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Outbound Acquisitions: European Holding Company Structures

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Outbound Acquisitions: European Holding Company Structures OUTBOUND ACQUISITIONS: EUROPEAN HOLDING COMPANY STRUCTURES Ewout van Asbeck David Glynn Van Doorne A & L Goodbody Amsterdam Dublin Nikolaj Bjørnholm Werner Heyvaert Bech-Bruun Stibbe Copenhagen Brussels Willem P. Bongaerts Nairy Der Arakelian-Merheje Loyens & Loeff Der Arakelian-MerhejeLaw Office Luxembourg/New York Nicosia Chokri Bouzidi Stephan Neidhardt Nauta Dutilh Walder Wyss & Partners* Luxembourg/London Zurich Guillermo Canalejo Lasarte Luca Rossi Uria & Menendez Facchini Rossi Scarioni Madrid Milan Michel Collet Stanley C. Ruchelman CMS-Bureau Francis Lefebvre The Ruchelman Law Firm New York New York City Oliver Doerfler Robert Schneider KPMG Attorney at Law Frankfurt Vienna Jonathan S. Schwarz 3 Temple Gardens, Tax Chambers, *Effective 8/1/07 London TABLE OF CONTENTS INTRODUCTION ................................................................................................................................. 9 1. LUXEMBOURG .................................................................................................................. 12 1.1. General/PARTICIPATION EXEMPTION.............................................................................. 13 1.1.1. Dividends .................................................................................................................. 13 1.1.2. Capital Gains............................................................................................................. 13 1.1.3. Subject to Tax ........................................................................................................... 13 1.1.4. Dividends or Capital Gains after Share Exchange.................................................... 14 1.1.5. Luxembourg Permanent Establishment .................................................................... 15 1.1.6. Partial Participation Exemption................................................................................ 15 1.1.7. Withholding Tax in Foreign Subsidiary's Country ................................................... 15 1.2. DEDUCTION OF COSTS.................................................................................................... 16 1.2.1. Write-offs.................................................................................................................. 16 1.2.2. Financial Costs.......................................................................................................... 17 1.2.3. Liquidation Losses .................................................................................................... 17 1.3. WITHHOLDING TAX ON OUTBOUND DIVIDENDS/CAPITAL GAINS................................... 17 1.3.1. Dividend Payment..................................................................................................... 17 1.3.2. Interest Payment on (Hybrid) Debt ........................................................................... 18 1.3.3. Capital Gains in Hands of Shareholder..................................................................... 18 1.3.4. Liquidation of a SOPARFI ....................................................................................... 19 1.3.5. Repurchase of Shares in a SOPARFI........................................................................ 19 1.4. OTHER INCOME TAX ISSUES........................................................................................... 19 1.4.1. Debt-Equity Ratio ..................................................................................................... 19 1.5. CAPITAL DUTY............................................................................................................... 19 1.5.1. Share Merger Exemption .......................................................................................... 20 1.5.2. Business Merger Exemption ..................................................................................... 20 1.6. ANNUAL NET WORTH TAX ............................................................................................ 21 1.7. SICAR........................................................................................................................... 21 1.8. SECURITIZATION VEHILCE.............................................................................................. 22 2. DENMARK .......................................................................................................................... 24 2.1. IN GENERAL................................................................................................................... 24 2.2. CORPORATE INCOME TAX .............................................................................................. 25 2.3. WITHHOLDING TAX IN FOREIGN SUBSIDIARY’S COUNTRY............................................. 26 2.4. CORPORATE TAXATION OF INBOUND DIVIDENDS ........................................................... 27 2.5. C.F.C. TAXATION .......................................................................................................... 28 2.5.1. C.F.C......................................................................................................................... 28 2.6. CAPITAL GAINS TAXATION ............................................................................................ 29 2.7. INTEREST DEDUCTIONS AND THIN CAPITALIZATION RULES ........................................... 30 2.7.1. Thin Capitalization ................................................................................................... 30 2.7.2. Additional Limitations.............................................................................................. 31 2 2.8. WITHHOLDING TAX ON OUTBOUND DIVIDENDS............................................................. 33 2.9. INTEREST WITHHOLDING TAX AND LIMITATION OF INTEREST DEDUCTIBILITY............... 33 2.10. TRANSFER PRICING ........................................................................................................ 35 2.11. GROUP OF COMPANIES – JOINT CROSS BORDER TAXATION ........................................... 36 2.12. INTERIM DIVIDENDS....................................................................................................... 37 2.13. BINDING ADVANCE RULING........................................................................................... 37 3. SWITZERLAND .................................................................................................................. 38 3.1. IN GENERAL................................................................................................................... 38 3.2. TAXATION OF HOLDING COMPANIES.............................................................................. 38 3.2.1. Income Tax ............................................................................................................... 38 3.2.2. Wealth tax ................................................................................................................. 39 3.2.3. Stamp Duty at Formation.......................................................................................... 39 3.2.4. Capital Gains Tax ..................................................................................................... 39 3.2.5. Value-Added Tax (“V.A.T.”) ................................................................................... 39 3.2.6. Securities Turnover Tax............................................................................................ 40 3.2.7. Swiss Withholding Tax............................................................................................. 40 3.2.8. Tax Credit for Foreign Withholding Taxes .............................................................. 41 3.2.9. Swiss Tax Treaty Network........................................................................................ 40 3.2.10. 1962 Decree on Misuse of Treaties........................................................................... 41 3.2.11. 1998 Circular Letter.................................................................................................. 41 3.2.12. Special Rule for Companies with Contacts in the U.S. ............................................ 42 3.2.13. Holding Company Activities .................................................................................... 42 3.3. ADDITIONAL TAX RELATED ISSUES................................................................................ 42 3.3.1. U.S. Check-the Box-Rules........................................................................................ 42 3.3.2. Swiss Ruling Policy.................................................................................................. 43 3.3.3. Swiss Debt-Equity Rules .......................................................................................... 43 3.3.4. Use of Swiss Holding Companies............................................................................. 43 4. BELGIUM............................................................................................................................. 44 4.1. CORPORATE INCOME TAX .............................................................................................. 44 4.1.1. General Regime......................................................................................................... 44 4.1.2. Participation exemption – General............................................................................ 44 4.1.3. Dividends Received Deduction................................................................................. 44 4.1.4. Capital Gain Exemption...........................................................................................
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