Налоговая система Нидерландов

Налоговая система Нидерландов

Министерство Образования Украины

Херсонский Государственный Технический Университет

Отчет

для студенческой конференции кафедры «Финансы и кредит» на тему:

Налоговая система Нидерландов

Выполнил: студент гр. 3 ФК 3,

Баранов Юрий

Руководитель: Химченко С.Н.

Херсон 2000

Введение. 4

Организационная структура. 4

2. Общая информация о налогах, присутствующих в системе налогообложения

Нидерландов. 4

3. Налог на прибыль корпораций(Corporation Tax). 7

3.1 Taxpayers 7

3.2 Tax base and rates 7

3.2.1. General 7

3.2.2. Tax rates 7

3.2.3. Determination of profits according to sound business practice 7

3.2.4. Depreciation of fixed assets 8

3.2.5. Stock valuation 8

3.2.6. Tax-deductible expenses; mixed expenses 8

3.2.7. Reserves 9

3.2.8. Investment allowance 9

3.2.9. Education allowance 10

3.2.10. Tax-deductible donations 10

3.2.11. Offsetting of losses 10

3.3. Participation exemption 10

3.3.1. General 10

3.3.2. Shareholdings 10

3.3.3. Gains 11

3.3.4. Costs 11

3.3.5. Converting a permanent establishment into a subsidiary 12

3.3.6. Losses resulting from liquidation 12

3.3.7. Directive on parent companies and subsidiaries 12

3.4. Fiscal unity; consolidation for tax purposes 12

3.5. Investment institutions 13

3.5.1. General 13

3.5.2. Conditions 13

3.5.3. Reserves 14

3.5.4. Allowance for foreign withholding tax 14

4. Подоходный налог(Income Tax) 14

4.1 Taxpayers: residents and non-residents 14

4.2 Taxbase and rates 15

4.2.1. Taxable income of residents 15

4.2.2. Tax rates and personal allowances 15

4.2.3. Total gross income 16

4.2.4. Non-source-related deductions 20

4.3. Employee savings and profit-sharing schemes 21

4.3.1. Employee savings schemes 21

4.3.2. Profit-sharing schemes 21

4.4. Foreign employees: the 35% rule 22

5. Налог на богатство(Wealth Tax) 22

5.1. Taxpayers: residents and non-residents 22

5.2. Tax base and rates 23

5.2.1. Exemptions 23

5.2.2. Tax rates 24

5.2.3. Special allowances 24

5.3. Tax returns and assessments 24

6. Налог на добавленную стоимость(Value Added Tax and Excise Duty) 25

6.1. Taxable persons 25

6.2. Tax base 25

6.3. Exemptions 26

6.4. Special arrangements for small businesses (persons) and the

agricultural sector 26

6.5. Tax rates 27

6.6. The new VAT system in the single European market 27

6.7. Tax returns and assessments 28

7. Налоги на охрану окружающей среды(Environmental Taxes) 28

7.1. Fuel tax 28

7.2. Tax on groundwater 29

7.3. Tax on tap water 29

7.4. Tax on tap water 29

7.5. Regulatory energy tax 30

8. Избежание двойного налогообложения на доход, прибыль и

богатство(Avoidance of Double Taxation for Taxes on Income, Profits and

Wealth) 30

8.1. General 30

8.2. Methods 31

8.2.1. The exemption with progression method 31

8.2.2. The credit method 31

8.2.3. Deduction as costs 31

Введение.

Причины, побудившие меня к написанию доклада относительно голландского

налогообложения, весьма просты. Я побывал в Голландии, где имел ряд

контактов «коллегами» родственной специальности и от них услышал о весьма

тяжелом бремени налогов, воочию же было видно лишь повсеместное процветание

и социальная защищенность. Такой феномен не мог не заинтересовать, и тема

доклада вполне закономерна.

1. Организационная структура.

Верховным органом, принимающим и дополняющим налоговое

законодательство, являются Генеральные штаты, законодательный аналог

Верховной Рады. Генеральные штаты, точнее представители 2-3 самых крупных

партий, победивших на выборах, формируют Кабинет Министров. Отличительной

особенностью голландского способа управления налоговой ситуацией является

то, что органы контроля и регулирования входят в структуру Министерства

Финансов. Существует 2 департамента – Генеральный директорат по налогам,

таможенной политике и законодательному обеспечению, а так же Генеральный

директорат по налоговому и таможенному администрированию.

Первый из выше упомянутых департаментов занимается корректировкой

процесса налогообложения, например, при неэффективности некоего налога

подает аналитический доклад в Генеральные штаты с пропозицией изменить,

отменить, ограничить действие какого-либо пункта в законодательстве, также

директорат участвует в фискальной части составления бюджета.

Генеральный директорат по налоговому и таможенному администрированию

непосредственно следит за выполнением налогового законодательства, собирает

перечисленные средства, решает конфликты на почве налогообложения,

принимает меры в случае нарушений налогового законодательства.

Если провести аналогию с нашей ситуацией первый Директорат

соответствует Комитету по налогообложению и налоговой политике в нашей ВР,

а Генеральный директорат по налоговому и таможенному администрированию

может быть соотнесен со структурами ГНАУ.

2. Общая информация о налогах, присутствующих в системе налогообложения

Нидерландов.

* Категория налогов на прибыль, доход и чистое богатство(taxes on

income, profits and net wealth)

Income tax.

Income tax is a tax on a person's natural annual income. It is levied at a

progressive rate. Personal circumstances are taken into account when making

the assessment of the amount of tax to be paid, and certain expenses are

tax-deductible. The scheme provides for a personal allowance, the amount of

which is dependent on the individual circumstances. There are four tax

rates, 33.90%, 37.95%, 50% and 60%. The first two rates include both tax

and social security contributions; the last two rates consist solely of

tax.

Salaries tax

Income tax has two advance levies, which are a salaries tax, and a dividend

tax. The salaries tax and the social security contributions are levied

jointly on earned income or benefits. The employer or body paying the

benefit deducts the tax and contributions directly from the salary or

benefit, and pays these to the Tax Department. Many natural persons pay

only salaries tax, and are not subject to income tax. For natural persons

with a high income or many tax-deductible items, the salaries tax serves as

an advance levy, and they are subsequently issued with an income tax return

and an assessment.

Dividend tax

The other second advance levy for income tax is the dividend tax. The

corporation paying the dividend withholds dividend tax at a rate of 25% and

pays the tax to the Tax Department. Shareholders are liable for income tax

on the gross dividend they receive. An amount of this dividend is exempted

from income tax, NLG 1,000 for single persons and NLG 2,000 for married

persons. For non-residents the dividend tax levied on a dividend is in

principle a final levy. Tax conventions generally provide for a lower rate

than the 25% mentioned above.

Corporation tax

Corporation tax is levied on the taxable profit of both private and public

companies. Foundations (in Dutch 'stichtingen') may also be liable for

corporation tax. An important feature of the corporation tax is the

participation exemption, which ensures that corporation tax is levied only

once on the profit obtained within a group. This means that a company

receiving dividends does not have to pay corporation tax on these dividends

since the tax has already been paid by the company distributing the

dividends. Corporation tax is levied at a rate of 35%. The first NLG 50,000

taxable profit is levied at a rate of 30%.

Wealth tax

Wealth tax is levied on a natural person's total net wealth. The net wealth

is the value of the assets less any liabilities. In principle the assets

include all property and possessions, for example the person's own home,

shares, bonds and savings, together with the capital invested in the

person's own business. There are several personal allowances and

exemptions. For instance the personal allowance for married couples is NLG

250,000. The tax rate is 0.7%.

Inheritance tax

The Inheritance Tax Act has two forms of tax, which are inheritance tax and

gift tax. These taxes are, in general, to be paid by the recipient. There

are substantial exemptions from both inheritance tax and gift tax. There

are no exemptions from inheritance tax payable upon the inheritance or

donation of specific assets, for example property. The rates are the same

for these taxes, and depend on the value of the assets that have been

received and the relationship between the giver and the recipient. There is

a minimum and maximum rate.

Tax on games of chance

The tax on games of chance is levied on prizes that exceed NLG 1,000. The

rate is 25%. The organisation awarding the prize generally pays the tax,

and the winner receives a net prize.

* Категория налогов и пошлин на товары и услуги(taxes and duties on goods

and services)

Import duty.

Import duty is levied on imported goods. This usually amounts to a

percentage of the value of the goods being imported. Various rates are

applicable, which are determined by the EU. The rates are usually lower for

minerals or raw materials, and higher for finished products. Import duty is

levied on goods, which are imported from countries outside the EU. The

revenue is destined for the EU.

Value added tax

Value added tax (VAT) is a general consumer tax included in the price

consumers pay for goods and services. Consumers pay this tax indirectly,

and companies remit the tax to the Tax Department. All companies pay VAT,

although there are a few exceptions. The VAT paid by one company to another

may be reclaimed from the VAT to be paid to the Tax and Customs

Administration. There are three rates for VAT:

. a general rate of 17.5%;

. a lower rate of 6%, applicable mainly to food and medicines;

. a zero rate, applicable mainly to goods and services in international

trade, so that goods can be exported free from VAT.

