Netherlands. Treasury Management Profile Together we thrive

Transcription

1 Netherlands Treasury Management Profile 2018 Together we thrive

2 2 3 Contents Introduction and Purpose Introduction and Purpose 3 Legal and Regulatory 6 Taxation 8 Banking 12 Payment Instruments 13 Netherlands This is one of a series of Treasury Management Profiles designed for finance and treasury professionals worldwide. By providing a snapshot of banking, payments and cash management in selected locations, these profiles can help treasury managers to make informed decisions, manage risks effectively and take advantage of new opportunities. However, this information is not intended to be comprehensive and does not constitute financial, legal, tax or other professional advice. Accordingly you should not act upon the information contained in this document without obtaining your own independent professional advice. The materials contained in this document were assembled in April 2017 (unless otherwise dated) and were based on the law enforceable and information available at that time. European Payments 16 Payment Systems 18 Cash Management 20 Electronic Banking 23 Trade Finance 24 Useful Websites 26 Facts and Figures Capital/Other major cities: Area: 41,543km 2 Population: m Languages: Currency: Amsterdam/Rotterdam, The Hague, Utrecht, Eindhoven Dutch Euro (EUR) National holidays: Source: Business hours: Banking hours: Stock exchange: Leading share index: Jan, 22, 27 Apr, 30 May, 10 Jun, 25, 26 Dec 09:0017:00 (MonFri) 09:0017:00 (MonFri) Euronext AEX-Index Country telephone code: 31 Weekend: National holidays: Source: Saturday and Sunday Jan, 30 Mar, 2, 27 Apr, 10, 21 May, 25, 26 Dec Sectoral distribution of GDP (% of GDP): Source: publications/resources/the-worldfactbook/index.html. Agriculture 1.6%, Industry 17.9%, Services 70.2% (2017 estimate) Government Legislature Parliamentary monarchy with a bicameral parliament, the States General (Staten Generaal), composed of the First Chamber (Eerste Kamer) and the Second Chamber (Tweede Kamer). First Chamber: 75 members are elected to serve four-year terms. Second Chamber: 150 members are elected to serve four-year terms. Head of state King Willem-Alexander, hereditary monarch since 30 April Political leader Mark Rutte, prime minister since 14 October The prime minister is elected every four years.

3 4 5 Country credit rating Fitch Ratings rates Netherlands for issuer default as: Term Issuer Default Rating Short F1 + Long AAA Long-term rating outlook Stable Source: January Exchange rate & Interest rate (%) Economy Interest rate (corporate lending rate)*(%) Unemployment (%) Consumer inflation** (%) GDP volume growth (%) Q4 Year Q1 Q2 Q NA NA GDP (EUR bn) GDP (USD bn) GDP per capita (USD) 53,609 49,492 51,409 52,128 44,446 44,446 BoP (goods/services/income) as % GDP Exchange rate* (EUR/USD) ** * Period average. ** Year on year Consumer inflation & GDP volume growth (%) Sources: IMF, International Financial Statistics,January 2018 and 2017 Yearbook Exchange rate (EUR/USD) Consumer inflation % Interest rate (T-bill rate) GDP volume growth % Sources: IMF, International Financial Statistics, November 2017 and 2017 Yearbook

