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European Holding Company Analysis 2017 (Extended)

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European Holding Company Analysis 2017 (Extended) European Holding Company Analysis 2017 (Extended) Dear Nexia member, We are pleased to present an updated version of the (Extended) European Holding Company Analysis, as per January 1, 2017. We gratefully acknowledge the contributions made by the following Nexia members (in alphabetical order per country): Austria: K&E Wirtschaftstreuhand GmbH in Graz, [email protected] Belgium: VGD in Antwerpen, [email protected] Cyprus: Nexia Poyiadjis in Nicosia, [email protected] Czech Republic: VGD s.r.o. in Prague, magda.vecerova@@vgd.eu Denmark: Christensen Kjaerulff in Copenhagen, [email protected] Finland: Nexia Fiscales Ltd in Helsinki, [email protected] France: Cabinet Sevestre in Paris, [email protected] Germany: DHPG Dr. Harzem & Partner mbB in Bonn, [email protected] Greece: Nexia Eurostatus Certified Auditors S.A. in Athens, [email protected] Guernsey: Saffery Champness in St. Sampson, [email protected] Hungary: VGD Ferencz & Partner Kft. in Budapest, [email protected] Italie: TCFCT – Studio Associato Consulenza Societaria e Tributaria in Milano, [email protected] Malta: Nexia BT in San Gwann, [email protected] Netherlands, The: Koenen en Co in Maastricht, [email protected] Norway: BHL DA in Billingstad, [email protected] Poland: Advicero Tax Sp. z o.o. in Warsaw, [email protected] Slovak Republic: VGD SLOVAKIA s.r.o. in Bratislava, [email protected] Slovenia: Cautela Pros d.o.o. in Ljubljana, [email protected] Spain: LAUDIS Consultor in Barcelona, [email protected] Sweden: Nexia Revision in Stockholm, [email protected] Switzerland: ABT Treuhandgesellschaft AG in Adliswil, [email protected] United Kingdom: Saffery Champness in London, [email protected] Extended with: Hong Kong: Nexia Charles Mar Fan & Co in Kong Kong, [email protected] Singapore: Nexia TS Tax Services Pte.Ltd. in Singapore, [email protected] South Africa: Nexia SAB&T in Cape Town, [email protected] Last but not least I would like to express my gratitude to my secretary mrs. Eugenie Gerritse, for all the hard work she has done to complete this update. This European Holding Company Analysis is meant as a practical tool for an initial comparison of relevant tax aspects of some holding company regimes. It should not be used as a substitute for obtaining local tax advice. May 1, 2017 Maastricht, The Netherlands Chris Leenders International Tax Partner at Koenen en Co European Holding Company Analysis – 2017 (Extended) 1 COUNTRY (NOTES CODE) AUSTRIA (A) 1 BELGIUM (B) CYPRUS (CY) CZECH REPUBLIC DENMARK (DK) (CZ) RELEVANT CRITERIA / DATE LAST UPDATE Jan-17 Jan-17 Jan-17 Jan-17 Jan-17 Registered and/or Type of Holding Company Resident Company Resident Company Resident Company Resident Company 1 resident company 1 Treatment of Dividend Income How is Dividend Income treated for tax 1 purposes – in particular, is the dividend Participation 95% Deduction Exempt from any Participation Participation 2 income either Exemption Cyprus taxes subject Exemption Exemption (a) exempt from tax under a “participation to easily met 1,2 exemption” or conditions (b) taxable with credit for foreign tax credits 2 Minimum Participation for Dividend income 10 % At least 10% No 10 % At least 10% Minimum participation holding level (%) or € 2.500.000 required to be satisfied 3 Treatment of Capital Gains Income Exempt from tax under 3 a “participation” Exempt from taxation Participation Exempt from taxes How is Capital Gains Income treated for tax Optional exemption, but only Exemption purposes – in particular, is the capital gain Participation for small and medium either 2 Exemption sized companies. Tax (a) exempt from tax under a “participation rate for big sized exemption” or companies: 0,412% (b) taxable with credit for foreign tax credits European Holding Company Analysis – 2017 (Extended) 2 COUNTRY (NOTES CODE) AUSTRIA (A) 1 BELGIUM (B) CYPRUS (CY) CZECH REPUBLIC DENMARK (DK) (CZ) RELEVANT CRITERIA / DATE LAST UPDATE Jan-17 Jan-17 Jan-17 Jan-17 Jan-17 4 Minimum Participation for Capital Gains 10% N/A No 10% 10% for quoted shares 0% for unquoted Minimum participation holding level (%) shares required to be satisfied 5 Minimum “ownership” period requirements What are the minimum “ownership” period Requirements in respect of: 1 year a) At least 1 year None 1 No minimum 12 months 3 (a) Dividend income 1 year b) If less than 1 year, None ownership period (b) Capital gains a tax rate of 25,75% applies (for derived from the participating holding? all companies) 6 “Active Business” Test on underlying participation The underlying The underlying No 2 No No 4 Does the underlying subsidiary require to be subsidiary has to be subsidiary can itself an active operating company or can the an active one. be a passive holding subsidiary be, itself, a passive holding company? 