Excise duty

Excise duty is levied on certain consumer goods, i.e. petrol and other

mineral oils, tobacco products, and alcohol and alcoholic beverages. A

special consumer tax is levied on non-alcoholic beverages. Excise duty,

like VAT, is included in the price consumers pay for these goods. The tax

is remitted by the manufacturers and importers of the goods liable to

excise duty.

Taxes on legal transactions

Three taxes on legal transactions are levied in the Netherlands. These are

transfer tax, insurance tax and capital duty. Transfer tax is levied on the

acquisition of property located in the Netherlands. The rate is 6% of the

market value of the property. Insurance tax is levied on insurance premiums

at a rate of 7%. The following insurances are exempted from insurance tax:

life insurance, accident insurance, invalidity insurance, disablement

insurance, medical insurance, unemployment insurance and transport

insurance. Capital duty is levied when capital is contributed to companies

located in the Netherlands when the capital is comprised of shares. The

rate is 0.9% and the tax due is calculated on the value contributed (assets

less liabilities), or on the nominal value of the shares, whichever is

higher. In certain circumstances an exemption is made for mergers or

reorganisations.

Motor vehicle tax

Motor vehicle tax is paid on vehicle ownership, except for buses, for which

vehicles the tax is paid for the use of the roads. The amount depends on

the type and weight (sometimes gross) of the vehicle and for private cars

also on the type of fuel the vehicle uses. Furthermore, for private cars

and motorcycles, the amount is dependent on the province in which the

person/owner is resident or the company/owner is established.

Tax on heavy vehicles

The tax on heavy vehicles (also known as the eurovignette) is a tax on

vehicles with a gross weight of maximum 12.000 kg or more. It is levied for

the use of motorways in the Netherlands. The tax has to be paid before the

vehicle uses the motorway. There are two rates of tax, which are based on

the number of axles of the vehicle; one rate is for three axles or less,

the other for four axles or more. The tax can be paid daily, weekly,

monthly or annually. A similar tax, based on a directive of the European

Union and a Treaty, is levied in Belgium, Denmark, Germany, Luxembourg and

Sweden.

Tax on private cars and motorcycles

The tax is included in the price paid by the buyer on the purchase of a

private car or motorcycle. It is usually paid by the manufacturer or

importer. The tax is dependent on the net listed value of the private car

or motorcycle. The minimum tax rate is 10% of the net listed value of the

vehicle, unless it is 25 years of age or older.

Environmental taxes

There are several environmental taxes in the Netherlands. Fuel tax is to be

paid by suppliers or users of mineral oil and other fuels. Since 1 January

1995 taxes are liable for the withdrawal of ground water and the disposal

of waste. A regulatory energy tax came into force on 1 January 1996.

3. Налог на прибыль корпораций(Corporation Tax).

3.1 Taxpayers

Corporation tax is levied on companies established in the Netherlands

(resident taxpayers) and by certain companies not established in the

Netherlands, which receive income in the Netherlands (non-resident

taxpayers). In this context the term 'company' includes corporations with a

capital consisting of shares, co-operatives, and other legal entities

conducting business. The main types of companies referred to in the

Corporation Tax Act are the public company (NV) and the private company

with limited liability (BV).

Whether a company is deemed to be established in the Netherlands depends on

the individual circumstances. Factors of relevance include the location of

the effective management, the location of the head office, and the location

of the shareholders' general meeting. Under the Corporation Tax Act all

companies incorporated under Dutch law are regarded as being established in

the Netherlands.

3.2 Tax base and rates

3.2.1. General

Corporation tax is levied on the taxable amount, which is the taxable

profits made by the company in a particular year less deductible losses.

The taxable profits are the profits less tax-deductible donations. In

principle the profits should be calculated in accordance with the

provisions laid down in the Income Tax Act to determine the business

profits of natural persons. In certain cases additional stipulations made

in the Corporation Tax Act are also applicable. Under certain conditions it

will be permitted to taxpayers to compute their taxable profit in currency

other than the guilder (the ‘functional currency’) for a period of at least

10 years.

3.2.2. Tax rates

Corporation tax is levied at a rate of 30% of taxable profits.

3.2.3. Determination of profits according to sound business practice

The profits should be determined according to sound business practice and

consistent accounting methods. The concept of sound business practice has

mainly been developed in case law. For example unrealized losses may be

taken into consideration, while unrealized profit may be ignored. The

requirement of consistent accounting methods means that the method of

determining profits may be changed only if this is compatible with sound

business practice. Companies exploiting sea-going vessels may opt for a

tonnage-based profit determination, providing that certain requirements are

met. An important requirement is that the decision is binding for a period

of ten years.

3.2.4. Depreciation of fixed assets

The depreciation of fixed assets for tax purposes is a statutory

requirement. In principle taxpayers are free to choose a depreciation

method. The method chosen must be in accordance with sound business

practice. The linear method of depreciation is generally used. A less

common method of calculating depreciation is the declining balance method.

In case law, the latter method is accepted only for fixed assets with a

steadily declining use with age. A combination of both methods, i.e.

depreciation according to a declining percentage, may also be used.

Goodwill may only be depreciated if the goodwill has been purchased from a

third party; goodwill generated by the company itself cannot be

depreciated. An accelerated depreciation is permitted for certain fixed

assets, of which the most important are:

. energy-saving fixed assets and other environmentally-friendly fixed

assets;

. sea-going vessels;

. intangible assets, providing these belong to a business that has been

purchased which was not established in the Netherlands.

This is subject to restrictions.

3.2.5. Stock valuation

The following stock valuation methods are permitted: valuation based on

cost, valuation based on cost or market value (whichever is lower), or the

base stock method. Valuation at cost is in accordance with sound business

practice, unless the market value is significantly lower than the cost. In

this system unrealized profit is ignored, while unrealized losses can be

taken into account directly. The value of the stock can be determined by

either the FIFO or LIFO method. Subject to certain conditions, case law

also permits the use of the base stock system.

3.2.6. Tax-deductible expenses; mixed expenses

The basic principle of the determination of the profits is that all

expenses associated with business operations are tax-deductible. If an

expense can be regarded as commercially sound then its value is not of

importance. However, the deductibility of certain business expenses is

subject to restrictions. This concerns mixed expenses, which are business

expenses with a private element. Non-deductible expenses include costs

connected with pleasure craft used for entertainment purposes and fines.

The limitations on deductibility of expenses are more strict for companies

with one or more natural persons holding a substantial interest in the

company, who also work(s) for the company. Basically, a natural person has

a substantial interest if he holds 5% or more (direct or indirect) of the

share-capital of the company. In that case 10% of the company's costs in

connection with food, drinks, tobacco, representation including receptions

and entertainment, seminars, excursions etc., are not deductible. The

company can opt for a fixed amount of NLG 3,200 per substantial interest

holder, who also works for the company, to be treated as non-deductible.

The Corporation Tax Act gives an inexhaustive list of deductible and non-

deductible expenses. The following expenses are always deductible:

. profit shares paid to directors and other staff as remuneration for

employment;

. profit shares paid to creditors other than founders, shareholders or

other persons entitled to shares in the corporation;

. profit shares paid in connection with licences, patents, etc., to persons

other than founders, shareholders or persons otherwise entitled to shares

in the corporation;

. profit shares paid by an insurance company to its policyholders;

. the costs of incorporation and of alterations in the capital.

In the Netherlands no thin capitalization rules exist. Since January 1997

limitations on the deductibility of intercompany interest expenses have

been introduced in the Corporate Income Tax Act. The (interest) expenses on

intercompany loans are not deductible in basically two types of situations:

(interest) expenses arising from indebtness in the shareholder/susidiary

relation, e.g. in connection with dividends, reduction of capital and

capital contributions. However, (interest) expenses remain deductible, if

the tax payer can demonstrate that both the transaction and the loan were

entered into for sound business reasons;

(interest) expenses related to artificial conversion of equity into debt

within the group. However, expenses related to these schemes remain

deductible, if the tax payer can demonstrate that either both the

transaction and the loan were entered into for sound business reasons or

that the interest paid is effectively subject to a reasonable level of

profits tax in the hands of the recipient.

The following expenses are never deductible:

. profit distributions other than those specifically designated as

deductible in the Corporation Tax Act (see above);

. corporation tax, dividend tax and tax on games of chance.

3.2.7. Reserves

Certain reserves may be formed by making a deduction from the profits. In

order to qualify for this deduction the business must keep regular annual

accounts. Three reserves are legally permitted, which are the cost

equalisation reserve, the replacement reserve and since January 1997 the

reserve for financial risks for multinational companies.

The cost equalisation reserve enables recurrent costs to be spread

uniformly over a period of time.

A replacement reserve may be created if fixed assets are lost, damaged, or

sold, when the payment received exceeds the book value. To be eligible for

this reserve there must be plans to replace or repair the assets. The

reserve should generally be terminated in the fourth year following the

year in which it was formed.