4 6 7 Legal and Regulatory Approximately 2,000 resident companies with a high volume of transactions with nonresidents are required to report all their financial transactions with non-residents on a monthly basis to the central bank. Central bank The De Nederlandsche Bank (DNB) is an independent institution operating in accordance with the 1998 Bank Act and its amendments. The DNB is a member of the European System of Central Banks (ESCB). Bank supervision The European Central Bank (ECB), via the Single Supervisory Mechanism (SSM), is responsible for supervising the financial stability of banks operating within the eurozone. However, while the ECB has final supervisory authority over all banks operating within the eurozone, it directly supervise only those banks classified as significant under the terms of the SSM (at present 125 significant banking groups have been recognised). All other less significant banks will continue to be supervised by the national supervisory authority i.e. the DNB. The Netherlands Authority for the Financial Markets supervises the relationships between financial institutions and their clients. Resident/non-resident status A company is considered resident in the Netherlands if it is incorporated under Dutch law or has its place of effective management located in the Netherlands. Bank accounts Resident Foreign exchange accounts and domestic currency (EUR) accounts can be held by residents both domestically and abroad. Resident domestic currency accounts are convertible into foreign currency. Non-resident Non-resident bank accounts are permitted in both foreign and domestic currency. Non-resident domestic currency accounts can be held abroad and are convertible into foreign currency. Interest can be offered on current accounts and demand deposit accounts. Overdraft facilities are available to residents and non residents. Reporting Approximately 2,000 resident companies with a high volume of transactions with non-residents are required to report all their financial transactions with non-residents on a monthly basis to the DNB. The sample companies are chosen by the DNB. The DNB monitors other resident companies payments through surveys to ensure that its sample of reporting companies remains representative. DNB reporting is essentially limited to financial reporting (capital flows, securities transactions and corporate investment income), with other current account statistics compiled by Statistics Netherlands. Sample companies submit transactions data electronically via the eline BOP online reporting tool. Exceptions are made for data that can only be reported annually, such as dividends and real estate transactions. Exchange controls The Netherlands is a member of the European Union (EU). The euro (EUR) is the Netherlands official currency. The Netherlands does not apply exchange controls. Foreign investment in shipping and airlines is subject to restrictions. Anti-money laundering/counter-terrorist financing 1 The Netherlands has enacted anti-money laundering legislation, including legislation implementing the three EU anti-money laundering directives, and counter-terrorist financing legislation. Notable legislation includes: The Money Laundering and Terrorism Financing (Prevention) Act 2008, as amended The Ministry of Finance, the DNB and FIU Netherlands have also issued associated Guidance. A Financial Action Task Force (FATF) member, the Netherlands observes most of the FATF+49 standards. The Netherlands is also a member of the Caribbean Financial Action Task Force (CFATF) as a Cooperating and Supporting Nation. The FIU-Netherlands, the country s financial intelligence unit, is a member of the Egmont Group. Account opening procedures require formal identification of the account holder. Beneficial owners must also be identified and have their identity verified by taking adequate measures on a risksensitive basis. All financial institutions have to identify clients in respect of any individual or aggregated transactions, where the amount involved is equal to or greater than EUR 15,000. Financial institutions are required to report a money transfer for the sum of EUR 2,000 or more. Financial institutions in the broadest sense are required to record and report cash transactions above EUR 15,000 and unusual transactions to the FIU Netherlands without delay a broader standard than the requirement to report suspicious transactions. Relationships with shell banks are prohibited. All records necessary for the reconstruction of financial transactions must be kept for at least five years. Individuals entering or exiting the EU must declare currency of EUR 10,000 to the customs authorities. Customs authorities must also report unusual transactions to the FIU-Netherlands. 1. Data as at April 2017.

5 8 9 Taxation 1 The Netherlands has a two-tier system with progressive tax rates. The first EUR 200,000 of taxable income is subject to a tax rate of 20%. Income in excess of EUR 200,000 is taxed at 25%. Resident/non-resident A company is considered resident if its effective management is located in the Netherlands, or if it is incorporated according to Dutch civil law. Tax authority Belastingdienst (Tax revenue). Tax year/filing The tax year generally corresponds to the calendar year, unless the company defines a different year in its articles of association. The tax year usually is 12 months, but shorter or longer periods are permitted in the year of incorporation. A provisional assessment, generally based on information from the previous two years, is issued in the first month of the taxpayer s financial year. This assessment is payable in monthly instalments for the remaining months of the year. Corporate income tax returns must be filed annually, within six months of the end of the fiscal year. Businesses are expected to file all returns electronically. The tax return should be accompanied by all information required to determine taxable profits, including the balance sheet and profit-and-loss account and any other information requested by the tax inspector. If a company does not meet these obligations or does not file a proper tax return, the inspector may issue an estimated assessment. Provided certain conditions are satisfied, a parent company may form a fiscal unity with one or more of its subsidiaries, under which the losses of one company may be offset against the profits of another company and fixed assets of one company may be transferred to another company without corporate income tax consequences. To qualify for fiscal unity status, the parent company must own at least 95% of the statutory voting rights and must be entitled to at least 95% of the profit and capital of the subsidiary. As from 9 December 2016, a fiscal unity may be formed via a company based in another EU member state. It is possible to form a fiscal unity, in certain cases, with an EU/EEA-resident parent company that has a Dutch permanent establishment (PE). Corporate taxation Resident companies are subject to taxation on their worldwide income. Non-resident companies are generally subject to the same rates of corporate taxation as residents on certain types of income sourced in the Netherlands. Profits derived from qualifying shareholdings (generally shareholdings of 5% or more) are exempt from tax (the participation exemption regime). Branches of foreign companies and subsidiaries are treated the same way in determining corporate income tax, although branches are usually exempt from withholding tax on profit remittances to their foreign head offices. The Netherlands has a two-tier system with progressive tax rates. The first EUR 200,000 of taxable income is subject to a tax rate of 20%. Income in excess of EUR 200,000 is taxed at 25%. There is no surtax or alternative minimum tax. Various investment deductions and reliefs are available. Under the innovation box regime, income derived from selfdeveloped intellectual property (R&D) is effectively taxed at a 5% rate. As from 1 January 2017, the modified nexus approach applies under the regime, with the result that R&D expenses incurred by an affiliated entity will be disregarded and more stringent conditions are imposed on the type of R&D activities that qualify. A special tonnage tax regime applies to shipping companies. A 0% tax liability or an exemption is provided for qualifying investment funds. Losses may be carried forward for nine years and carried back for one year. Losses incurred in fiscal years 2009 through 2011 may be carried back for three years upon request, in which case, the term for carryforward is limited to six years. Special restrictions apply to losses incurred by a company whose activities are at least 90% finance and/or holding activities. Participation exemption The participation exemption applies to dividends and capital gains derived from shareholdings of at least 5%, provided: 1. The subsidiary is not held as a mere portfolio investment; 2. The subsidiary is subject to a reasonable effective tax rate based on Dutch tax principles (subject to tax test); or 3. Less than 50% of the assets of the subsidiary consist of passive assets, based on the fair market value of the assets (asset test). If the participation exemption is not applicable, a credit for the underlying tax may be obtained. Group financing/licensing activities generally are deemed to be portfolio investment activities, i.e. participants predominantly engaged in these activities must meet test (2) or (3) for the participation exemption to apply. As from 2016, dividends and interest payments received are taxable if the payment is tax deductible in the country of the payer. Advance tax ruling availability A taxpayer can request an advance ruling from the tax authorities on the application of the participation exemption to holding companies in international structures; the use of hybrid financing instruments and hybrid entities; the existence of a PE in the Netherlands; or the classification of activities, i.e. group services or shareholder activities. It is possible to enter into an advance pricing agreement for the use of a certain transfer pricing method. Capital gains tax Capital gains are generally taxed as ordinary income, except for those on certain investments in shares (e.g. in cases where the participation exemption regime applies). The taxable gain is the difference between the sale proceeds and the book value of the asset. Capital losses are, in principle, deductible from Dutch corporate income tax, except for those on certain investments in shares (e.g. in cases where the participation exemption regime applies). Gains on certain assets can be deferred if there is an intention to reinvest in new assets within three years of the end of the year in which the asset is sold. The new asset must perform a similar economic function within the company, unless it is depreciated over ten years or less. Withholding tax (subject to tax treaties) Withholding tax of 15% is levied on dividends paid to both residents and non residents. For non-residents, the application of a tax treaty may reduce the rate, potentially to 0%. As from 1 January 2017, tax withheld on dividends paid to nonresident individuals and companies may be refunded, provided the recipient is a resident of another EU/EEA member state and is the beneficial owner of the dividend. The refund will be equal to the amount of tax withheld that exceeds the (corporate) income tax that would have been due had the recipient been a Dutch resident. A similar refund is available, in certain cases, to a resident of a third country that exchanges information with the Netherlands. A withholding tax exemption may apply to dividend payments if the participation exemption applies. A tax-exempt entity under Dutch rules (e.g. a qualifying pension fund), established outside of the EU/EEA, may request a full refund of the dividend withholding tax relating to Dutch portfolio investments. 1. All tax information supplied by Deloitte Touche Tohmatsu ( and Deloitte Highlight, 2017.

