Should a M&A advisor be informed about the Tax landscape in Netherlands? Tax aspects are of high importance when buying a business. Your advisor needs to be up to date with the tax framework that applies to M&A transactions in Netherlands. Here we mention some aspects that you need to consider when acquiring a company and setting up your tax structure in Netherlands. Tax-efficient acquisition structuring is important to prevent possible tax claims after the acquisition date. Effective planning and structuring can help you avoid complicated legal and regulatory issues in cross-border acquisitions. We provide relevant tax knowledge ourselves in M&A transactions or work with tax specialists that bring in the required taxation knowledge.
It is important to create the right legal structure and keep tax aspects into account before doing an acquisition. The legal structure during a M&A transaction should be set-up in such a way that it is most effective for future tax aspects. We can help give you the required tax advice to structure a business sale or purchase in a tax friendly manner.
Restrictions exist on the deductibility of interest on 'excessive' acquisition debt, including debt owed to third parties. When a Dutch target company is acquired that will be included in a consolidated tax group (fiscal unity) tax regulations exist. This is the case for debt with a Dutch holding company including debt owed to third parties. These rules reduce the effectiveness of tax grouping as a way to deduct interest on acquisition debt from operational profits of the target.
This Tax Bill includes, in addition to the existing anti-base erosion and thin cap restrictions, restrictions on the deduction of interest on acquisition debt. Leveraging Dutch acquisition vehicles that form a consolidated tax group (fiscal unity) with the Dutch target company, so that interest on the acquisition debt can be set-off against the Dutch target company's taxable profits are decreased. The existing anti-base erosion and thin cap rules, which effectively apply to intragroup financing only, have been further decreased to curb the leveraging of Dutch target companies. A Dutch parent company can, upon request, include a Dutch subsidiary in a fiscal unity if it holds at least 95% of its nominal share capital. As a result, Dutch CIT is levied as if the Dutch parent company and the Dutch subsidiary were a single taxpayer. Under the current rules, interest on 'excessive' Acquisition Debt can no longer be deducted from the taxable profits attributable to a Dutch target company.