Dutch tax treaty overview Q4, 2013 Hendrik van Duijn DTS Duijn's Tax Solutions Zuidplein 36 (WTC Tower H) 1077 XV Amsterdam The Netherlands T +31 888 387 669 T +31 888 DTS NOW F +31 88 8 387 601 duijn@duijntax.com 1 of 16
Dutch tax treaty overview Q4, 2013 i. Which Dutch tax treaties have been concluded recently? ii. Concluded tax treaty highlights! iii. Which Dutch tax treaties have been amended recently? iv. Amended tax treaty highlights! v. Which tax treaties are being (re)negotiated? vi. Recent Dutch treaty opportunities! vii. Dutch tax treaty and Dutch bilateral investment treaty list; viii. Dutch bilateral investment treaty only list; Contents 2 of 16
i) Which tax treaties have been concluded recently? Tax treaties with the Netherlands Country Signed Applicable United Kingdom (Bank Tax) June 12, 2013 January 1st, 2011 (retrospective) Ethiopia August 10, 2012 Not Yet Panama October 6, 2010 December 1, 2011 Hong-Kong March 22, 2010 October 24, 2010 Oman October 5, 2009 December 29, 2011 Saudi Arabia October 13, 2008 December 1, 2010 Azerbaijan September 22, 2008 December 18, 2009 United Arab Nations May 8, 2008 June 2, 2010 Qatar April 24, 2008 December 25, 2009 Bahrain April 16, 2008 July 16, 2009 Ghana March 10, 2008 November 12, 2008 Barbados November 28, 2006 July 12, 2007 3 of 16
ii) Concluded tax treaty highlights! - United Kingdom: Tax treaty for the avoidance of double bank tax - Ethiopia: Tax Treaty: - Dividend Withholding tax 5%; - Interest Withholding tax 5%; - Royalty Withholding tax 5%; - Panama: Tax Treaty: - Dividend Withholding tax 0% (LOB); - Interest Withholding tax 5%; - Royalty Withholding tax 5%; - Hong-Kong: Tax Treaty - Dividend Withholding tax 0% (LOB); - Interest Withholding tax 0%; - Royalty Withholding tax 3%; 4 of 16
iii) Which treaties have been amended recently? Amended Dutch tax treaties Country Signed Applicable as of Canada September 18, 2013 Unknown United Kingdom June 12, 2013 Expected NL January 1st, 2015 (UK 6, April 2015) China May 15, 2013 Unknown Norway April, 23 2013 Unknown Tjech Republic October 15th, 2012 May 31, 2013 India May 5, 2012 November 2, 2012 Germany April 12, 2012 Unknown Japan August 25, 2010 December 29, 2011 Slovakia June 7, 2010 December 1,2010 Singapore August 25, 2009 May 1, 2010 Belgium June 23, 2009 Ratified by NL Luxembourg May 29, 2009 July 1, 2010 5 of 16
iv) Amended tax treaty highlights! Curacao; Introduction of 0% dividend withholding tax, limitation on benefits clause, expected entry, reduction of 8,3% to 5% up to 2019, entry into force January 1 st, 2015. Canada: Information exchange clause amended; United Kingdom: Government employees and profit attribution permanent establishments; China: Revised information exchange clause and reduction of dividend withholding tax to 5%; Norway: Reduction of dividend withholding tax pertaining to pension funds, providing services can constitute a permanent establishment (if the services take place for a period exceeding a 6 month threshold) and Pensions, annuities and social security benefits taxing rights are allocated to the source country; Czech Republic: Revised information exchange clause, government employee clause as well as a change in the relief of double taxation method from a Czech Republic perspective. India: Most favorite nation application. Reduction of dividend withholding tax to 5%, interest withholding tax of 10% and royalty withholding tax of 10% (specific scope services); Germany: Dividend withholding tax 5%, interest withholding tax 0% and royalty withholding tax 0%. Slightly improved pension funds article, treaty made up-to-date with OECD model, comprehensive protocol, various caveats and complex rules apply. 6 of 16