Under certain conditions a reserve may be formed for the special risks

involved in operating as an international group. The risks aimed at concern

financing and holding activities. One of the main conditions to qualify is

that the financing activities must comprise financing of group companies in

at least four countries or on two continents. In principle, the entity that

forms the reserve may charge to this reserve 80% of its income derived from

financing activities before tax. The tax inspector will grant the regime

for ten years upon a request filed by the tax payer, in wich the tax payer

states the relevant factual circumstances. The Dutch tax inspector can

impose additional conditions.

3.2.8. Investment allowance

This scheme allows a certain percentage of the sum invested in fixed assets

in a particular year to be deducted when calculating the taxable profits.

Investments are divided into nine tranches, where the percentage of the

allowance decreases with increase in investment. In 1999 the lowest tranche

is applicable to investments between NLG 3,900 and NLG 65,000, and the

highest tranche is applicable to investments between NLG 503,000 and NLG

566,000. The corresponding percentages are 27% and 3% respectively. Certain

fixed assets are excluded from the investment allowance. If fixed assets

for which an investment allowance was obtained in the past are sold within

five years of being purchased then the investment allowance is withdrawn

either wholly or in part.

Furthermore, there is an investment allowance in respect of investments in

energy saving business assets, placed on an Energylist. For investments

over NLG 3,900 up to NLG 65,000 the allowance is 52%. The percentage of the

allowance declines as the amount of the investment increases. The maximum

allowance is 40% of NLG 208 mln.

3.2.9. Education allowance

This scheme allows an additional percentage of the costs of education of

employees to be deducted when calculating the taxable profits. The

percentage of the allowance varies between 20% and 80%.

3.2.10. Tax-deductible donations

Within certain limits donations to religious, ideological, charitable,

cultural or academic institutions or other bodies serving the public good

are tax-deductible. The donations must be more than a total of NLG 500. The

maximum deduction is 6% of the profits.

3.2.11. Offsetting of losses

A loss may be offset against the taxable income of the three preceding

years (carry back) and against taxable income of all years to come (carry

forward).

If a corporation discontinues its business either wholly, or in part, then

any losses that have not been offset may be compensated with future

profits, provided that at least 70% of its shares continue to be held by

the same natural persons

3.3. Participation exemption

3.3.1. General

The Corporation Tax Act has always provided for a participation exemption,

which is applicable to both domestic and foreign shareholdings. This

exemption is one of the main pillars of the Dutch Corporation Tax Act, and

it is motivated by the desire to prevent double taxation when the profits

of a subsidiary are distributed to its parent company which is also liable

to corporation tax. The main features of this scheme are as follows: all

gains from shareholdings are exempted, the costs associated with a

shareholding are not deductible, and losses arising from liquidation of the

corporation are deductible only under certain conditions. The corporation

distributing dividends does not have to pay dividend tax if the

distribution of profits falls under the participation exemption enjoyed by

the company receiving the dividend.

The most important elements are as follows.

3.3.2. Shareholdings

The participation exemption is applicable to both domestic and foreign

shareholdings. A shareholding is deemed to exist if the taxpayer:

1. holds at least 5% of the nominal paid-up capital (a shareholding

includes the related possession of 'jouissance' rights); or

2. holds less than 5%, but ownership of the shares is part of the normal

business conducted by the taxpayer, or the acquisition of the shares

served a general interest; or

3. is a member of a cooperative; or

4. holds at least 5% of the share certificates in a mutual fund based in

the Netherlands.

The participation exemption is not applicable if the taxpayer or subsidiary

company is a fiscal investment institution. The concept of an investment

institution is explained in section 3.6. The participation exemption is not

applicable when the shares are held as stock.

The participation exemption does not apply internationally when shares in

the foreign corporation are held as a portfolio (passive) investment.

Another requirement for the exemption to be granted is that the foreign

company in which the shares are held is subject to a tax on profits levied

by the central government in the country in which it is established (see

also 3.3.7.). Furthermore, the participation exemption is not applicable

for participations in foreign 'passive' finance companies.

In principle a Dutch company cannot credit any foreign withholding tax on

dividends received from foreign subsidiaries to which the participation

exemption is applicable. However, the Dutch dividend tax which has to be

transferred by the Dutch company in the event of the redistribution of

foreign dividends received can be partly reduced, subject to certain

conditions. The reduction amounts to a maximum of 3% of the foreign

dividends received.

3.3.3. Gains

Gains from shareholdings are ignored when calculating the profits. In

principle the term 'gains' includes both profits and losses. Profits, of

course, include both official and disguised dividends received. Exempted

gains also include profits made by the sale of a participation (including

exchange rate differences). Since January 1997, it is possible to opt for

application of the participation exemption to currency results arising from

financial instruments which are used to hedge the translation risks on

investments in foreign subsidiaries. Accordingly losses from sales are not

deductible. If the participation declines in value as a result of losses

suffered, then a write-off by the parent company is in principle non-

deductible. An important exception is losses resulting from liquidation

(see 3.3.6.).

However, since January 1997 a company may claim a tax deduction for start-

up losses of a subsidiary, in which it holds at least 25% of the share-

capital. The rules allow the parent company to depreciate the book value of

the subsidiary in the first 5 years after the acquisition if and to the

extent that the value of the subsidiary has declined below cost price. When

the subsidiary becomes profitable, a taxable appreciation has to be made up

to the amount of the cost of the investment. To the extent the depreciation

has not been reversed during the first 5 years, the balance will then have

to be reversed in the next 5 years in equal steps.

If the depreciated debts of a subsidiary to a parent company are converted

into share capital then a special provision prevents tax claims being lost.

In such cases an amount equal to the depreciation of the debt is, in

principle, again regarded as part of the profits of the parent company.

This is also applicable when the debt is sold to an affiliated company or

if it is discharged.

3.3.4. Costs

Shareholdings may give rise to costs as well as gains. In principle such

costs are not deductible. However an exception is made when these are

indirectly conducive to making profits taxed in the Netherlands. With

foreign shareholdings this may occur if the foreign subsidiary has a

permanent establishment in the Netherlands. In practice the main non-

deductible costs are the costs of financing the participation. The taxpayer

must also show that the costs are conducive to making domestic taxable

profits.

3.3.5. Converting a permanent establishment into a subsidiary

As losses incurred by foreign subsidiaries cannot be offset against profits

made by the Dutch parent company, foreign activities from which profits are

not directly expected are often undertaken through a permanent

establishment. Foreign losses can then be directly deducted from the

profits of the Dutch company. To prevent losses being deducted from the

profits in the Netherlands whilst later profits in this country are not

taxed, it is stipulated that when a permanent establishment is converted

into a subsidiary then the profit made by the subsidiary up to the amount

of the losses deducted from the Dutch profit is not exempted from taxation.

This obligation to compensate profits made by a subsidiary with earlier

losses incurred by the permanent establishment is applicable to the eight

years preceding the conversion, and is subject to the condition that the

losses have not been offset against other foreign profits.

3.3.6. Losses resulting from liquidation

In principle losses from participations cannot be taken into account by the

parent company. An exception is those losses resulting from liquidation.

The liquidated subsidiary cannot be compensated for these losses in the

future. For this reason these losses may be taken into account by the

parent company, under certain conditions, in the year in which the

liquidation of the subsidiary is completed. The loss resulting from

liquidation is the difference between the liquidation payments and the sum

paid to acquire the participation (the 'sacrificed amount'). Special rules

apply if a tax deduction has been claimed for this participation (see

3.3.3.).

There are additional requirements for taking account of the losses

resulting from the liquidation of foreign participations. One requirement

is that the holding must be at least 25%, and that it must have been held

during the five years preceding the discontinuation of the subsidiary's

business, the year of discontinuation itself, and during subsequent years

in which liquidation payments are received. In addition no loss resulting

from liquidation can be taken into account if the participation was

obtained from a foreign associated company when the operations concerned

are discontinued within three years.

3.3.7. Directive on parent companies and subsidiaries

In 1992 Dutch legislation was amended in line with the EU directive on

parent companies and subsidiaries. The relevant Act has a retroactive

effect from 1 January 1992. The participation exemption has been extended

in several respects. For example an investment in a company established in

another EU member state can be regarded as a participation covered by the

participation exemption. For this purpose a shareholding of at least 25% is

required. The possession of at least 25% of the voting rights in a company

can also be regarded as a participation under certain conditions, even if

the shareholding is less than 5%. Under this Act dividend tax is not levied

on dividend paid to a company established in another member state when the

company has an interest of at least 25% in the company paying the dividend.

This act was further amended in 1994 in order to give the exemption of

dividend tax a wider application than the EU directive. If certain

conditions are met then the exemption now becomes applicable when the

shareholder has an interest of at least 10% in the company's capital, or

holds at least 10% of the voting shares.

3.4. Fiscal unity; consolidation for tax purposes

Under certain conditions a parent company may form a fiscal unity with one

or more subsidiaries. For corporation tax purposes this means that the

subsidiaries are deemed to have been absorbed by the parent company. The

main advantages of fiscal unity are that the losses of one company can be

set off against profits from another company, and that fixed assets can be

transferred at book value from one company to another.

