CLIENT – ATTORNEY PRIVILEGED WORK PRODUCT

Jurisdictional comparison The Netherlands – Luxembourg – Cyprus Holding companies CLIENT – ATTORNEY PRIVILEGED WORK PRODUCT

Jurisdiction Netherlands Luxembourg Cyprus

CORPORATE/LEGAL

Incorporation time and costs Possible in 3 days Less than a week Up to 2 weeks app. EUR 2,500 app. EUR 4,000 app. EUR 2,000

Share capital BV (Besloten vennootschap met Sarl (Société à responsabilité Ltd. (a Cyprus limited liability beperkte aansprakelijkheid - limitée - Luxembourg private company): no minimum share Dutch private limited liability limited liability company): EUR capital, denomination of the company): no minimum share 12,500 minimum share capital, shares is free. capital, no authorized capital in denomination of the shares is the articles of association, capital free. may be denominated in a currency other than Euro, SA (Société Anonyme - nominal value of shares may be Luxembourg public limited expressed in more than two digits liability company): EUR 31,000 behind the decimal point. minimum share capital, denomination of the shares is NV (Naamloze vennootschap – free. Dutch public limited liability company): minimum share capital SCA (Société en Commandite par of EUR 45,000. Actions – Luxembourg partnership limited by shares): EUR 31,000 Coop (Coöperatie met uitgesloten minimum share capital, aansprakelijkheid – a Dutch denomination of the shares is cooperative ): no minimum free. contribution.

Registered office Must be maintained in the Must be maintained in Must be maintained in Cyprus. Netherlands . Luxembourg . CLIENT – ATTORNEY PRIVILEGED WORK PRODUCT

Jurisdiction Netherlands Luxembourg Cyprus

Shareholders/directors BV/NV: Minimum 1 Sarl: minimum 1 shareholder/1 Minimum 1 shareholder/1 shareholder/1director. manager. director plus company secretary.

Coop: minimum 2 members/1 SCA: minimum 2 limited director. partners/1 general partner.

SA: minimum 1 shareholder/3 directors.

Shareholders liability Limited to contribution. Sarl/SA: Limited to contribution. Limited to contribution.

SCA: limited partners – limited to contribution, general partner – unlimited.

Reporting Mandatory filing of annual Mandatory filing of annual Annual accounts and annual accounts including financial accounts. return must be filed with statements and a management Registrar of Companies. board report.

Accounting requirements No mandatory audit, unless 2 of No mandatory independent Mandatory audit annual accounts. the following 3 criteria are auditor, unless 2 of the following fulfilled by the company during 2 3 criteria are fulfilled by the successive years: company during 2 successive - total assets exceeding EUR 4.4 years: million; - total balance sheet exceeding - turnover exceeding EUR 8.8 EUR 3.125 million; million; - net turnover: exceeding EUR - a workforce of more than 50 6.25 million; employees. - average number of full-time CLIENT – ATTORNEY PRIVILEGED WORK PRODUCT

Jurisdiction Netherlands Luxembourg Cyprus

employees: 50.

Confidentiality The companies register (reveals The companies register (reveals The companies register (reveals information concerning the information concerning the information concerning the directors, sole shareholder, directors, shareholders and directors, shareholders, registered address, incorporation classes and amounts of shares registered address, incorporation date) and articles of association held, registered address, date, charges and mortgages are publically accessible. incorporation date), articles of registered on company assets) is association are publically publically accessible. accessible.

Meetings of shareholders May be held outside the May be held outside Luxembourg. May be held outside Cyprus. Netherlands if the articles of association so provide or Decisions can be also taken anywhere else if all shareholders outside a physical meeting by way agree and the of a written resolutions of managing/supervisory directors shareholders. have been given the opportunity to advise on the proposed resolutions beforehand.

Decisions can be also taken outside a physical meeting by way of a written resolutions of shareholders/members.

TAX

Tax on capital contributions None. None. EUR 102 registration fee plus capital duty of 0.6% of the authorized capital and of any CLIENT – ATTORNEY PRIVILEGED WORK PRODUCT

Jurisdiction Netherlands Luxembourg Cyprus

subsequent increases in authorized capital (contributions with regards to merger or reorganization are exempt).