v) What tax treaties are being (re)negotiated? Based on a.o. the Dutch State Secretary announcement (April 26, 2013): The treaties with the following countries are currently negotiated: - Algeria, Chili, Colombia, Cyprus, Iraq, Kenia The treaties with the following countries are currently renegotiated: - Australia, Brazil, France, Ireland, India, Indonesia, Mongolia, New Zealand and Turkey, The treaty negotiations with the following countries are going to be initiated: - Uruguay, Costa Rica, Malawi, Poland, Spain, Tadzjikistan, Tanzania, South-Africa and South-Korea. 7 of 16
vi) Recent Dutch treaty opportunities? Germany, signed on 12 April, 2012, hopefully to apply as from January 1 st, 2014, comprehensive protocol; Japan, amended as per August 25, 2010, applies as from December 29 th, 2011, 0% dividend withholding tax rate available, includes a limitation on benefits article; Ethiopia, Bilateral Investment Treaty in force, tax treaty to be in force soon; Argentina cancelled its tax treaty with several countries including Spain. Because the Netherlands has a solid tax treaty as well as a Bilateral Investment Treaty, this is a genuine treaty opportunity. 8 of 16
vii) Dutch tax treaty / bilateral investment treaty list LEGENDA Country Year Signing Dividend Interest Royalty LOB BIT Dutch tax treaty Bilateral Investment Treaty This is the country with wich the treaty had been signed, or its successor (for instance former Sovjet Union states) This is the year in which the treaty was signed. This typically does not coincide with the year of enactment and/or the applicable year The dividend withholding tax rates are divided by a / to reflect the portfolio investment rate on the one hand and the corporate participation rate (with a certain percentage of vote and/or value threshold which needs to be met) The interest withholding tax rates are divided by a / to reflect the different applicable rates. The lower rate is typically the rate used by banks and government owned businesses. The royalty withholding tax rates are divided by a / to reflect the different applicable rates. The rates used differ by category of royalty income, such as trademarks, patents or movie licenses. Stands for Limitation On Benefits clause, which restricts the eligibility of the treaty benefits to qualified persons under the treaty. Bilateral Investment Treaty (the treaty with Venezuala has been cancelled, therefore the X has been inserted. It still remains in force) DTT BIT 9 of 16
vii) Dutch tax treaty / bilateral investment treaty list Maximum Withholding Tax Rates Country Year Signing Dividend Interest Royalty LOB BIT Albania 2004 0/5/15 0/5/10 10 N Y Argentina 1996 10/15 12 3/5/10/15 N Y Armenia 2001 0/5/15 0/5 5 N Y Aruba 1964 5/7,5/15 0 0 N N Australia 1976 15 10 10 N N Austria 1970 5/15 0 0/10 N N Azerbaijan 2008 5/10 0/10 5/10 N X Bangladesh 1993 10/15 7,5/10 10 N Y Bahrein 2008 0/10 0 0 N N Barbados Belarus 2006/2009 0/15 5 0/5 N N 1996 0/5/15 5 3/5/10 N Y Belgium 1933/1970/2001 0/5/15 0/10 0 N N Bosnia 1982 5/15 0 10 N Y Brazil 1990 15 0/10/15 15/25 N N Bulgaria 1990 5/15 0 0 N Y Canada 1957/1986 5/10/15 0/10 0/10 N Y China (P.R.C.) 1987 10 0/10 6/10 N Y Croatia 2000 0/15 0 0 N Y Curaçao 1964 5/7,5/15 0 0 N N Czech Republic 1974 0/10 0 5 N Y 10 of 16
vii) DTT / BIT list continued Maximum Withholding Tax Rates Country Year Signing Dividend Interest Royalty LOB BIT Denmark 1957/1996 0/15 0 0 N N Egypt 1999 0/15 12 12 N Y Estonia 1997 5/15 0/10 5/10 N Y Finland 1954/1970/1995 0/15 0 0 N N France 1949/1973 5/15 0/10 0 N N Georgia 2002 0/5 0 0 N Y Germany 1959/2012 10/15 0 0 N N Ghana 2008 5/10 0/8 8 N Y Greece 1981 5/15 8/10 5/7 N N Hong-Kong 2010 0/10 0 3 Y N Hungary 1938/1986 5/15 0 0 N Y Iceland 1997 0/15 0 0 N N India 1988 5/10/15 10/15 10/20 N Y Indonesia 1973/2002 10 0/10 10 N Y Ireland 1969 0/15 0 0 N N Israel 1973 5/10/15 10/15 5/10 N N Italy 1957/1990 5/10/15 0/10 5 N N Japan 1970 0/5/10 0/10 0 Y N 11 of 16