6 10 11 If the parent company is a resident of an EU member state, and meets certain criteria, a withholding tax exemption may apply. Payments on certain profit-sharing loans are treated as dividends. All other interest payments are exempt from withholding tax. No withholding tax is levied on royalties. Tax treaties/tax information exchange agreements (TIEAs) The Netherlands has concluded an extensive tax treaty network with more than 95 tax treaties. Different rates of withholding tax can apply to interest, dividends and royalties, depending on the terms of the agreement with the particular country. Where, in a particular case, a treaty rate is higher than the domestic rate, the latter is applicable. Netherlands has exchange of information relationships with 126 jurisdictions through 97 double tax treaties and 29 TIEAs. The Netherlands, as part of the OECD/G20 Base Erosion and Profit Shift (BEPS) initiative, has signed a multilateral cooperation agreement with 30 other countries (the Multilateral Competent Authority Agreement (MCAA)). Under this multilateral agreement, information will be exchanged between tax administrations, giving them a single, global picture on some key indicators of economic activity within multinational enterprises (MNE). With country-by-country reporting, the tax authorities of jurisdictions where a company operates will have aggregate information annually relating to the global allocation of income and taxes paid, together with other indicators of the location of Withholding tax (subject to tax treaties) economic activity within the MNE group. The reports will also cover information about which entities do business in a particular jurisdiction and the business activities each entity engages in. The information will be collected by the MNE group s country of residence, and will be exchanged through exchange of information supported by such agreements as the MCAA. The first exchanges under the MCAA will begin in based on 2016 information. Thin capitalisation The thin capitalisation rules were abolished and replaced with new rules as from 1 January The new rules disallow the deduction of interest costs relating to excess debt (deemed to be) associated with the acquisition price of participations. The excess debt for purposes of this rule is calculated based on a mathematical rule, under which operational participations acquired from a third party generally is excluded. Transfer pricing The arm s-length principle is laid down in the Dutch Corporate Income Tax Act. Corporate income taxpayers are obliged to keep records substantiating that intercompany transfer prices have been determined in line with the arm s length principle. It is possible to enter into an advance pricing agreement for the use of a certain transfer pricing method. Disclosure requirements As a result of the OECD BEPS project, country-by-country reporting requirements are in effect that provide information to Payments to: Interest Dividends Royalties Technical fees Branch remittances Resident companies None 015% None None NA Non-resident companies 10% 015% None None None the tax authorities on revenue, income, tax paid and accrued, employment, capital, retained earnings, tangible assets and activities of a multinational group. As from 1 January 2017, there are rules on the automatic exchange of cross-border rulings and transfer pricing agreements between the tax authorities of EU member states. Abuse of law The abuse of law doctrine applies where the motive of a transaction or series of transactions is the avoidance of tax. In addition to the restrictions on the deductibility of interest, various other rules can result in the (partial) disallowance of a deduction for interest costs incurred by a Dutch taxpayer. These include: Anti-base erosion rules that essentially cover the conversion of equity into intragroup debt without a valid business reason; Rules on the acquisition of shares against debt from a related party without meeting a business purpose test or an effective tax rate test; and Rules on debt-funded acquisitions of Dutch companies that limit an interest deduction for acquisition holdings. When forming a fiscal unity on or after 15 November 2011 between a parent company and an acquired subsidiary, interest expense relating to the acquisition may be deducted only up to the taxable income of the parent company. Several exceptions and thresholds may apply to all of these rules. Stamp duty No stamp duty is levied on loan agreements. Cash pooling The Netherlands has no specific tax rules for cash pooling arrangements. Real property taxes Municipalities impose an annual tax at varying rates on owners of real property. Real estate tax is deductible for corporate income tax purposes. A 6% real estate transfer tax is payable on the acquisition of real property in the Netherlands or certain related rights. A reduced rate of 2% applies to the transfer of a residence. Sales taxes/vat (incl. financial services) VAT is levied on all persons considered to be entrepreneurs (this includes importers and foreign firms supplying goods and services in the Netherlands) at a general rate of 21%. There is a reduced rate of 6% for basic goods and services. Exports and certain services are zero rated, and certain goods and services are exempt (in particular, those that relate to financial services). There is no registration threshold in the Netherlands; all VAT payers are required to register. Financial transactions/banking services tax There are no specific financial transactions/banking services taxes in the Netherlands. Payroll and social security taxes There is no payroll tax payable by employers. Salaries are subject to income tax, national insurance contributions and employee insurance contributions. Social security contributions on employment income are payable by the employer and the employee. The contributions are calculated on gross salary, less pension premiums withheld from the salary. An income-dependent health insurance contribution, disability insurance contribution and unemployment insurance contribution also are levied.