Corporate Income tax rate 25% (20% for the first EUR Effective combined rate of 10% (interest received other than 200,000 of profits). 29.22%. An annual minimum flat in, or closely related to the tax of EUR 3,210 is levied on ordinary course of business is holding companies of which the subject to 15% special defense assets consist for more than 90% contribution (“SDC”) tax. of ‘financial assets’. Such tax is creditable against a future tax liability.

Participation exemption regime Provides full exemption for both Provides full exemption for All dividends derived from a dividends and capital gains. both dividends and capital foreign participation are full gains. 1-year holding period exempt. No minimum Minimum participation of at least and minimum participation participation or holding period 5% and one of the following three requirements apply. Minimum requirements apply. tests is met: participation of at least 10% (or acquisition price of EUR 1.2 SDC tax of 20% applies on (i) The objective with respect to million for dividends and EUR 6 dividends derived from a non- the participation is to obtain million for capital gains), resident subsidiary that engages a return that is higher than a participation is sufficiently directly or indirectly for more return that may be expected taxed (i.e. a tax rate of 10.5% than 50% in activities which lead from regular asset and a comparable tax base) and to investment income and the management (“Purpose a minimum holding period of foreign tax is significantly lower Test”); 12months applies. than the tax rate payable in Cyprus (“passive dividends”). (ii) The direct and indirect assets of the subsidiary consist for Capital gains realized from the CLIENT – ATTORNEY PRIVILEGED WORK PRODUCT

Jurisdiction Netherlands Luxembourg Cyprus

less than 50% of so-called disposal of securities are exempt. low-taxed free passive assets Gains from sale of shares of (“Asset Test”). Generally this unlisted companies owning Test is easily met by immovable property in Cyprus are operating companies with an subject to 20% tax capital gains ‘active business enterprise’; tax to the extent the gains are derived from such property. (iii) The subsidiary is subject to a genuine tax determined on Dutch tax standards (i.e. an effective tax of at least 10% according to Dutch tax standards) (“Subject-to-tax Test”).

CFC, anti-abuse and interest Light CFC rules and certain No CFC rules, but certain anti- No CFC rules, general anti- deduction limitations limitations on the deduction of abuse provisions and limitations avoidance provisions including interest may apply (i.e. specially on interest deductibility may the disregarding of artificial or on the deduction of interest apply. factious transactions may apply. expenses on debt related to the acquisition of a participation).

Dividend withholding tax (“WHT”) on outbound dividends

(i) Domestic rate 15%. Subject to certain anti-abuse 15%. 0%. provision, the Dutch cooperative is fully exempt from withholding tax on distributions and is thus very efficient when dividend distributions are expected. CLIENT – ATTORNEY PRIVILEGED WORK PRODUCT

Jurisdiction Netherlands Luxembourg Cyprus

(ii) WHT on distributions made to 0% if a participation of at least 5% 0% if a participation of at least 0%. EU corporate shareholders is held in the holding company. 10% (or EUR 1.2 million qualifying under the local acquisition price) is held in the implementation of the EU holding company for an Parent/Subsidiary Directive uninterrupted period of at least 12 months.

(iii) WHT on distributions made 15%, which may be reduced to 15%, which may be reduced to 0% No dividend withholding tax on to corporate shareholders 0% by means of an applicable by means of an applicable tax overseas distributions to non- abroad the EU tax treaty. Subject to certain treaty. In addition, profit residents. anti-abuse provisions, the participating loans (i.e. CPECS) Dutch cooperative is fully and partial redemption of shares exempt from withholding tax are commonly used and tax- on distributions. efficient techniques to avoid withholding tax on distributions.

Withholding tax on interest 0%. 0% (an exception may apply for 0% on interest paid to non- payments individuals by virtue of the EC resident recipients. Savings Directive).

Withholding tax on royalty None. None. None, unless the rights are used payments in Cyprus (subject to 10% withholding tax).

Taxation of non-resident Capital gains and dividends may Capital gains are only taxed in Capital gains and dividends shareholders trigger Dutch taxes at the level of Luxembourg in case of the derived by non-resident non-resident shareholders if a alienation of a substantial interest shareholders on the participation substantial interest is held in the in the holding company (i.e. in the holding company are fully holding company (i.e. interest of more than 10%) and exempt from Cyprus tax at the CLIENT – ATTORNEY PRIVILEGED WORK PRODUCT

Jurisdiction Netherlands Luxembourg Cyprus

participation of at least 5%). Such such gain is realized within a level of such shareholders. taxation would not apply if the period of 6 months following the participation is attributable to a acquisition of the shares in the business enterprise at the level of holding company. Dividends are the non-resident shareholder or not subject to Luxembourg taxes such interest is not held with one at the level of the non-resident of the main purposes to avoid shareholder. Dutch personal income tax and/or Dutch dividend withholding tax liability at the level of another person. In practice, it is not difficult to show the presence of an enterprise at the level of non- resident shareholders.