This type of tax consolidation is possible only between a parent company

and its wholly owned subsidiaries (in practice 99% is sufficient) when all

the companies involved in the consolidation are established in the

Netherlands. Other conditions are that the parent company and the

subsidiaries have the same financial year, and are subject to the same

taxes. A request to form a fiscal unity must be submitted to the Inspector

on behalf of all the companies involved. The standard conditions drawn up

by the Minister of Finance must be met. These conditions cover a large

number of technical aspects involved in consolidation.

The fiscal unity can be terminated upon request, or will be terminated

automatically if any of the conditions are not met.

Since January 1997 new regulations apply to leveraged acquisitions, in case

a leveraged Dutch acquisition vehicle is used to acquire a Dutch operating

company. The aim of these regulations is to prevent the acquisition vehicle

to form a fiscal unity with the target company in order to offset its

interest expenses against the profits of the operating (target) company. In

principle, following to the new fiscal unity rules these (interest)

expenses are disallowed (for a period of eight years) to be offset against

the profits of the target company.

3.5. Investment institutions

3.5.1. General

Subject to certain conditions Dutch-based public companies, private

companies and mutual funds may apply for recognition as investment

institutions for taxation purposes. An investment institution can request

to pay corporation tax at 0%. The purpose of this system is to ensure that

persons investing in an investment institution shall not receive a less

favourable treatment than persons who invest directly. This would not be

the case without a special scheme.

As stated in section 3.3.2. an investment institution does not qualify for

the participation exemption, whether it be a parent company or a

subsidiary.

3.5.2. Conditions

Several conditions must be met before an organisation may be regarded as a

fiscal investment institution. These conditions include the way in which

the investments are financed, the distribution of the investment returns,

and the ownership of shares in the investment institution. The main

conditions are:

. up to 60% of the book value of the immovable property may be financed

with borrowed capital. For other investments the limit is 20% of the book

value;

. the profits must be distributed within eight months of the close of the

financial year;

. when the investment institution is listed on the Amsterdam Stock

Exchange, less than 45% of the shares may be held by a corporation liable

to corporation tax or several associated corporations (parent,

subsidiary, or sister corporations with interests of a third or more in

each Mother), unless the corporation is another listed investment

institution;

. when the investment institution is not listed on the Amsterdam Stock

Exchange then at least 75% of the shares must be owned by individuals,

corporations not liable to profits tax, or listed investment institutions

which meet the above condition;

. less than 25% of the shares in the investment institution may be held

indirectly by Dutch shareholders via foreign-based corporations;

. less than 25% of the shares in the investment institution may be held

directly by a single foreign shareholder.

3.5.3. Reserves

Institutions are allowed to form two special fiscal reserves, the

reinvestment reserve and the rounding-off reserve. The reinvestment reserve

is formed by non-distribution of capital gains. The level of the annual

contribution to the reserve and its absolute size are both subject to

restrictions. If, when establishing the amount of the profit to be

distributed, an amount remains due to sums being rounded off then this

amount may be added to the rounding-off reserve. The rounding-off reserve

may not exceed 1% of the paid-up capital.

3.5.4. Allowance for foreign withholding tax

Under Dutch law and Dutch tax conventions withholding tax levied abroad may

generally be set off against income or corporation tax payable by the

taxpayer in the Netherlands. As an investment institution is liable for

corporation tax at a rate of 0% it cannot make use of this facility. To

ensure that persons who invest directly and persons who invest via an

investment institute receive equal tax treatment, special arrangements are

made for investment institutions allowing the former to offset foreign

withholding taxes against income from securities and claims. Under these

arrangements an investment institution may obtain an allowance from the

Dutch tax authorities which amounts to no more than the withholding tax

levied abroad. If not all the shareholders in the investment institution

are resident or established in the Netherlands then the allowance is

calculated according to the number of shareholders resident or established

in the Netherlands.

4. Подоходный налог(Income Tax)

4.1 Taxpayers: residents and non-residents

Under the present Income Tax Act residents are liable for income tax on

their world-wide income. Non-residents are taxed only on the income from a

limited number of sources in the Netherlands. The Netherlands has concluded

a large number of double taxation conventions to prevent the double

taxation of world-wide income. If no convention is applicable, tax relief

may be obtained on the basis of the Unilateral Decree for the prevention of

double taxation. (If certain requirements are met, foreign employees

temporarily posted to the Netherlands may request the application of a

special tax arrangement known as the 35% rule, see 4.4.)

The legal definition stipulates that a taxpayer's place of residence is

determined 'according to circumstances'. Several factors are of relevance

when deciding whether the taxpayer maintains personal and economic ties

with the Netherlands. These include a family home, employment, or

registration in a municipal register. Nationality is not a determining

factor, but it may be relevant in some cases. The law also provides for a

number of special cases. The crews of ships and aircraft with a home

harbour or airport in the Netherlands are deemed to be residents of the

Netherlands unless they have established residence abroad. Dutch diplomats

and other civil servants serving abroad remain residents of the

Netherlands. Foreign diplomats and the staff of certain international

institutions are exempt from Dutch income tax.

If both spouses are resident in the Netherlands then married couples are

taxed individually on their personal income (business profits, salary,

pension, etc.) less certain deductions, allowances and premiums. Investment

income and non-source related deductions such as certain personal

obligations and exceptional expenses are attributed to the spouse with the

highest personal income. If only one of the spouses is resident in the

Netherlands then their incomes are regarded as completely separate.

4.2 Taxbase and rates

4.2.1. Taxable income of residents

The tax year for persons is the calendar year. Residents are taxed on their

total gross income, which is the income from all domestic and foreign

sources less the associated expenses. This income may be further reduced by

certain deductions and allowances not directly related to a specific source

of income. The balance is the total net income. This total net income is

further reduced by the deduction of losses and a personal allowance before

tax is levied. The result is the taxable amount, which is calculated as

shown below. The various terms are explained in sections 4.2.3 and 4.2.4.

|GROSS INCOME (4.2.3): | | |

|profits from business or | |............ |

|professional activities | | |

|income from a substantial holding | |............ |

|net income from employment and | |............ |

|services rendered outside employment| | |

|net income from capital | |............ |

|net income in the form of periodic | |............ |

|payments | | |

| | |______ |

| | |+ |

|TOTAL GROSS INCOME |(A) |............ |

|MINUS: DEDUCTIONS (4.2.4): | |............ |

|contribution to the old-age reserve | |............ |

|the self-employed persons' deduction| |............ |

|business-assistance deduction | |............ |

|personal obligations (special | |............ |

|expenses) | | |

|exceptional expenses | |............ |

|tax deductible donations | |............ |

| | |______ |

| | |+ |

| |(B) |............ |

|TOTAL NET INCOME |(A-B) | |

|minus: deductible losses |(C) | |

|TAXABLE INCOME |(A-B-C) | |

|minus: personal allowances |(D) | |

|TAXABLE AMOUNT |(A-B-C-D) | |

4.2.2. Tax rates and personal allowances

Income tax is levied on the taxable amount calculated as shown above. This

is a progressive tax. The rates are:

|33.90 |on the first |NLG 15,255 |

|37.95% |on the next |NLG 33,739 |

|50% |on the next |NLG 58,762 |

|60% |on the remainder | |

The 33.90% rate is comprised of 4.5% tax and 29.40% social security

contributions, the second rate is comprised of 8.55% tax and 29.40% social

security contributions, whilst the 50% and 60% rates consist solely of tax.

A rate of 16% (first rate) and 20.05% (second rate) is applicable to

persons aged 65 and over, as they are no longer liable for several social

security contributions.

The above diagram shows that a personal allowance is deducted from the

total net income before tax is levied. The level of this allowance is

determined by the tax>

depends on the individual circumstances. The basic personal allowance is

NLG 8,950. For married or single persons with a spouse or partner without

an income the personal allowance is NLG 17,473. For single parents with

children living with them the allowance is NLG 15,768. For single parents

in paid employment this amount is increased by a maximum of NLG 6,821. For

persons older than 65 years the personal allowance is increased by NLG 520

to a maximum of NLG 5,678.

4.2.3. Total gross income

The Income Tax Act distinguishes five different sources of income, which

together comprise the total gross income. The five categories are:

|I. |profits from business or professional activities; |

|II. |income from a substantial holding; |

|III.|net income from employment and from services rendered outside |

| |employment; |

|IV. |net income from capital; |

|V. |income in the form of periodic payments. |

I. Profits from business or professional activities

For income tax purposes the definition of 'profits' is the same as that for

the assessment of the corporation tax which is to be levied, except that in

assessing profits for corporation tax purposes a number of special factors,

notably those which reflect the difference between liability to pay income

tax and liability to pay corporation tax, are taken into consideration.

This means that for income tax purposes only sections 3.2.1, 3.2.3 to 3.2.6

(in part), 3.2.7, 3.2.8 and 3.2.11 are applicable.

The following additional rules apply to persons conducting a business who

are liable for income tax.

Accelerated depreciation when starting a business

From 1 January 1996 an accelerated depreciation of fixed assets is

permitted, subject to certain restrictions, for persons who have recently

started a business.

Exemption of profits derived from the liquidation of a business

Only part of the profits derived from the liquidation of a business are

taxable. The exemption varies with the age of the person who conducted the

business. The maximum exemption is NLG 45,000.

