NETHERLANDS Law and Practice Contributed by: Jan-Willem van Rooij, Anne Brugmans and Jordy Kusters, Loyens & Loeff
the book value and fair market value of the spun-off assets. However, in case a spin-off is structured as a full or partial legal demerger, a tax-neutral roll-over facility exists. Using the facility is not mandatory. The facility is available provided that specific conditions are met. Most important is the anti-abuse rule, requiring that the demerger must not be predominantly aimed at the avoidance or deferral of taxation, but made for business reasons (ie, non-tax reasons). If (part of) the shares in the entities involved in the demerger are sold within three years following the demerger, a lack of predominantly business reasons is assumed. Shifting the burden of proof to the taxpayer would make it plausible that the transaction was based on predomi- nantly business reasons. In addition, the following conditions are relevant to apply the roll-over facility without approval from the Dutch tax authorities. • The same (profit) regime applies to both the demerged and acquiring entity (eg, no innovation box regime, and no foreign branches). • Neither the demerged nor the acquiring entity has any tax claims available (eg, loss carry-forward, or double taxation relief). • The demerged business remains subject to Dutch corporate income tax (eg, assets are not trans- ferred to a foreign subsidiary or branch). If these conditions are not satisfied, the taxpayer may submit a request to the Dutch tax authorities to authorise the roll-over facility, who may then grant approval under certain additional conditions. The request should be submitted prior to the demerger, although the decision does not necessarily need to be awaited. 3.3 Spin-Off Followed by a Business Combination Under Dutch corporate law there is sufficient flexibility to structure a spin-off that is immediately followed by a business combination, such as a merger or acquisi- tion. Such spin-offs can end up as standalone entities or subsidiary organisations, depending on the desires of the parent company.
A spin-off offers an appealing form for attracting investment and enabling co-operation. It provides flexibility for developing projects outside of the core business. This makes it enticing for rapidly changing sectors such as energy and infrastructure, wherein innovation creates continued change. Spin-offs contribute to the growth of renewable energy companies, increased private equity and institutional investor involvement, and future trends such as smart grids, data-driven energy management and decentral- ised energy systems. 3.4 Timing and Tax Authority Ruling The timing of a spin-off in the Netherlands depends on various factors, including the complexity of the trans- action, regulatory requirements, internal restructuring and due diligence procedures. When the spin-off is structured through a legal demerger, a one-month objection period applies following the filing of the pro- posal with the Dutch Chamber of Commerce and the publication of a mandatory notice in a nationally dis- tributed daily newspaper. In the event of a spin-off of a business involving employees, the employer is subject to specific information obligations. Although no statu- tory waiting period applies, it is generally advisable to inform and consult employees in a timely manner prior to the effective date of the spin-off, whereby at least two months is considered timely. In case a request needs to be filed with the Dutch tax authorities to apply the tax-neutral roll-over facil- ity discussed previously, a typical term of receiving such approval is 6–12 weeks (although this may be substantially longer in case there are additional questions). While it is generally advised to await the approval, strictly speaking the approval may also be granted post-demerger as long as the request was filed pre-demerger.
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