NETHERLANDS Law and Practice Contributed by: Eduard Scheenstra, Etiënne Courbois and Jenny Noordermeer, CMS
4. Tax 4.1 Withholding Tax
end up being subject to Dutch corporate income tax in the Netherlands. This could be relevant to the bor- rower if the loan documentation requires indemnifica- tion by the borrower for such tax imposed outside the lender’s jurisdiction.
In the Netherlands, arm’s length interest payments on genuine loans are generally not subject to withhold- ing tax. However, if a loan is recharacterised for tax purposes – such as a profit participation loan with no fixed maturity (or over 50 years), where repayment is only possible in insolvency, interest is almost entirely profit-dependent, and the lender is subordinated – interest may be treated as a dividend and subject to 15% dividend withholding tax. Additionally, interest or quasi-dividend payments to related-party lenders in low-tax or non-cooperative jurisdictions may be sub- ject to a conditional withholding tax of 25.8% (2025 rate). This tax applies to payments from Dutch entities or permanent establishments, and may also apply in cases of abuse or entity mismatches. A tax treaty may prevent this tax if the lender is not considered related under Dutch rules. 4.2 Other Taxes, Duties, Charges or Tax Considerations In the Netherlands, lenders are not subject to registra- tion tax, stamp duty, or similar charges when making loans or taking security or guarantees from Dutch enti- ties. The main exception is court fees, which may arise during enforcement proceedings. However, if enforce- ment of security (such as a pledge over shares or a mortgage) results in the lender acquiring ownership of real estate, a real estate transfer tax of 10.4% applies, except for owner-occupied residential property, which is taxed at 2%. This rate for non-owner-occupied resi- dential property will decrease to 8% in 2026. Acquisi- tion of shares in a “real property company” may also trigger this tax, based on the fair market value of the underlying Dutch real estate. In insolvency, Dutch tax authorities have a statutory priority right, ranking ahead of other creditors, and are generally considered preferred creditors. 4.3 Foreign Lenders or Non-Money Centre Bank Lenders There may be tax concerns where the foreign lender is considered to have been artificially interposed in the structure to avoid Dutch personal income tax from being imposed on a – direct or indirect – shareholder of the lender. In such a case, the foreign lender may
5. Guarantees and Security 5.1 Assets and Forms of Security
The assets typically available as collateral to lenders include registered property ( registergoederen ), mov- able assets ( roerende zaken ), receivables ( vorderin- gen ), and shares. The formalities and perfection requirements depend on the specific type of security. A mortgage must be executed as a notarial deed and must thereafter be registered with the relevant register of the Dutch public land registry. The method of perfecting the rights of the pledge depends on the collateral that is purported to be pledged and whether this collateral is pledged by way of a disclosed or an undisclosed right of the pledge: • A pledge over shares must be executed using a notarial deed. • A pledge over movable assets can be perfected: (a) without bringing the movable asset under the pledgee’s control: (i) by execution of an authentic (notarial) deed; or (ii) by execution of a private deed that is thereafter registered with the Dutch tax authorities; or (b) by bringing the movable assets under the pledgee’s control. • A pledge over receivables can be created by way of a disclosed or an undisclosed pledge: (a) Disclosed: The right of pledge should be per- fected by notification thereof from the pledgor to the relevant debtor. (b) Undisclosed: The right of pledge should be perfected by execution of an authentic (notarial deed) or by execution of a private deed that is
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