7 12 13 Banking Payment Instruments Overview There are 39 domestic banks, including 13 subsidiaries of foreign banks, operating in the Netherlands. There are also 40 foreign bank branches. The Netherlands has a universal banking system, with no distinction made between commercial and investment banking activities. The banking sector is highly concentrated and dominated by three domestic banks ING Bank, Rabobank Nederland and ABN AMRO Bank (the Dutch government sold a 20% stake in ABN AMRO in November 2015, and a further 7% in November 2016 but retains majority ownership (70%) of the bank). Major banks Bank Total assets (EUR millions) 30 June 2017 ING Bank 862,051 Rabobank Nederland 623,197 ABN AMRO Bank 401,176 BNG Bank 146,304 NWB Bank 94,553 Source: January Payment statistics Millions of transactions % change Traffic (EUR billions) / Credit transfers 2, , , , Direct debits 1, , Debit card payments 3, , Credit card payments % change 2015/2014 E-money Cheques The country s five largest banks accounted for 85% of the country s total banking assets at the end of June Total 6, , , , Source: ECB Payment Statistics, September Foreign banks play a limited role in the Dutch banking sector; approximately 10% of assets are held by foreign banks. Banks in the Netherlands are moving towards full digital/ mobile delivery of banking services. ING Bank, for example, is investing EUR 800 million in digital transformation, which will see approximately 7,000 jobs being lost (in Belgium and the Netherlands, in particular). ABN AMRO also plans to provide additional funding to expand its digital subsidiary, MoneYou (the majority of its 500,000 customer base is in the Netherlands although it has customers in Belgium, Austria and Germany also). Bunq, a mobile-only bank, launched in the Netherlands in late Cash Cash remains an important payment medium in the Netherlands, particularly for low-value transactions. However, since 2015, the number of cash transactions has been falling (2.95 billion cash transactions in 2016, 3.19 billion in 2015), as consumers turn to debit cards for low-value payments. In 2015, Dutch retailers and banks signed a covenant to discourage the use of cash and public transport in Amsterdam is planning to phase out cash payments altogether by Credit transfers Credit transfers in the Netherlands can be paper based or automated. However, in 2015, 100% of credit transfers were initiated electronically. High-value and urgent credit transfers are cleared and settled via TARGET2-NL in real time. Low-value and non-urgent SEPA credit transfers are cleared via EquensWorldline CSS. SEPA credit transfers can also be cleared on a same-day or next-day basis via STEP2, the pan-european ACH for bulk retail payments operated by the Euro Banking Association (EBA). Low-value credit transfers include payroll, supplier and third-party payments. Two niche credit transfer types have not been replaced by SEPA credit transfers: TNS (Telegiro Nieuwe Stijl) payments: low-value and urgent credit transfers. IBAN Acceptgiros: pre-prepared, in-payment transfers initiated by the payee. Traditionally paper based, IBAN Acceptgiros are increasingly initiated electronically. The use of IBAN Acceptgiros is in decline due to a preference for SEPA credit transfers, but are not scheduled to be phased out completely until 1 January Both the TNS and IBAN Acceptgiros are cleared via EquensWorldline CSS. Approximately 45 banks in the Netherlands currently participate in the SEPA Credit Transfer Scheme. (For more information on SEPA credit transfers, see European Payments.) In November 2017, the European Payment Council s SCT Inst scheme (a pan-european 24/7 instant payment scheme for SEPA credit transfers) went live.