vii) DTT / BIT list continued Maximum Withholding Tax Rates Country Year Signing Dividend Interest Royalty LOB BIT Jordan 2006 0/5/15 5 10 N Y Kazakhstan 1996 0/5/15 0/10 10 N N Korea South 1978 10/15 10/15 10/15 N Y Kosovo 1982 5/15 0 10 N N Kuwait 2001 15 0 0 N Y Kyrgyzstan 1982 15 0 0 N Y Latvia 1994 5/15 0/10 5/10 N Y Lithuania 1999 5/15 10 5/10 N Y Luxembourg 1968 2,5/15 0 0 N N Macedonia 1998 0/15 0 0 N Y Malawi 1948 -/- 0 0 N Y Malaysia 1988/1996/2009 0/15 10 8 N Y Malta 1977 5/15 10 0/10 N Y Mexico 1993/2008 0/5/15 0/5/10/15 10 N Y Moldova 2000 0/5/15 0/5 0 N Y Mongolia 2002 0/15 0/10 0/5 N Y Morocco 1977 10/25 10/25 10 N Y Netherlands Antilles 1964/1985/1996/2005 8,3/15 0 0 N N 12 of 16
vii) DTT / BIT list continued Maximum Withholding Tax Rates Country Year Signing Dividend Interest Royalty LOB BIT New Zealand 1980 15 0/10 10 N N Nigeria 1991 12,5/15 12,5 12,5 N Y Norway 1950/1966/1990 0/15 0 0 N N Oman 2009 0/10 0 8 N Y Pakistan 1982 10/20 10/15/20 5/15 N Y Panama 2010 0/15 0/5 5 N Y Philippines 1989 10/15 10/15 10/15 N Y Poland 1979/2002 5/15 0/5 5 N Y Portugal 1999 10 0/10 15 N N Qatar 2008 0/10 0 5 N N Romania 1979/1998 0/5/15 0 0 N Y Russia 1996 5/15 0 30 N Y Saudi Arabia 2008 5/10 5 7 N N Serbia 1982 5/15 0 10 N Y Singapore 1971 0/15 0/10 0 N Y Slovakia 1974 0/10 0 5 N Y Slovenia 2004 5/15 0/5 5 N Y South Africa 1971/2005 5/10 0 0 N Y Spain 1971 5/15 10 6 N N Sri Lanka 1982 This document is only informative 10/15 and should not be used 5/10 10 N Y 13 of 16
vii) DTT / BIT list continued Maximum Withholding Tax Rates Country Year Signing Dividend Interest Royalty LOB BIT St Martin 1964/1985/1996/2005 8,3/15 0 0 N N Suriname 1975 7,5/15/20 5/10 5/10 N N Sweden 1935/1952/1968/1991 0/15 0 0 N N Switzerland 1951 0/15 0 0 N N Taiwan 2001 10 0/10 10 N N Tajikistan 1982 15 0 0 N Y Thailand 1975 5/25 10/25 5/15 N Y Tunisia 1995 0/20 7,5 7,5 N Y Turkey 1986 5/10/15/20 0/10/15 10 N Y Uganda 2004 0/5/15 0 0/10 N Y Ukraine 1995 0/5/15 0/2/10 0/10 N Y United Arab Emirates United Kingdom United States 2007 0/5/10 0 0 N N 1935/1948/1967/1980/ 2008 0/5/10/15 0 0 N N 1948/1992 0/5/15 0 0 Y N Uzbekistan 2001 0/5/15 0/10 0/10 N Y Venezuela 1991 0/10 5 5/7/10 N X Vietnam 1995 5/7/15 7 5/10/15 N Y Zambia 1977 5/15 10 10 N Y Zimbabwe 1989 10/20 10 10 N Y 14 of 16
viii) Bilateral investment treaty only list Country Country Country Country Belize Cuba Jamaica Peru Benin Ecuador Kenya Senegal Bolivia El Salvador Laos Sudan Burkina Faso Eritrea* Lebanon Tajikistan Cambodia Ethiopia Mali Tanzania Cameroon Gambia Mozambique Uruguay Cape Verde Guatemala Namibia Yemen Chile Honduras Nicaragua Costa Rica Ivory Coast Paraguay 15 of 16
SCOPE LIMITATION This slide-deck does not represent an opinion of DTS and should not be relied upon as such. The slide-deck has not been prepared with the level of due diligence and analysis that would be needed Further research and analysis is required prior This slide-deck has not been reconciled with the Dutch tax authorities. The information in this slide-deck is based on general information and cannot be used. This slide-deck is intended to provide preliminary guidance in anticipation of further examination, discussions and analysis of issues to be identified. This document was not intended or written to be used, and it cannot be used, for the purpose of avoiding U.S. federal, state or local tax penalties. This includes penalties that may apply if the transaction that is the subject of this document is found to lack economic substance or fails to satisfy any other similar rule of law. Pursuant to an engagement between DTS and Client, General Terms & Conditions of DTS are applicable to the work performed in the execution of the engagement by DTS. The liability with respect to the envisaged engagement is limited in accordance with the provisions laid down in the General Terms & Conditions.Please note that DTS is not liable in any event for lost profits or any consequential, indirect, punitive, exemplary or special damages. Hendrik van Duijn DTS Duijn's Tax Solutions Zuidplein 36 (WTC Tower H) 1077 XV Amsterdam The Netherlands T +31 888 387 669 T +31 888 DTS NOW F +31 88 8 387 601 duijn@duijntax.com 16 of 16