1 Nexia World Tax Meeting Cape Town, May 30, 2009 (Extended) European Holding Company Analysis by Chris Leenders, International Tax Partner at Koenen en Co, Member of Nexia The Netherlands/ Nexia International

2 European Holding Company Analysis Countries covered: 19 Updates as per January 1, 2009 Issues covered: 17 This presentation: counter-attack Holland vs. US

3 European Holding Company Analysis Countries covered: Out: Czech RepublicIn: Croatia Denmark Russia Finland Mauritius Ireland Singapore Romania

4 European Holding Company Analysis Editorial aspects Countries not covered? Czech Republic Denmark Finland Ireland Romania and Hong Kong!

5 European Holding Company Analysis Issues 1.Treatment of dividend income Participation exemption: 16 countries (full or 95%) Taxable with credit: 3 countries (Greece, Russia and Mauritius)

6 European Holding Company Analysis 2.Minimum participation At least 50% : Russia At least 20% : Switzerland At least 10% : 10 (some 0% in case of unlisted shares) At least 5% : 3 (France, The Netherlands, Spain) Other/0% : 4 (Cyprus, UK, Hungary, Portugal)

7 European Holding Company Analysis 3.Treatment of capital gains Participation exemption: 15 (some 95%) Taxable with credit: 1 (Greece) Taxable: 2 (Hungary, Russia) Taxable: 1 (UK, if non trading)

8 European Holding Company Analysis 4.Minimum participation In accordance with requirements mentioned in § 2

9 European Holding Company Analysis 5.Minimum “ownership” period requirements 1 year :7 None :10 (Croatia, Cyprus, Germany, Hungary, Netherlands, Malta, Mauritius, Singapore, Sweden, UK) 2 years:2 (Greece, France)

10 European Holding Company Analysis 6.Active business test on underlying participation Yes :9 No :10 (France, Germany, Greece, Luxembourg, Malta, Mauritius, Portugal, Russia, Singapore, Sweden)

11 European Holding Company Analysis 7.Subject to tax-test on underlying participation Yes :11 No :8 (Greece, Netherlands (if active business), Luxembourg (if EU sub), Malta (if EU sub), Mauritius, Portugal, Singapore, Switzerland)

12 European Holding Company Analysis 8.Rates CIT, DWHT, other taxes To various to give any comment

13 European Holding Company Analysis 11.Withholding tax on liquidation Yes :10 No :9 (Croatia, Cyprus, Greece, Luxembourg, Malta, Mauritius, Singapore, Spain (in some cases), UK)

14 European Holding Company Analysis 12.Interest deductibility; Debt/equity ratio’s Interest deductible: Yes: 17 / No: 2 (Cyprus, Portugal) Debt/equity ratio’s: Yes: 13 / No: 6 (Austria, Greece, Malta, Mauritius, Singapore, Sweden)

15 European Holding Company Analysis 13.Advance Tax Rulings Yes: 15 No: 4 (Croatia, France, Greece, Russia)

16 European Holding Company Analysis 14. CFC and/or anti-abuse regulations? CFC: Yes: 10 / No: 9 ( Austria, Croatia, Cyprus, Greece, Luxembourg, Malta, Netherlands, Singapore, Switzerland) Anti-abuse: Yes: 8 (Austria, Cyprus, France, Germany, Netherlands, Portugal, Spain, Switzerland) No: 14

17 European Holding Company Analysis 15. Anti treaty shopping provisions Example: 1. Netherlands – Malta (protocol) The provisions of sub-paragraph (a) of paragraph 2 of Article 10 shall not apply if the relation between the two companies has been arranged or is maintained primarily with the intention of securing this reduction 2. Netherlands – US art 26 limitation on benefits

18 European Holding Company Analysis 15a. Counter-Attack Netherlands – US May 5 th : Mr. OBAMA ‘Netherlands = Tax Haven’ May 6 th : US Administration ‘Netherlands ≠ Tax Haven’ What is the issue?

19 European Holding Company Analysis 15b 1. Is Holland a Tax Haven?

20 European Holding Company Analysis 15b 2. Dutch Group Structure Dutch BV 1 Dutch BV 2

21 European Holding Company Analysis 15b 3. Dutch Group Structure Dutch BV 1 Dutch BV 2 (US) Target

22 European Holding Company Analysis 15b 4. Group Structure/Check the Box US Parent Bank loan -/- Dutch BV 1 Dutch BV 2 (US) Target Equity Intercompany loan

23 European Holding Company Analysis 16. Double tax treaty network Does the holding company receives treaty protection? Yes: ALL Are anti treaty shopping / beneficial ownerships tests included? Yes: 16 / No: 3 (Greece, Hungary, Russia)

24 European Holding Company Analysis QUESTIONS ? THANK YOU !