NETHERLANDS Law and Practice Contributed by: Mandeep Lotay and Dámaris Engelschman, Freshfields LLP
RETT should not be triggered as a result of the transfer of financial assets (including performing mortgage-backed loans) from the originator to the SPE, as such financial assets do not repre - sent an interest in real estate for RETT purposes. The Netherlands imposes value added tax (VAT) on the sale of certain goods and services. The sale and transfer of financial assets is, however, generally exempt from VAT. In addition, VAT may be due over certain services fees (see section 7.4 Other Taxes ). 7.2 Taxes on Profit The SPE will be subject to corporate income tax over its actual net profits, as shown in its com - mercial accounts. Such profits will, in principle, consist of the difference between all of the SPE’s income and its expenses. In most securitisation transactions, an SPE with a de minimis equity at risk is typically treated as an agent of the originator(s) for corporate income tax purposes on the basis that it only acquired the legal ownership of the relevant financial assets, and not the economic ownership. Accordingly, the originator(s) is (are) deemed to have retained the economic ownership of the relevant financial assets, and for corporate income tax purposes the SPE does not take into account the actual income and expenses relating to the financial assets and their funding. Instead, the SPE is subject to corporate income tax over an agency fee, which is the (only) remuneration it is entitled to receive on the basis of the transaction docu - mentation, and which is typically determined on a cost-plus basis. 7.3 Withholding Taxes Depending on the laws of the jurisdiction of the debtor/payor of the relevant financial asset, cross-border payments received by the SPE
may be subject to withholding taxes. If the SPE is treated as an agent of the originator(s) (see 7.2 Taxes on Profit ), the SPE will not be able to obtain an unqualified certificate of residence (which may be needed to reduce such taxes) or to credit any withholding taxes against its cor - porate income tax liability. Payments received by the SPE from Netherlands’ debtors/payors under the financial assets are not subject to withholding taxes unless the relevant financial assets have certain equity-like characteristics. Expenses Payments made by the SPE under the bonds/ notes that it issues will generally not be sub - ject to Netherlands’ withholding taxes unless the bonds/notes have certain equity-like char - acteristics and effectively qualify as equity for Netherlands’ tax purposes (in which case such payments will be treated as dividends, with the consequences set out in the last paragraph of this section), although this can be avoided in securitisations. The Netherlands levies a condi - tional interest withholding tax on (deemed) inter - est payments made to entities affiliated ( gelieerd ) to the SPE (or, where the SPE is treated as an agent of the originator, to entities affiliated to the originator – see 7.2 Taxes on Profit ) in situ - ations involving low-tax jurisdictions or hybrid/ abusive structures. Accordingly, this withholding tax does not apply on interest payments made by the SPE to unaffiliated bond/noteholders. Any dividends paid by the SPE will generally be subject to dividend withholding tax at a rate of 15% (or, where the shareholder qualifies as an entity affiliated to the SPE and is resident in a low-tax jurisdiction or is holding its shares through a hybrid/abusive structure, at a rate of 25.8%). In certain situations, this rate may be lowered based on domestic or tax treaty-based reductions or exemptions.
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