How to structure your wealth via Dutch and Hungarian structures

Real Estate opportunities

• Budapest Performed as the Best in CEE in Most Key Hotel Performance Indicators in Q1 2015
• Compared with other countries, the yields that can be attained on the Hungarian commercial real estate market are quite attractive.
• For example, prime office yields were around 7.5 % at the end of 2014. The prime yields for the best shopping centres were around 7% and slightly below 9% for the logistics sector

DBH Trust Services

• DBH recently acquired a Mid Size Trust company
• Independent
• We speak your language: English, Russian, French, German, Ukrainian, Dutch, Spanish, Chinese.
• Management team of 3 partners
• Fully licensed by Dutch Central Bank
• Office at 3 locations in The Netherlands

( Maastricht, Eindhoven and Amsterdam )

Benefits from The Netherlands

• Participation exemption
• Strong and stable tax treaty network
• No or decreased withholding tax on dividends
• No withholding tax on interest and royalties
• Advance tax rulings with tax authorities ( Free and Quick )
• Outstanding financial service industry
• Leading Banks ( ING, ABN AMRO, Rabobank )

Dutch Participation Exemption (PE) Regime

• Companies which are tax resident in NL are generally subject to Dutch corporate income tax at the regular corporate income tax rate of 20-25%
• A Dutch company is taxed for its worldwide profits (including business, trading, dividend, royalty and interest income)
• Under the PE Regime certain income items received in connection with a qualifying shareholding are exempt from Dutch corporate income tax
• These income items include dividends, other profit distributions, capital gains and foreign exchange rate results realized by a Dutch resident company. Fiscal substance in the Netherlands is essential!

Structuring a (real estate and VC ) fund through the Netherlands

• The overall Legal/Tax/Regulatory/Accounting infrastructure is favorable for structuring a fund in or through the Netherlands
• Legal: BV (Dutch private limited) and CV (private partnership)
• Rules applicable to BVs have been considerably relaxed recently (e.g. no capital requirement)
• Tax: participation exemption and transparent tax structure, possibility to implement tax neutral structures
• Advanced tax ruling

The Netherlands: a trust hub

• Substance is essential for the application of the PE regime
• Dutch trust companies help their international clients in providing (fiscal) substance though providing management and domicile
• Dutch trust firms also help clients in the setting up of a Dutch company and coordinate professional services (legal, tax, auditing and banking services).
• Trust companies get their license from the Dutch Central Bank and operate under strict supervision 

Trust in The Netherlands

Is:

• The management, domiciliation and administration of Dutch companies on behalf of others (based on “trust”)
• Primarily used for corporate tax planning for holding, finance, royalty or real estate activities

Is not:

the legal instrument of a Trust mainly used in

Anglo-Saxon jurisdictions for:

– asset protection or creation of family / charity funds

– saving inheritance tax (income tax on interest income)

– located often in off shore jurisdictions 

You may create a presence in the Netherlands to secure benefits sought under treaties for the avoidance of double taxation.

How to create Substance

• Domicile in the Netherlands
• Majority of Dutch directors
• Professional knowledge
• Decisions taken in the Netherlands
• Bank account in the Netherlands
• Administration and annual accounts prepared in the Netherlands

Conclusions

• There are high potentials in investing in European tech companies, especially in Central Europe (arbitrage) e.g. Hungary
• Hungarian (Budapest) real estates are undervalued thus there are great opportunities
• Dutch and Hungarian structures are favorable to organize investments in Europe.