In recent years, the Dutch tax regime for mergers and acquisitions with a foreign partner has seen major changes. These changes will affect the major decisions that prospective buyers must take. This includes deciding whether to buy shares or assets and what acquisition vehicle will be used. This article examines these changes briefly, based on the current tax legislation, up to and including Tax Plan 2021. This mainly came into effect in 2019.

The most common way for a party to acquire control over a Netherlands-incorporated company is through a public bid for all issued shares. This is typically a share-forshare swap, however it can also involve securities (e.g. bonds and convertible instruments). In rare cases tender offers may be made for securities representing less than 30 percent of the voting rights in the target (e.g. America Movil’s bid to purchase KPN in 2012, and Pon Holding’s bid to purchase Accell Group in November of 2018).

A Statutory merger is an alternative option to take control of a Dutch-incorporated company. This involves a surviving corporation buying all the assets and liabilities of one or more disappearing businesses by operation of law, and shareholders who are dissident being granted appraisal rights allowing them to exit against cash compensation (e.g. the post-bid cash-out merge of Wright Medical Group into a Stryker subsidiary in 2020). Statutory mergers can be domestic or cross-border within the European Economic Area (EEA) but not between a Netherlands-incorporated company and a foreign company (e.g. a Delaware corporation).

The acquiring entity must be a Dutch public liability company (NV) with its headquarters in the Netherlands or, in the event of abuse, a hybrid entity as defined by the Tax Treaty between the Netherlands and the EEA. Moreover WHT — which is equal to the highest CIT rate leading VDR service providers in the Netherlands applies to arm’s-length interest and royalty payments between an affiliated entity located in the Netherlands and an affiliate that is based outside the Netherlands, except if they are attributed to an establishment permanent (PE) in the acquiring country.