The Dutch tax framework for cross-border mergers and acquisitions has changed significantly in recent years. These changes affect the major choices that buyers will need to make. This includes deciding whether or not to purchase shares or assets, and which method of acquisition will be used. This article briefly reviews some of these developments, based on current tax legislation up to and including the Tax Plan 2021 that was in effect from 2019.
The most common way for a party to acquire control over a Netherlands-incorporated company is through a public bid for all issued shares. This is often a share-for-share swap, but can also involve securities (e.g. convertible instruments and bonds are two examples of securities that can be traded. In rare instances, an offer can be made on securities that comprise less than 30% of the voting rights within a specific target. America Movil’s bid to purchase KPN in 2012, and Pon Holding’s partial bid for Accell Group in November 2018).
A statutory merger is yet another way to take control of the Dutch company. This entails a surviving company purchasing all the liabilities and assets of one or more disappearing companies via legal process, with dissenting shareholders being granted appraisal rights, which allow them to exit with cash compensation (e.g. the post-bid cash-out merge of Wright Medical Group into a Stryker subsidiary in 2020). Statutory mergers can be domestic or cross-border within the European Economic Area (EEA) but not between a Netherlands-incorporated company and a foreign company (e.g. Delaware corporation).
The acquiring entity must be a Dutch public liability company (NV) based in the Netherlands or, in read articles on https://rietvelddejong.nl the event of abuse, a hybrid company as defined in a Tax Treaty between the Netherlands and the EEA. In addition, the WHT equivalent to the highest CIT is applicable to interest and royalty payments made between an affiliated entity in the Netherlands and a subsidiary located outside the Netherlands unless the payment is caused by a permanent institution in the country of acquisition.