR 45,000
No mandatory transfer restrictions
Mainly used for listed companies or regulated companies
Private Limited Company (besloten vennootschap)
Only registered shares
Minimum capital EUR 18,000
Mandatory transfer restrictions
Cooperation (coöperatie)
Special form of an association
No share capital, but membership rights
At least two members

16. Some Legal Considerations
Incorporation by notarial deed
Necessity statement of no objection (timing!)
Necessity information on ultimate beneficial owners
Contribution in kind to be evidenced by confirmation accountant
Contribution in cash to be confirmed by bank statement
Pre incorporation liabilities
Appointment of/representation by management board
Timely disclosure of annual accounts
(Interim) dividend distributions
No foreign exchange controls
No securities and credit supervisions for non listed companies

17. Dutch Flex BV: Towards a More Competitive Legal Form
Expected implementation: 2009
Main Objectives:
Decrease of mandatory law elements
Increase flexibility
Abolish or replace ineffective rules
Reduce legal uncertainties
Facilitate needs of national and international legal community

18. Dutch Flex BV: Towards a More Competitive Legal Form
INTRODUCED
minimum capital € 0,01
no bank statement or accountant statement required at incorporation or for contributions
reduction convocation time GMS
electronic convocation GMS
non-voting shares
ABOLISHED:
mandatory share transfer restrictions
freely distributable reserve test
financial assistance prohibition
number of votes linked to nominal value
shareholder resolutions outside meeting to require unanimity