Transfer of a business to a relative

If a person conducting a business transfers the business or part thereof to

his or her spouse or partner or children, the transfer may, on request, be

exempted from income tax. The successor then takes the place of the person

conducting the business. A similar smooth transfer also takes place

following the death of the person conducting the business and the

dissolution of the community of property.

Discontinuation of a business liable for income tax when it is to be

continued as business liable for corporation tax

If a person conducting a business which is liable for income tax wishes to

continue the business activities in the statutory form of company which is

subject to corporation tax, e.g. a private company, then he or she may

request an exemption from income tax when this conversion is made. The

company then takes the place of the person conducting the business. The

Ministry of Finance has published standard conditions for such situations.

Deduction for assistance in the business

If the spouse or partner of a taxpayer conducting a business works for that

business for a certain number of hours per year then the taxpayer may make

a deduction for that assistance from his or her gross income. The deduction

is made from the profits at a rate which is dependent on the number of

hours the spouse or partner works for the business. The rate increases to a

maximum 4% when the spouse or partner works for 1,750 hours or more in the

business in that financial year. At the request of both the taxpayer and

his or her spouse the deduction for assistance in the business may be

waived. The spouse is then assessed separately on the basis of the wage or

salary received from the business.

Old-age reserve for the self-employed

Resident taxpayers who derive income from the profits of a business or from

self-employment are allowed to offset a certain percentage of their gross

income towards the provision of a retirement pension. The annual

contribution to this reserve may be no more than NLG 21,367 and at no time

may the reserve exceed the book value of the business's assets. If this

reserve is not converted into an annuity when the business is terminated

then tax will be levied over this amount at a rate of 45%.

Deduction for self-employed persons

Resident self-employed taxpayers between the ages of 18 and 65 who devote

at least 1,225 hours to running a business are allowed to offset a

deduction for self-employed persons against their gross income. The amount

of this deduction is in inverse proportion to the size of the company's

profits. A fixed deduction of NLG 13,110 is allowed on profits of less than

NLG 96,170. The allowance gradually declines to NLG 8,730 on profits of NLG

108,395 or more. Persons who have recently started a business may deduct an

additional sum of NLG 3,840 for the first three years.

II Income from a substantial holding

Income, including capital gains or losses, from a substantial holding in a

corporation is subject to income tax and is taxed at a rate of 25% insofar

as this income exceeds the first two tax brackets.

A taxpayer is regarded as having a substantial holding in a corporation if

he or she, either alone or with his or her spouse, holds directly or

indirectly 5% of the issued capital. If the corporation has issued

different>

taxpayer, either alone or with his or her spouse, holds more than 5% of the

issued capital of a particular>

substantial interest in a corporation, jouissance rights and debt-claims

issued by that corporation and held directly or indirectly by the taxpayer,

either alone or with his or her spouse, are regarded as forming part of the

substantial holding.

Interest derived from debt-claims forming part of a substantial holding is

taxed at the normal rate of income tax. Dividends and capital gains derived

from the alienation of shares or from the redemption of debt-claims are

taxed at a proportional rate of 25% in the income tax, insofar as this

income exceeds the first two tax brackets. In case of a capital loss 25% of

that loss may be offset against the tax which would otherwise be due. For

this purpose an arrangement similar to that for the offsetting of losses is

applicable (section 3.2.11). In case of emigration of the taxpayer the

substantial holding is deemed to be alienated. However, the tax due will

not be collected as long as the substantial holding is not disposed of.

After the elapse of 10 years the remainder of the tax levied because of the

deemed alienation at the time of emigration, is pardonned.

For non-residents the income from the substantial holding is only subject

to tax in case of a substantial holding in a corporation wich is a resident

in the Netherlands. With respect to non-residents a corporation is also

deemed to be a resident of the Netherlands if it was resident in the

Netherlands for at least five years during the last ten years. With respect

to non-residents the substantial holding is deemed to have been alienated

in case of the transfer of the place of effective management of the

corporation from the Netherlands to elsewhere.

III. Net income from employment and services rendered outside employment

This income is comprised of all income other than business income that is

received in cash or in kind from present and former employment, together

with income derived from services rendered outside employment.

Income from present employment includes salaries, payments, gratuities,

tips and certain periodic payments received under social security

legislation (in cash), and the free use of a private car and free housing

paid for by the employer (in kind). Income from past employment includes

pensions, and invalidity, disablement and unemployment benefits.

Salaries, wages and certain periodic payments received under social

security legislation are subject to the salaries tax. This tax is withheld

by the employer, and is essentially an advance levy on the person's final

income tax assessment (see 4.5.1).

Income from activities and services which does not qualify as income from

business or employment is considered to be income from services rendered

outside employment. To be regarded as income there must be a reasonable

expectation that these activities will yield income. Examples are the

provision of boarding for lodgers, and fees for services and copyrights.

In principle expenses incurred in connection with employment and the

provision of services are deductible from the income derived from these

activities. The deduction is equal to the actual expenses less

reimbursements or, subject to upper and lower limits, 12% of the gross

salary, whichever is larger. A fixed sum is tax-deductible for travel

between home and work.

IV. Net income from capital

Net income from capital is comprised of all income from movable and

immovable property and rights not related to goods. Only the yield from

property and rights is taxable; the increase in the value of the assets is

exempted. There is no capital gains tax in the Netherlands.

A special provision is applicable to owner-occupied property. The property

is taxed at an imputed rental value, which represents the balance of the

revenue and expenses connected with the use of a dwelling. This rental

value, which is a positive amount, is assessed on statutory tables. As

normal expenses are included in the imputed rental value, no expenses other

than (mortgage) interest and ground rent may be deducted.

Interest and dividends received by private investors from designated credit

or investment institutions which mainly participate in environmental

projects are exempt from income tax.

Income from stocks and shares includes cash dividends, stock dividends and

bonuses. The final payment to the shareholder following the liquidation of

a corporation is regarded as a dividend if it exceeds the average amount

paid on the shares concerned.

Notional dividends from foreign investment corporations and funds are

income from assets, and are taxed accordingly. In principle the income from

the latter is set at 6% of the market value of the shares.

A maximum allowance of NLG 1,000 is granted insofar as dividends subject to

Dutch dividends tax exceed related expenses (including interest expenses).

Under certain conditions the amount of the dividend allowance can be

raised:

for dividends received from specific private participation companies, the

allowance is raised by a maximum of NLG 1,000;

for dividends received in connection with employee savings and profit-

sharing schemes, the allowance is raised by a maximum of NLG 1,000;

For dividends received from specific participation companies which mainly

participate in starting entrepeneurs (both natural persons and corporate

bodies), the allowance is raised by a maximum of NLG 5,000. However,

insofar as the corresponding interest allowance in connection with starting

entrepeneurs is utilized, this amount of NLG 5,000 is reduced.

For married taxpayers the above mentioned amounts of the dividend allowance

are doubled. The dividend allowance is not applicable with respect to

dividends from a substantial holding in a corporation.

Interest is more than just the interest received from a debtor or bank.

There are special provisions for taxation of the increase from the lower

issue price to par value of zero bonds and deep discount bonds, and the

notional interest on the bare ownership of rights and claims of which the

temporary usufruct is divided.

A maximum allowance of NLG 1,000 is granted insofar as any interest

received exceeds the interest paid in connection with sources of income and

personal obligations. This is exclusive of the interest paid on a mortgage,

which is related to the purchase or renovation of owner-occupied property.

Under certain conditions the amount of the interest allowance can be

raised:

for interest received in connection with employee savings and profit-

sharing schemes, the allowance is raised by a maximum of NLG 1,000;

for interest received in connection with a subordinated loan to a starting

entrepeneur of at least NLG 5,000, or interest originating from specific

participation companies wich mainly participate in starting entrepeneurs

(both natural persons and corporate bodies), the allowance is raised by a

maximum of NLG 5,000.

For married taxpayers the above mentioned amounts of the interest allowance

are doubled. Furthermore, the taxpayer is entitled to an additional

interest allowance when his children under the age of 18 receive interest,

up to a maximum of NLG 500 per child.

The interest component of a capital payment from a life insurance policy

(and the investment income) is not taxed if the payment occurs because the

person insured dies before the age of 72. The beneficiary is generally

allowed the same exemption for payments upon the death of the insured

person at or after the age of 72 if the premiums have been paid over a

period of at least 15 years. Interest included in payments of up to NLG

62,000 on a fixed date is exempt from income tax if the annual premiums are

paid over a period of at least 15 years. This is also applicable to

interest included in life insurance payments of up to NLG 210,000 if the

annual premiums are paid over a period of at least 20 years. Both

exemptions are subject to the condition that the highest annual premium

paid for the insurance may not be more than ten times the lowest premium.

Income from capital includes income from life annuities and other periodic

payments resulting from either a lump-sum payment or the payment of

premiums. These payments are liable to tax over the amount that the

payments and the payments received in the past exceed the total premiums or

lump sum paid under the policy.

V. Net income in the form of periodic payments

There are two categories of periodic payments, those which are>

income from capital, and those which qualify as a separate source of

income.