7 “Subject to tax” Test on underlying participation Yes Yes 2 No 2 Yes Does the subsidiary require to be subject to taxation in its jurisdiction of registration? Minimum 15% Similar to Should be the Belgian subject of Yes 5 If so, what is the minimum acceptable level of Corporate similar CITR taxation (% rate) in the jurisdiction of the Income Tax 2 higher than 0 % holding company for the purposes of this test? European Holding Company Analysis – 2017 (Extended) 3 COUNTRY (NOTES CODE) CZECH REPUBLIC 1 BELGIUM (B) CYPRUS (CY) DENMARK (DK) AUSTRIA (A) (CZ) RELEVANT CRITERIA / DATE LAST UPDATE Jan-17 Jan-17 Jan-17 Jan-17 Jan-17 8 Corporate Rate of Taxation 3 Corporate tax rate in jurisdiction 25% 33.99% 12.5% 19 % 22% 9 Withholding Tax – Dividend (Outgoing) 4 4 6 (a) Non-Treaty rate on Dividends 27,5% 15% or 30% 0% 35 % 0% / 27% (b) Treaty – range of withholding taxes 0% – 4 0 – 15 % 0% 15% 10 Withholding Tax - Dividends (Incoming) 5 General range of withholding taxes on 0 – 15% 0% - 15% 0-15% 0 – 15 % 0% - 15% dividends in the foreign source jurisdiction in terms of treaty network. 11 Withholding Tax - Liquidation of Holding Co. 4 4 6 Is a withholding tax imposed on the final Yes In general: 30% 0% Yes/15 % Yes/35% No distribution of assets of the holding company in liquidation? Non-Treaty European Holding Company Analysis – 2017 (Extended) 4 COUNTRY (NOTES CODE) CZECH REPUBLIC AUSTRIA (A) 1 BELGIUM (B) CYPRUS (CY) DENMARK (DK) (CZ) RELEVANT CRITERIA / DATE LAST Jan-17 Jan-17 Jan-17 Jan-17 Jan- UPDATE 17 12 Interest Deductions & Thin Yes, but subject to Capitalisation conditions i.e. Rules - Debt : Equity Ratios Notional Interest 5 7 (a) Interest Deductions Yes Exemption: if Deductible Deduction(NID) Interest Expences of No Are Interest Expenses incurred on loans acquired from a group available & actual foreign participation (received to finance the acquisition of company interest expense acquisiton are non- the foreign participation) deductible deduction for 100% tax deductible 5 against dividend income; capital gains ‘trading’ subsidiaries or other income of the holding company? No 3 7 No Yes Yes Yes (b) Debt : Equity Ratios Are there restrictions on the level of 6 2 non- equity capital financing of the 1 : 1 6 : 1 holding company in the form of prescribed Debt: Equity ratios? N/A 3 6 3 N/A 5 : 1 4 : 1 7 4 : 1 Debt : Equity ratio: 13 Controlled Foreign Corporation ( “CFC”) & “anti-abuse” regulations (a) CFC Regulations No such special 4 Are CFC regulations applied? Yes Yes No local regulations Yes Are the regulations applied only to a 7 4 prescribed “black list” of jurisdictions Reference to Black list N/A N/A N/A or with reference to the effective rate effective rate of tax imposed in the overseas jurisdiction? European Holding Company Analysis – 2017 (Extended) 5 COUNTRY (NOTES CODE) CZECH REPUBLIC 1 BELGIUM (B) CYPRUS (CY) DENMARK (DK) AUSTRIA (A) (CZ) RELEVANT CRITERIA / DATE LAST Jan-17 Jan-17 Jan-17 Jan-17 Jan-17 UPDATE (b) Other “anti-abuse” 6 regulations Yes No Yes No No Are “anti-abuse” provisions applied in regard to the EU Parent-Subsidiary Directive (90 / 435 / EEC)? 14 Binding Advance Tax Rulings (pre- transaction) 8 7 4 Are Advance Tax Rulings available Yes Yes Yes Yes Yes pre- transaction? Are these rulings granted only in respect No No 7 4 No of specific situations? No Yes Changes due to the Tax 15 Other taxes Reform 2016 Capital 8 (a) Capital Duty Duty is canceled with 0% See below No 0% (b) Transfer Tax on shares 01.01.2016 0% 0% No 0% (c) Annual Net Worth / Patrimonial Tax The transfer of at least 0% 0% No 0% (d) Trade Tax 95 % of the substance 0% 0% No 0% of the partnership to new shareholders within five years is taxable as RETT European Holding Company Analysis – 2017 (Extended) 6 COUNTRY (NOTES CODE) CZECH REPUBLIC AUSTRIA (A) 1 BELGIUM (B) CYPRUS (CY) DENMARK (DK) (CZ) RELEVANT CRITERIA / DATE LAST UPDATE Jan-17 (EXTENDEJDan) E-1U7R OPEAN HOLDINGJa CnO-1M7P ANY ANALYSIS Jan-17 Jan-17 RELEVANT CRITERIA / DATE LAST UPDATE FINLAND (FI) FRANCE (FR) GERMANY (DE) GREECE (GR) GUERNSEY (GG) 1C6O UDNoubTRYle (NTaOxT TrESea CtOy NDeE)t work RELEVANT CRITERIA / DATE LAST UPDATE Jan-17 Jan-17 Jan-1 7 Jan-17 Jan-17 (a) Number of treaties in operation Type of Holding Company Resident Company Resident C ompany Resident Co mpany Resident Co mpany Resident C ompany (b) Is the holding company type excluded 91 89 Over 55 87 75 from any of the treaties? 1 Treatment of Dividend Income No No No a) Excempt Nfrom tax Dividend iNncoo me is (c) Do any of the treaties include “anti- How is Dividend Income treated for tax under a taxable at the relevant treaty shopping” provisions and/or purposes – in particular, is the participat ion corporate rate (see note detailed “beneficial ownership” tests? 5 9 8 dividend income either Yes Yes Yes exemptNo/ionY efosr EC GG1) andY ecsre d it for (a) exempt from tax under Participation 95 % Partic ipation 95% subsidiairies foreign tax may be a“participation exemption” or Exemption Exempt ion Participation applicable in some 17 Substance requirements (b) taxable with credit for foreign tax credits 1 Exemption b) Taxable with credit cases.
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