8 14 15 The scheme enables the transfer of funds (the maximum threshold value for SCT Insts will be EUR 15,000) to another account in any of the 34 SEPA countries in less than ten seconds. At present, such a transaction can take up to one day to complete. Participation in the SCT Inst scheme is optional for Payment Service Providers (PSPs). SCT Insts are available in the Netherlands. Credit transfers accounted for 29.3% of the volume of all cashless payments in 2015, and 98% of the value 1. Direct debits Direct debits are available in the Netherlands and used for lowvalue recurring payments such as utility bills. SEPA direct debits can be settled on a same-day or next day basis via EquensWorldline CSS. (For more information on SEPA direct debits, see European Payments.) Direct debits accounted for 19.3% of the volume of all cashless payments in 2015, but just 1.2% of the value 1. Cheques Cheques are no longer issued in the Netherlands. Legacy items are occasionally used for payments, however they are costly and difficult to negotiate. All cheques are cleared bilaterally between banks. Card payments Payment cards, particularly debit cards, are a popular method of payment in the Netherlands. In 2015, debit cards accounted for approximately 49% of the volume of all cashless payments. The value of debit card transactions over the same period was negligible (0.6% of the value of all cashless payments) 1. There were approximately 26.2 million debit cards and 4.2 million credit cards in circulation at the end of Visa % volume of all cashless payments 2015 Credit Transfers Direct Debits Debit Cards Credit Card 29.3% 19.3% 49% 2.1% and MasterCard are the principal payment card brands issued, although American Express and Diners Club credit cards are also available. More than half of all debit cards are contactless; over one billion contactless payments have been made since the introduction of contactless cards in All payment cards issued in the Netherlands are SEPA-compliant EMV chip cards. (For more information on SEPA-compliant payment cards, see European Payments.) The majority of all card payments are processed via EquensWorldline CSS. Visa and MasterCard payment transactions can also be cleared by their respective international card schemes. There are approximately 7,000 ATMs and 444,860 POS terminals in the Netherlands. All ATMs are interoperable via the Equens-operated Interbank Authorisation Network. Payments are processed via EquensWorldline CSS. All ATMs and POS terminals are EMV-compliant. % value of all cashless payments 2015 Credit Transfers Direct Debits Debit Cards Credit Cards 98% 1.2% 0.6% 0.06% Source: ECB Payment Statistics, September Electronic wallets Electronic money schemes are available in the form of reloadable pre-paid cards. There were 9.4 million payment cards with an e-purse function in circulation at the end of All e-money payment transactions are processed via EquensWorldline CSS. Mobile wallet payment apps are offered by a number of banks and mobile operators and have been rapidly adopted by the Dutch. The ideal payment system, incorporated into most banking apps, has helped boost the growth of mobile payments. A quarter of all ideal payments are done via mobile phone or tablet. MasterCard Netherlands digital wallet service, MasterPass, enables users to make online purchases via their PCs or mobile devices. It is expected that changes to the payments landscape as a result of the Revised Payment Services Directive (PSD2), will enable mobile payments to be made more easily. (For more information on PSD2, see European Payments.) In November 2017, the EPC s SCT Inst scheme (a pan- European 24/7 instant payment scheme for SEPA credit transfers) went live. The scheme enables the transfer of funds to another account in any of the 34 SEPA countries in less than ten seconds. 1. ECB Payment Statistics, September 2016.