Periodic payments forming a separate source of income can be divided into

different categories. Examples are:

payments from the state, such as certain public scholarships and government

subsidies;

periodic payments under family law, such as maintenance payments, unless

received from relatives once or twice removed;

other periodic payments, claimable in court, unless received from close

relatives, foster parents or members of the same household, such as

maintenance payments to a former partner.

4.2.4. Non-source-related deductions

In certain circumstances payments which are not related to the acquisition

of income may be deducted from the total gross income. These non-source-

related expenses can be divided into three categories, which are personal

obligations (special expenses), exceptional expenses and tax-deductible

donations.

I. Personal obligations

The most important expenses which may be regarded as personal obligations

are the following:

premiums for several forms of life annuity payments, such as (temporary)

disablement, old age and widows' annuities up to NLG 6.179 or, in certain

circumstances, up to NLG 12,358 in the case of (married) couples. If

certain conditions are met then this amount can be increased to NLG 86,480,

if the provisions for the old age pension are inadequate in relation to

current income.

certain maintenance payments or lump-sum payments which replace these;

interest on debts. Since 1997, the deduction of interest on debt is

restricted. Insofar interest paid is not connected with a source of income,

a maximum amount of NLG 5,291 is deductible. For married taxpayers, this

amount is doubled. Certain exemptions are applicable.

losses on specific loans. Under certain conditions a loss on a subordinated

loan granted to a starting entrepeneur can be deducted up to a maximum of

NLG 50,000.

II. Exceptional expenses

Resident taxpayers may deduct certain exceptional expenses from their total

gross income. There are a number of categories of exceptional expenses,

each of which has its own specific non-deductible component based on the

taxpayers' gross income. For married couples the non-deductible component

is calculated on the basis of their joint income.

The following categories can be distinguished:

medical expenses and expenses related to disability and old age are tax-

deductible when they exceed a certain percentage of the joint gross income,

subject to specified upper and lower limits;

expenses involved in the maintenance of children younger than 27 years of

age;

expenses involved in the support of certain relatives;

expenses which are made in connection with study or training for a

profession. Studies as a hobby do not qualify;

expenses involved in child care, subject to certain conditions.

III. Tax-deductible donations

Donations to domestic religious, charitable, cultural and academic

institutions or other bodies serving the public good in excess of 1% of the

gross income may be deducted by resident taxpayers, with a lower limit of

NLG 120. Donations in excess of 10% of the gross income are not tax-

deductible. Provided certain conditions are met this restriction does not

apply to donations in the form of annuities. Contributions to foreign

institutions of the kinds indicated above may also qualify, if the

institutions have been designated as such by the Ministry of Finance.

4.3. Employee savings and profit-sharing schemes

Employers and employees may agree to set up employee savings schemes in

which a certain maximum amount of the salary is exempt from tax and social

security contributions. Employers in the private sector can set up profit-

sharing schemes to provide a tax advantage for both employers and

employees.

4.3.1. Employee savings schemes

Since January 1994 new rules apply which exempt employers from paying tax

and social security contributions on each employee's salary to a maximum of

NLG 2,894. This is applicable to salaries based on:

premium savings schemes, or

salary savings schemes (including blocked profit-sharing schemes and share

option schemes in the private sector).

In premium savings schemes the employer withholds an agreed amount from the

employee's net salary and deposits this in a premium savings account. The

employer can then award the employee a savings premium of up to 100% of the

amount withheld, to a maximum of NLG 1,158. Under certain conditions no tax

and social security contributions need to be paid on this savings premium.

In salary savings schemes the employer withholds an agreed amount not

exceeding NLG 1,736 of the employee's gross salary and deposits this in a

savings account blocked for at least four years. When the sum is paid out

it is not liable to tax or social security contributions.

However, the employer is required to pay 10% salaries tax on the exempted

amount.

4.3.2. Profit-sharing schemes

Employers in the private sector can give their employees a share in the

(fiscal or commercial) profits of the business or of one or more businesses

associated with the business. If the profit payment is blocked in a salary

savings account then the rules for salary savings schemes are applicable

(the maximum amount on which tax or social security contributions are not

due is NLG 1,736). However, in this case the employer does not need to pay

10% salaries tax on the exempted amount.

If the profit payment is not blocked, but is paid directly in cash or

documents of value then the employer pays 10% salaries tax on a maximum

amount of NLG 1,736. This amount is not liable for social security

contributions. Any salary savings received must be deducted from this

amount. If a profit payment minus salary savings exceeds NLG 1,736 then the

normal rate of tax and social security contributions must be paid over the

difference.

4.4. Foreign employees: the 35% rule

A special allowance is granted to certain foreign employees who are

assigned to a post with a domestic employer (i.e. an employer established

in the Netherlands, or an employer not established in the Netherlands who

is obliged to withhold salaries tax on the salary paid to the employee).

If certain requirements are met, then Dutch employers may grant a special

tax-exempt allowance of 35%, which is paid in addition to employees'

salaries. The allowance is calculated on the basis of the salary as

determined in accordance with the provisions of the Wage Tax Act. To obtain

the basis for calculating the 35% allowance the salary is multiplied by a

factor of 100/65. Employer reimbursements of school fees for the attendance

of children at international primary or secondary schools are also exempt

from tax. In addition to the 35% rule, expenses incurred in connection with

employment are reimbursed tax free.

Foreign employees have to be recruited by or seconded to a domestic

employer in the Netherlands. The employer and his employee must first

agree, in writing, that the 35% allowance will be applied. Their joint

request for the application of this allowance must then be submitted to the

Private Individuals Tax Unit (Non-resident Taxpayers) in Heerlen. Once the

application has been approved the 35% allowance is applied from the outset.

The 35% allowance is applicable for a maximum period of 120 months. This

period is reduced by any period of employment with a domestic employer in

the Netherlands, or by any time previously spent by the employee in the

Netherlands, unless more than ten years have elapsed since the end of such

employment, or time spent in the Netherlands.

On the joint request of the domestic employer and the foreign employee the

foreign employee, with a few exceptions, is regarded as a fictitious

foreign taxpayer with regard to the levy of salaries tax, income tax, and

wealth tax.

5. Налог на богатство(Wealth Tax)

5.1. Taxpayers: residents and non-residents

Under the present Wealth Tax Act resident natural persons (resident

taxpayers) and non-resident natural persons owning property in the

Netherlands (non-resident taxpayers) are subject to wealth tax if their net

wealth exceeds a certain amount. The rules for the determination of the

place of residence as laid down for income tax purposes are also applicable

to wealth tax.

Resident taxpayers

The wealth tax is levied on the total net wealth, which is defined as the

value of the assets less any liabilities. The tax is levied at the

beginning of the calendar year. Assets and debts are taken into

consideration at their market value. Although both husband and wife are

liable for taxation the assets of both are added together. A child's assets

are taxed under the child's name.

Non-resident taxpayers

Non-residents are liable for wealth tax only if they own certain assets in

the Netherlands at the beginning of the calendar year. (In this case the

net wealth is defined as the value of the assets less any liabilities in

the Netherlands).

Assets in the Netherlands are:

assets belonging to a Netherlands permanent establishment and

participations (other than through shares) in a domestic business. An

example is the participation of a limited partner in a Netherlands limited

partnership.

the following assets not belonging to a permanent establishment in the

Netherlands:

29. immovable property (including immovable rights) within the

Netherlands;

30. profit sharing rights based on the net profits (not the

turnover) of a company managed in the Netherlands, excepting

profit sharing bonds, etc., and bonus rights of employees.

Debts in the Netherlands are:

debts of a permanent establishment in the Netherlands;

debts secured by a mortgage on immovable property situated in the

Netherlands.

Married non-resident taxpayers are required to state their personal net

assets only; a married person's net assets are not added to those of his or

her spouse.

5.2. Tax base and rates

5.2.1. Exemptions

The legal usufruct together with rights and obligations involving regular

payments directly arising from family law, and payments attributed by

parents to their minor children are not taken into account for the purposes

of the wealth tax.

The following items are exempted from wealth tax for both resident and non-

resident taxpayers:

a part of the business assets of the taxpayer, which is:

34. 100% when the assets of the business do not exceed NLG 219,000

(1999: NLG 216,000);

35. 68% of the assets in excess of NLG 219,000 plus the exemption of

NLG 219,000 if the assets of the business exceed NLG 219,000

(1999: 68% of the assets in excess of NLG 216,000 plus the

exemption of NLG 216,000 if the assets of the business exceed

NLG 216,000).

This exemption also applies to:

37. amounts payable by the person to whom the taxpayer has

transferred the ownership of his business;

38. the assets of a business which is to be converted into a limited

liability company;

39. the value of "substantial interest" shares in a limited

liability company established in the Netherlands;

40. specific subordinated loans granted to a starting entrepeneur.

Examples of other special exemptions:

42. entitlements ensuing from a pension scheme;

43. payments ensuing from life annuities that have not yet

commenced; annuities that have already commenced are also

exempted to a certain sum;

44. entitlements and benefits with regard to sickness, disability or

accidents, accruing to those concerned or the surviving spouse

or minors;

45. personal belongings such as items of artistic or scientific

value, clothes, food, gold and silver, pearls and precious

stones to a total value of NLG 8,500.