Tax rulings Advance tax rulings are granted Tax rulings are standard practice Although it is not standard confirming residency of the in Luxembourg and tax authorities practice, advance clearances are holding company and in relation are willing to issue tax rulings issued by the Cyprus tax to the participation exemption confirming the taxation of all authorities and are available upon regime and the position of non- matters that are of importance request. resident shareholders. for a holding company (e.g. participation exemption regime, exemption of distributions – in particular alphabetic shares and CPECS – and also debt-financing activities).

Double Tax Treaty Network

(i) Number of treaties in 96. 64. 45. operation CLIENT – ATTORNEY PRIVILEGED WORK PRODUCT

Jurisdiction Netherlands Luxembourg Cyprus

(ii) Do any of the treaties include Yes, amongst others: NL-Portugal, Yes, amongst others, LUX-US. Yes, The Cyprus-US double tax “anti-treaties hopping” NL-US, NL-Malta. treaty contains ‘limitation of provisions and/or detailed benefits’ provisions. “beneficial ownership” tests?

Key items included in the tax treaty concluded with Russia

Withholding tax rates

(i) Dividends 5%: if the beneficial owner is a 10% (to be reduced to 5% under 5%: if the beneficial owner has company – other than a the New Protocol to the Treaty as invested at least EUR 100,000 (or partnership) which holds 25% of per 2014): if the beneficial owner the equivalent in other national the capital of the company paying holds directly at least 20% of the currency). 10%: in all other cases. the dividends and has invested at company paying the dividends least EUR 75,000 (or the and has invested at least EUR equivalent in other national 75,000 (or the equivalent in other currency). 15%: in all other cases. national currency). 15%: in all other cases.

(ii) Interest 0%. 0%. 0%.

(iii) Royalties 0%. 0%. 0%.

Local taxation of capital gains on shares

(i) Local taxation of capital gains No Russian local taxation No Russian local taxation No Russian local taxation, unless on shares (depending on local legislation (depending on local legislation the local Russian subsidiary this may be different for this may be different for derives more than 50% of its subsidiaries investing in subsidiaries investing in value from immovable property CLIENT – ATTORNEY PRIVILEGED WORK PRODUCT

Jurisdiction Netherlands Luxembourg Cyprus

immovable property). immovable property). located in Russia).

FEES

Annual corporate fees of trust app. EUR 6,000 – 8,000. app. EUR 7,000 – 10,000. app. EUR 4.000 – 6.000. companies for management, administration and domiciliation service

Governmental fees None. Annual fee of app. EUR 135 . Annual company maintenance fee EUR 350 payable to Registrar of Companies.

DISCLAIMER No individual who is a member, partner, shareholder, employee or consultant of, in or to any constituent part of Van Campen Liem (whether or not such individual is described as a “partner”) accepts or assumes responsibility, or has any liability, to any person in respect of this document. This document contains information confidential to Van Campen Liem. Copyright in the materials is owned by Van Campen Liem and the materials should not be copied or disclosed to any other person without the express authorisation of Van Campen Liem. This document is not intended to give legal advice and, accordingly, it should not be relied upon. It should not be regarded as a comprehensive statement of the law and practice in this area. Readers must take specific legal advice on any particular matter which concerns them. If you require any advice or information, please speak to your usual contact at Van Campen Liem. CLIENT – ATTORNEY PRIVILEGED WORK PRODUCT

CONTACT

Marcello Distaso Yana Levin

Netherlands J.J. Viottastraat 52 1071 JT Amsterdam The Netherlands

T: +31 20 7601 603 E: [email protected] [email protected]

Van Campen Liem is the joint trade name of Liem & Partners N.V. and Van Campen & Partners N.V. Liem & Partners N.V. has its statutory seat at Amsterdam, the Netherlands, and is registered with the Trade Register under number 54787882. Van Campen & Partners N.V. has its statutory seat at Amsterdam, the Netherlands, and is registered with the Trade Register under number 54033500.