9 16 European Payments SEPA initiative The Single Euro Payments Area (SEPA) is an initiative of the European Payments Council, with the support of the European Commission (EC) and European Central Bank, to create an integrated payment infrastructure across Europe. The SEPA initiative requires common payments instruments, infrastructures, procedures and technical standards. All electronic, EURdenominated retail payments within SEPA are treated as domestic payments. The SEPA initiative does not apply to urgent, high-priority payments or to cheques. SEPA scheme countries include the 28 European Union (EU) member states and the four European Free Trade Association member states (Iceland, Liechtenstein, Norway and Switzerland). SEPA payment instruments Migration to SEPA credit transfers (SCTs) and SEPA direct debits (SDDs) was completed within the eurozone on 1 August National niche payment instruments were phased out by 1 February Full SEPA migration outside the eurozone was finalised on 31 October Systems for euro-denominated payments The Euro Banking Association s (EBA s) STEP1 or STEP2 systems can be used to effect individual and bulk retail payments in EUR. STEP1 cut-off time for same-day settlement is 14:30 CET. STEP2 is the only pan-european ACH for SEPA payments (there are 50 countries within the jurisdictional scope of the SEPA scheme). Cut-off times for same-day settlement, overnight settlement and next-day settlement of SCTs are 16:00 CET, 21:00 CET and 01:00 CET respectively. Cut off times for the same-day settlement of Core SDDs and B2B SDDs are 11:00 CET and 12:00 CET respectively. Bilateral arrangements are also in place between a number of SEPA-compliant Clearing and Settlement Mechanisms (CSMs) enabling cross-border retail payments in EUR. The EC s Payment Services Directive regulates payment services and their providers throughout the European Economic Area (EEA), comprising all 28 EU member states, plus Norway, Iceland and Liechtenstein. As a result, all cross-border credit transfers, direct debits and card payments below EUR 50,000 within the EEA have the same charges as their domestic equivalents. High-value/urgent cross-border payments in EUR can be made through TARGET2 s Single Shared Platform, which is used by 24 participant countries and operated by the Banca d Italia, the Banque de France and the Deutsche Bundesbank on behalf of the European System of Central Banks. Cut-off times for sameday settlement are 17:00 CET for customer payments and 18:00 CET for interbank payments. High-value/urgent cross-border payments in EUR can also be effected through the EBA s EURO1 system. Cut off time for same-day settlement is 16:00 CET. TARGET2, EURO1 and STEP1 are all based on SWIFT payment messages. International payments can also be routed via SWIFT through correspondent banking arrangements. PSD2 In January 2016, the PSD2 entered into force (the Directive requires that all member states implement these rules as national law by 13 January 2018). PSD2 sets out a common legal framework for making and receiving payments both within the EEA, and outside the EEA. According to the EC, one of the advantages of PSD2 is that it will help stimulate competition in the electronic payments market by providing the necessary legal certainty for companies to enter, or continue, in the market. Consumers will benefit from having a greater choice between different types of payment services and service providers. In addition, with the introduction of Account Information Service Providers, PSD2 will provide companies and consumers with the ability to view multiple bank accounts across a number of banks via one portal. Crucially, PSD2 introduces enhanced security measures to be implemented by all payment service providers, to make electronic payments, such as mobile payments, safer and more secure. 17

10 18 19 Payment Systems Type TARGET2-NL is the Netherlands national component of the pan-european TARGET2 real-time gross settlement system. Three Eurosystem central banks the Banca d Italia, the Banque de France and the Deutsche Bundesbank jointly provide the single technical infrastructure, the Single Shared Platform (SSP), of TARGET2 and operate it on behalf of the ESCB. TARGET2-NL processed 5.74 million payments in 2015, with a value of EUR 60,247.5 billion. This was a 10% fall in volume terms on 2014 figures, but a 2.2% increase in value. EquensWorldline CSS (Clearing and Settlement System) is a multilateral net settlement system for low-value and non-urgent payments. Equens CSS is bilaterally linked with a number of European payment and clearing systems, as well as with the USA s Federal Reserve, for cross-border, multicurrency clearing. EquensWorldline CSS enables SEPA credit transfers and direct debits to be made on a pan-european level via agreements with a number of CSM members of EACHA (European Automated Clearing House Association). All payment and clearing systems are accessible via the European Clearing Cooperative (ECC) payment platform. Final settlement is effected via TARGET2. EquensWorldline CSS processed 1,661.2 million payments in 2015, with a value of EUR 1,630.4 billion, a decrease of 15% and 3.5% respectively on 2014 figures. STEP2, the pan-european ACH for bulk retail payments, is a multilateral net settlement system operated by the EBA. Cross-border payments in EUR can be made through the EBA s EURO1 (four banks in the Netherlands participate in EURO1), STEP1 or STEP2 payments systems. (For more information, see European Payments.) On 21 November 2017, EBA Clearing (operator of EURO1, STEP1 and STEP2) and Italy s SIA Group (a technical operator for STEP2) launched a pan-european platform for instant EURdenominated payments. The instant payment system, RT1, supports the European Payment Council s SCT Inst scheme. Cross-border payments can also be routed via SWIFT and settled through accounts held with correspondent banks abroad. In January 2016, a Revised Directive on Payment Services (PSD2) entered into force. The overall objective of the PSD2 is to increase competition in the EU s payment market, facilitate innovative payment services and ensure that payment services are safe and offer complete consumer protection. The revised PSD2 will apply as of 13 January 2018, the date by which all EU countries are required to have incorporated PSD2 into national law. The Netherlands missed the 13 January 2018 deadline; it is expected implementation will not take place until mid-2018 at the earliest. Participants TARGET2-NL has 63 direct and 42 indirect participants. EquensWorldline CSS has 72 direct and 90 indirect participants. Transaction types processed TARGET2-NL processes high-value and urgent EURdenominated domestic and cross-border credit transfers. In addition, TARGET2-NL effects the final settlement of participants net balances originating from EquensWorldline CSS. EquensWorldline CSS processes low-value, non-urgent and bulk EUR-denominated retail payments. There is no threshold value. All niche legacy payments continue to be processed via EquensWorldline CSS. STEP2 processes low-value, non-urgent and high volume domestic and cross border SEPA credit transfers and direct debits. There is no maximum value threshold. Operating hours TARGET2-NL operates from 07:00 to 18:00 CET, Monday to Friday. EquensWorldline CSS operates from 07:00 to 17:00 CET, Monday to Friday. STEP2 operates 24 hours a day, Monday to Friday. Clearing cycle details TARGET2-NL TARGET2-NL settles transactions individually in real time and with immediate finality. All transactions are processed electronically via SWIFT. 17:00 CET: cut-off time for customer payments. 18:00 CET: cut-off time for interbank payments. Final settlement takes place across participant banks correspondent accounts held on the SSP. EquensWorldline CSS EquensWorldline CSS accepts payments from 07:00 CET. All paper-based items are truncated before being processed. 07:3017:00 CET: final net settlement occurs via TARGET2-NL every 30 minutes across accounts on the SSP. 15:30 CET: cut off time for guaranteed same-day settlement. STEP2 Payments are processed in batches, with participants balances settled in TARGET2-NL between 13:45 and 14:30 CET and between 07:00 and 08:00 CET. 11:00 CET: cut-off time for same-day settlement of Core (consumer) SEPA direct debit payments. 12:00 CET: cut-off time for same-day settlement of B2B (business to business) SEPA direct debit payments. 16:00 CET: cut-off time for same-day settlement of SEPA credit transfers. 21:00 CET: cut-off time for overnight settlement of SEPA credit transfers. 01:00 CET: cut-off time for next-day settlement of SEPA credit transfers. Currency centre holidays Jan, 30 Mar, 2 Apr, 1 May, 25, 26 Dec Jan, 19, 22 Apr, 1 May, 25, 26 Dec Source:

11 20 21 Cash Management The Netherlands operates an advantageous tax regime for interest payments within a corporate group. The Group Interest Box regime allows for a 5% rate to be levied on intercompany interest income. Domestic Notional pooling Notional pooling is permitted between resident and non-resident accounts. One or more legal entities may be included. However, if the entities have different beneficial ownership structures, intercompany cross-guarantees are required that may be subject to the country s transfer or thin capitalisation rules. Cross-currency pooling structures are available. Cash concentration Cash concentration is permitted between resident and nonresident accounts. One or more legal entities may be included. Zero balancing is a widely used cash concentration technique. Central bank reporting requirements apply. Collections Automated collection methods are used by medium-sized and large companies in the Netherlands. Companies that collect high volumes of recurring bill payments hold accounts with a number of banks to enable their customers to authorise their bank to debit their account via the issuance of a direct debit. Lockbox services are not available. Cross-border Cross-border notional pooling and cash concentration are both permitted. Lifting fees Fees are not applied to funds transfers between resident and nonresident accounts, although value dating is practised by banks. Additional comments International cash management banks are well represented in Amsterdam, due to the liberal regulatory regime and sophisticated cash management culture. The Netherlands operates an advantageous tax regime for interest payments within a corporate group. The Group Interest Box regime allows for a low rate of taxation (5%) to be levied on intercompany interest income. Short-term investments Interest can be earned on resident and non-resident current and savings accounts. Interest is typically paid quarterly to businesses. Interest levels are low, however it is possible to sweep surplus balances to attain higher yields. Time deposits are available in EUR or major foreign currencies, with maturities ranging from overnight to several years. Time deposits can have fixed, floating or annuity interest rates. Certificates of deposit are offered by commercial banks in the Netherlands with maturities ranging up to one year. Commercial paper is offered by companies and public authorities, and traded by banks. Commercial paper is typically issued with maturities ranging between one month and two years. The minimum investment amount is EUR 500,000. Euro commercial paper can be issued in a range of currencies by larger companies with a published credit rating. Dutch Treasury Certificates are issued by the Dutch State Treasury Agency, with maturities of three, six, nine or 12 months. Repurchase agreements are available. The Belening (collateralised loan) is a local form of repurchase agreement. Money market funds are available. Custody and securities settlement 1 Depositories Euroclear Nederland. Netherlands Inter-professional Securities Centre. Euroclear Nederland acts as the central securities depositary for equities, ETFs, government bonds, corporate bonds, T-bills, commercial paper, investment funds, and rights and warrants. Central counterparty LCH.Clearnet SA. BIS Model Model 1: Euroclear Netherland. Settlement cycle T+2. TARGET2-Securities Euroclear Nederland has migrated to T2S. 1. Data as at February2017.