5.2.2. Tax rates

The rate is NLG 7 for every NLG 1,000 of net assets (0.7%). There are two

categories, which are:

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The taxable amount for resident taxpayers is the total net wealth less the

personal allowance. The taxable amount for non-resident taxpayers is the

total domestic net wealth without the deduction of a personal allowance.

The personal allowances for resident taxpayers in 2000 are:

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5.2.3. Special allowances

The following amounts may be added to the above allowances:

I. Old-age allowance

The old-age allowance is intended for taxpayers who have little or no

provision for pension arrangements, but who have assets, which were

hitherto subject to wealth tax in their entirety. As a result of this

allowance this category of taxpayers above the age of 35 will be in a

position similar to those who have pension arrangements that are exempt

from wealth tax.

The following amounts may be added to the above allowance:

single persons over 35: minimum NLG 8,000 and maximum NLG 205,000

married persons: minimum NLG 13,000 and maximum NLG 292,000

II. 68% rule (for resident taxpayers only)

If in any given year the total income tax and wealth tax due exceeds 68% of

the taxable income for the year then the excess is refunded. For this

purpose the taxable income or net salary of a married, but not permanently

separated couple and the related income tax or salaries tax are attributed

to the spouse with the highest personal income. This provision is not

applicable to minors whose income from assets is taxed with that of their

parents.

5.3. Tax returns and assessments

The wealth tax is to be paid annually on the total net wealth on 1 January

of the relevant financial year. The tax is collected by means of an

assessment. The regulations, which are applicable to income tax, are also

applicable to wealth tax.

6. Налог на добавленную стоимость(Value Added Tax and Excise Duty)

In the Netherlands value added tax (VAT, in Dutch 'BTW') is levied at each

stage in the chain of production and distribution of goods and services.

The tax base is the total amount charged for the transaction excluding VAT,

with certain exceptions. Due to deductions in previous stages of the chain

VAT is not cumulative. Every taxable person is liable for VAT on his or her

turnover (the output tax), from which the VAT charged on expenses and

investments (the input tax) may be deducted. If the balance is positive

then tax must be paid to the tax authorities; if the balance is negative

then a refund is received. The tax paid by the ultimate consumers of the

goods or services is not tax-deductible. The tax is based on the VAT rate

applicable to the price, exclusive VAT, of the goods or services received.

6.1. Taxable persons

The taxable persons are the persons conducting a business, who are defined

as those who conduct independent business, including natural persons,

corporate bodies, partnerships, associations etc. Combinations of bodies

forming a single financial, organisational, and economic entity can be

considered as a fiscal unit for VAT purposes. In such cases the supply of

goods and services within the unit is not subject to VAT. A public body can

also act as a taxable person if its activities do not involve public

duties.

6.2. Tax base

There are four taxable activities:

|I. |the supplying of goods, |

|II.|the rendering of services, |

|III|the acquisition of goods by businesses (since 1 January 1993), |

|. | |

|IV.|the importation of goods. |

The supplying of goods and services

The term "supplying of goods" (goods are all physical objects, but also

include electricity, heating, cooling, etc.) is given a broad

interpretation. For example, for VAT purposes the following activities are

considered as the supplying of goods:

the transfer of ownership of goods under an agreement;

the transfer of goods on the basis of a hire purchase agreement;

the delivery of goods by a manufacturer who has manufactured the goods from

materials provided by the consumer;

the private use of goods by a business;

the self-supply of goods, if the goods are involved in exempt transactions

for which prepaid tax cannot be deducted, or is only partly deductible.

Services are defined as all activities performed for a remuneration that

are not>

Location of deliveries and services

Although the difference between the supplying of goods and the rendering of

services is usually a purely theoretical one, there is a valid reason for

distinguishing between them with regard to location. Transactions are

subject to the conditions and rates applicable at the location concerned.

The location at which the goods are supplied is defined as the location of

the goods at the time of supply. An exception is made for goods transported

in connection with the supply; in such cases the location of supply is the

location at which the transportation began. Another exception is made for a

series of supplies of imported goods; in such cases the location of all the

supplies is the Netherlands.

The location at which services are rendered is generally deemed to be the

place of residence or of establishment of the person supplying the

services. However there is a separate regulation for certain services: for

example for services involving copyrights and advertising, advice,

information, banking, insurance and the services of employment agencies

etc., the location at which the services are rendered is the place of

establishment of the person to whom the services are rendered. Services

involving immovable property are rendered at the location of the property.

6.3. Exemptions

Several types of transactions are exempt from VAT. An exemption means that

tax for the transactions should not be charged, and that prepaid VAT

attributable to those transactions cannot be deducted. Exemptions are

applicable to transactions such as:

the transfer or rental of immovable property, with certain exceptions. For

example, the delivery of newly-built property until two years after it is

first used, and property when the supplier and recipient have opted for

taxable delivery are taxable; however the possibility to opt for taxation

is restricted to situations in which the property is used for (almost)

wholly taxable purposes;

medical services;

services provided by educational establishments;

social-cultural services;

most services performed by banks;

insurance transactions;

non-commercial activities by public radio and television broadcasting

organisations;

postal services;

burials/cremations;

sports (not entrance fees);

the services of composers, writers and journalists.

6.4. Special arrangements for small businesses (persons) and the

agricultural sector

Small businesses run by persons enjoy a tax reduction. If the VAT to be

paid after the deduction of prepaid VAT is less than NLG 4,150 then a

reduction is granted of (NLG 4,150 minus the VAT due) x 2.5. If a small

business consequently does not have to pay any VAT to the authorities then

it can, on request, be relieved of the obligation to keep an

administration.

For the agricultural sector, i.e. arable farming, cattle breeding, and

horticulture, a special provision is applicable which is designed to

exclude the agricultural sector from the VAT system entirely. Farmers do

not charge VAT and do not have the right to deduct the prepaid VAT. The

purchasers of agricultural products from these farmers receive a fixed

prepaid VAT deduction of 4.8%. If the tax prepaid by the farmer is more

than 4.8% of the value of his sales then this special provision would put

him or his customers at a disadvantage; in such cases the farmer may then

opt for the usual statutory regulation.

6.5. Tax rates

The general rate is 17.5%. A reduced rate of 6% is applicable to the

supply, import, and acquisition of goods and services mentioned in Annex 1

to the VAT-act. The reduced rate is in the main applicable to foodstuffs

and medicines. Other goods and services subject to the lower rate include

water, art, books, newspapers and magazines, materials required by the

visually handicapped, artificial limbs, certain goods and services for

agricultural use, passenger transport, hotel accommodation and entrance

fees for museums, cinemas, sport events, amusement-parks, zoos and circus

and some labour intensive services. The zero rate is intended primarily for

exported goods, seagoing vessels and aircraft used for international

transport, gold destined for central banks, and any activities which may

take place within bonded warehouses or their equivalent. There is also a

zero rate for goods, which are transported to another EU member state on

which VAT is levied, because of the acquisition in that member state.

6.6. The new VAT system in the single European market

The single European market was completed on 1 January 1993. From this date

goods, persons, services and capital may be moved freely within the EU. The

transitional arrangements applicable after this date, for which the 1968

Turnover Tax Act of the Netherlands has been amended, contain the following

main points.

|I|For private persons buying goods in another member state VAT is |

|.|levied in the country in which the goods are bought (the principle of|

| |the country of origin). The exemption on exports from the member |

| |state and the obligation to pay VAT on the goods on arrival in the |

| |Netherlands are then not applicable. |

|I|For trade in goods between businesses in member states VAT is levied |

|I|in the member state to which the goods are transported (the principle|

|.|of the country of destination) at the rates and under the conditions |

| |of that member state. The business supplying the goods applies the |

| |zero rate. The business receiving the goods submits a tax return with|

| |regard to the goods purchased in another member state. (This |

| |transitional arrangement is applicable until the date on which |

| |transactions became subject to the country of origin principle). |

|I|The principle of the country of destination is also applicable to |

|I|intracommunity deliveries to exempted parties, farmers falling under |

|I|a lump-sum compensation scheme, and legal entities not liable for |

|.|taxation (authorities), unless the total value of the goods purchased|

| |exceeds the threshold of NLG 23,000 (ECU 10,000) |

|I|For mail order transactions or teleshopping involving private |

|V|persons, exempted businesses, legal entities not liable for taxation,|

|.|and farmers entitled to a lump-sum compensation scheme a similar |

| |provision to that referred to in point III is applicable, but with a |

| |threshold of NLG 230,000 (ECU 100,000). |

|V|The principle of the country of destination is always applicable to |

|.|the purchase of new, or almost new, motor cars by private persons or |

| |businesses in another member state.. |

|V|Every business making intracommunity deliveries to another member |

|I|state must submit regular notifications with regard the deliveries |

|.|subject to taxation in that member state (known as the listing |

| |requirement). The business will be required to supply further details|

| |if this is necessary for intracommunity checks on the levying of VAT.|

|V|Since border controls within the EU for tax purposes have been |

|I|discontinued the levying of VAT on imports and the zero rate for |

|I|exports will be applicable only to goods outside the EU. |

|.| |

Imports

Imports are confined to the bringing into free circulation in the

Netherlands of goods from countries outside the EU. The rates to be applied

are the same as those applicable to supplies of foods in the Netherlands.