12 22 23 Electronic Banking An estimated 98% of the banks contact with customers is via digital channels with mobile devices, increasingly the main interface between banks and their customers. Electronic banking is commonplace in the Netherlands and offered by both domestic and international banks. There is no bank-independent electronic banking standard; each bank offers its own proprietary system for corporate banking purposes. Electronic banking services include cross-border or multibank reporting, payment initiation and end-of-day sweeping arrangements. Large companies can also use SWIFT for Corporates. Internet and mobile banking is offered by all of the Netherlands banks for both corporate and retail purposes. An estimated 98% of the banks contact with customers is via digital channels with mobile devices, in particular, increasingly the main interface between banks and their customers. Online banking services were used by 91% of individuals in Mobile banking services were used by approximately 63% of individuals in Bills can be opened and paid online via the Standard Digital Invoice. The online e-mandate service facilitates direct debit payments via company and government agency websites. The Netherlands had an internet penetration rate of 94% in 2016; smartphone penetration was 83% Europe s Digital Progress Report (EDPR), ING International Survey on Mobile Banking 2016.

13 24 25 Trade Finance Licences are required for importing certain steel products from particular countries with formerly state controlled trading, such as China. Imports Documents No documentation is required for imports from another EU country, although it is good practice to send a commercial invoice. In order to import goods into the Netherlands from outside the EU, a customs declaration, commercial invoice, bill of lading, packing list and, in certain cases, certificate of origin are required. Licences Licences are required for importing certain steel products from particular countries with formerly state controlled trading, such as China. Licences are required for importing textiles from North Korea and a limited number of textiles from Belarus. Taxes/tariffs and other fees The Netherlands applies the EU customs code and all associated regulations and commercial policies on all items entering the country from outside the EU. Imports into the Netherlands are subject to a variety of tariffs. Tariffs are higher for agricultural imports than for non-agricultural imports. There is currently one free zone (Amsterdam Schiphol Airport) operating in the Netherlands. Exports Documents No documentation is required for exporting items to another EU country, although it is good practice to send a commercial invoice. In order to export goods from the Netherlands outside the EU, a customs declaration, commercial invoice, bill of lading, packing list and, in certain cases, certificate of origin are required. Licences Licences are required for exporting certain strategic goods. Taxes/tariffs and other fees No taxes are charged on exports from the Netherlands. Prohibited exports A negative list (of products that may not be exported) is in operation. Exporting certain items is prohibited in accordance with EU regulations and UN Security Council resolutions. Financing imports and exports Imports There are no financing requirements for imports. Exports There are no financing requirements for exports. Key import partners Germany China Belgium USA UK Key export partners Germany Belgium UK France Italy 14.7% 14.5% 8.2% 8.1% 5.1% 24.5% 11.1% 9.3% 8.4% 4.2% Source: The World Factbook. Washington, DC: Central Intelligence Agency, 2017 ( Prohibited imports A negative list (of products that may not be imported) is in operation. In accordance with EU regulations and UN Security Council resolutions, it is prohibited to import certain items into the Netherlands, in order to protect fauna and flora, and for national security and moral reasons.

14 26 27 Useful Websites De Nederlandsche Bank Leading banks: ABN AMRO Bank Bank Nederlandse Gemeenten ING Bank NWB Bank Rabobank Nederland Authority for the Financial Markets Dutch Banking Association Dutch Association of Corporate Treasurers (DACT) Ministry of Finance Dutch State Treasury Agency Ministry of Economic Affairs Holland Trade Netherlands Chamber of Commerce Netherlands Foreign Investment Agency Euronext EquensWorldline Currence ideal Dutch Payments Association HSBC website details HSBC Commercial Banking HSBC Global Banking and Markets Disclaimer This document has been produced by HSBC Bank plc and members of the HSBC Group ( HSBC ), together with their third-party contributor, WWCP Limited. We make no representations, warranties or guarantees (express or implied) that the information in this document is complete, accurate or up to date. We will not be liable for any liabilities arising under or in connection with the use of, or any reliance on, this document or the information contained within it. It is not intended as an offer or solicitation for business to anyone in any jurisdiction. The information contained in this document is of a general nature only. It is not meant to be comprehensive and does not constitute financial, legal, tax or other professional advice. You should not act upon the information contained in this document without obtaining your own independent professional advice. The information contained in this document has not been independently verified by HSBC. This document contains information relating to third parties. The information does not constitute any form of endorsement by these third parties of the products and/or services provided by HSBC or any form of cooperation between HSBC and the respective third parties. Under no circumstances will HSBC or the third-party contributor be liable for (i) the accuracy or sufficiency of this document or of any information, statement, assumption or projection contained in this document or any other written or oral information provided in connection with the same, or (ii) any loss or damage (whether direct, indirect, consequential or other) arising out of reliance upon this document and the information contained within it. HSBC and the third-party contributor do not undertake, and are under no obligation, to provide any additional information, to update this document, to correct any inaccuracies or to remedy any errors or omissions. No part of this document may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior written permission of HSBC and the third-party contributor. Any products or services to be provided by HSBC in connection with the information contained in this document shall be subject to the terms of separate legally binding documentation and nothing in this document constitutes an offer to provide any products or services.

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