VAT will be levied either in the same way as import duties or, after the

appropriate licence has been granted, in accordance with the deferred

payment system.

In the first situation the customs procedure is applicable. This means that

the tax due must be paid by the declarant when submitting an import

declaration, or that security must be provided for this purpose. In the

second situation the tax due is collected from the business for which the

goods are destined. The time of payment is then deferred until the time at

which the business must submit the periodic domestic VAT tax return. In

such cases the time of payment is coincident with the right to deduct the

same tax.

There are exemptions for imports, but these do not affect the right to the

deduction of VAT on input.

6.7. Tax returns and assessments

The period to which returns relate may be monthly, quarterly, or annually,

depending on the amount of VAT due. Almost all VAT returns are prepared and

dispatched by a computerised system. The system checks that the forms are

returned and the amounts in question are paid in good time. The return must

be submitted within one month of the end of the period to which it relates.

The tax owed must also be paid within this period. Returns for which no tax

is due, or a refund is requested, should be submitted within one month.

A significant percentage of retrospective assessments is the result of

returns being submitted too late, or the associated payment not being made

in good time. As mentioned above these are monitored by a computer system,

which automatically prepares a retrospective assessment if a payment is not

made, or a return is not submitted in good time. The system uses

information from returns relating to previous periods to determine the

amount of the assessment for the period in question.

In addition to assessments resulting from the failure to file a return or

pay the tax owed in good time, retrospective assessments are also issued if

checks reveal that too little VAT has been paid. It is possible to object

and appeal against retrospective assessments; however this does not suspend

the obligation to pay the tax deemed to be payable.

7. Налоги на охрану окружающей среды(Environmental Taxes)

7.1. Fuel tax

Fuel tax is levied on mineral oils, coal, natural gas, blast furnace gas,

cokes oven gas and coal gas. Mineral oils are petrol, diesel fuel, heating

gas oil and heavy fuel oil. The tax revenue is estimated as approximately

NLG 1,509 million in 2000.

Taxable persons

The fuel tax on mineral oils is levied together with excise duty on mineral

oils. Fuel tax on the other fuels mentioned above is due by persons who

extract, produce or import these fuels, and subsequently use them as fuels

or transfer them to others for use as fuels. The number of taxable persons

liable to fuel tax is restricted as the tax is levied primarily on the

manufacturers and importers of fuel.

Tax rates

The rates for the most common fuels on 1 January 2000 are as follows:

|Petrol |per 1000 l |NLG 26.07 |

|Medium oils |per 1000 l |NLG 28.56 |

|Diesel oil and the like |per 1000 l |NLG 28.76 |

|Heavy fuel oil |per 1000 kg |NLG 33.57 |

|Coal |per 1000 kg |NLG 24.28 |

|LPG |per 1000 kg |NLG 34.34 |

|Natural gas | | |

|0 - 10 mln. m3 |per 1000 m3 |NLG 22.40 |

|> 10 mln. m3 |per 1000 m3 |NLG 14.60 |

Exemptions

All usage other than as fuel is exempt.

7.2. Tax on groundwater

Groundwater tax is levied on the extraction of sweet groundwater. This tax

has been levied since 1 January 1995. The tax revenue is estimated at

approximately NLG 360 million for 2000.

Taxable persons

The tax is levied on the proprietors of the establishments extracting

groundwater. These are, for example, the manufacturers of drinking water,

farmers, and industries that use groundwater.

Rates

For drinking water companies the rate is NLG 0.3530 per mі; for others the

rate is NLG 0.2634 per mі. Rebates are applied for infiltrated water.

Exemptions

Exemptions are applicable under certain conditions, for example in case of

extraction of groundwater for draining a building site, as well as test-

extractions, extraction for use for sprinkling and irrigating land and

extraction needed to clean groundwater.

7.3. Tax on tap water

The tax on tap water is levied on the deliverance of tap water to a maximum

300 cubic meters per year. The tax revenue is estimated at NLG 215 million

for 2000.

Taxable persons

The tax is levied on the tap watercompanies.

Rates

The rate is NLG 0.285 per mі.

7.4. Tax on tap water

The tax on tap water is levied on the deliverance of tap water to a maximum

300 cubic meters per year. The tax revenue is estimated at NLG 215 million

for 2000.

Taxable persons

The tax is levied on the tap watercompanies.

Rates

The rate is NLG 0.285 per mі.

7.5. Regulatory energy tax

The regulatory energy tax is levied on the consumption of natural gas,

electricity and mineral oil products when used as substitutes for gas by

domestic users or commercial establishments. The tax revenue is estimated

at NLG 4,208 million for 2000. The revenues are returned to domestic users

and business by way of reductions in other taxes.

Taxable persons

The tax is levied on the energy distribution companies and manufacturers

and wholesalers of mineral oils. These companies pass on the tax to their

customers.

Rates

Natural gas is taxed to a maximum of 1.000.000 cubic metres per year, with

a tax-free allowance of 800 cubic metres per year. Electricity is taxed to

a maximum of 10.000.000 kWh per year, with a tax-free allowance of 800 kWh.

The rates for 2000 are as follows:

|fuel |unit |cents per| |

| | |unit | |

| | | |2000 |

|Natural gas |cubic metre | |20.82 |

|Electricity |kWh | |8.20 |

|Light fuel oil |litre | |17.43 |

|Heating oil |litre | |17.56 |

|LPG |kg | |20.78 |

A zero rate applies for fuels used for transport purposes.

Exemptions

Exemptions are for instance applicable for all usage other than as fuel and

for natural gas used to produce electricity.

7.6. Tax on uranium

This tax is levied on uranium-235. The tax was introduced so that nuclear-

generated electricity would be taxed in the same way as fuel-based

electricity. The tax came into force on 1 january 1997. The tax revenue has

been estimated initially at NLG 12 million for 2000.

Taxable persons

This tax is due by nuclear energy companies.

Rates

NLG 33.17 per gram of Uranium-235.

8. Избежание двойного налогообложения на доход, прибыль и

богатство(Avoidance of Double Taxation for Taxes on Income, Profits and

Wealth)

8.1. General

The Netherlands has two kinds of arrangements for the avoidance of double

taxation for taxes on income, profits and net wealth, and for inheritance

and gift tax. It has concluded conventions for the avoidance of double

taxation with a large number of countries (see 8.3). If no convention is

applicable then the unilateral provisions as laid down in the 1989 Double

Taxation (Avoidance) Decree of the Netherlands are applicable (see 8.4.).

The double taxation conventions apply for residents of the Netherlands and

for residents of the treaty countries. The above mentioned Decree applies

for residents of the Netherlands, and for residents of the treaty

countries. The above mentioned Decree applies only for residents of the

Netherlands.

8.2. Methods

The Dutch tax system provides for three different methods for avoiding

double taxation on income from foreign sources. Double taxation is avoided

by means of the exemption with progression method, the credit method, or

deduction of foreign taxes as costs. These methods are used under the

Decree and, with only a few exceptions, under the double taxation

conventions.

8.2.1. The exemption with progression method

The exemption with progression method is usually used for income tax,

corporation tax and wealth tax. In principle relief is provided for

positive and negative items of income from foreign sources, on a per

country basis. The exemption method involves a reduction of the Dutch tax

on total income. The reduction is calculated as follows:

|foreign |x total Dutch tax due on total taxable income |

|income | |

|Total | |

|income | |

(foreign income divided by total income; multiply result by the total Dutch

tax due on total taxable income)

If the income from foreign sources exceeds the total income then no full

relief for foreign taxes is provided in the year concerned. In such cases

relief is provided in the subsequent years.

Foreign losses reduce the Dutch tax base in the year in which they arise as

they are offset against the domestic income. However any losses from abroad

which are incurred in the preceding years are deducted from the foreign

income before relief is granted.

8.2.2. The credit method

The credit against tax method, or credit method, is usually used for

foreign withholding taxes on investment income such as dividends, interest

and royalties, on a per country basis (a ministerial order concerning the

possibility of choosing between the credit method on a per country basis

and the credit method on an overall basis is in preparation). The tax

reduction amounts to the lower of the foreign withholding tax or the Dutch

tax attributable to the foreign dividends, interest and royalties.

Since the foreign withholding taxes for which credit is allowed are usually

levied on a gross basis, whilst Dutch income tax is levied on a net basis,

it is quite possible that the Dutch tax attributable to the relevant items

of income is not sufficient to provide full credit for the tax levied by

the source country. In such cases the excess foreign taxes may be carried

forward to subsequent years.

Since January 1, 1999 in a few conventions for the avoidance of double

taxation the credit method is also applicable for income from passive

investments derived through a permanent establishment (see 8.4.2).

8.2.3. Deduction as costs

In situations in which no exemption or credit is allowed then any foreign

taxes paid may be deducted as costs related to the relevant income. In

situations in which a tax credit would normally be used then the taxpayer

may opt for non-recognition of the tax credit. This option is applicable to

the year in which the income is received and to the total amount of all

dividends, royalties and interest received in that year. The option will

thus result in a deduction of foreign taxes as costs.