NETHERLANDS Law and Practice Contributed by: Gianluca Kreuze, Ruben den Hollander, Anne van Geen and Sanne van Esterik, Loyens & Loeff
9. Takeover Finance 9.1 Regulated Targets
(deemed to be) made by a Dutch taxpayer to “related party” in case of financing structures involving so-called “low tax” or “non-coop- erative” jurisdictions or hybrid entities, or in certain abusive situations. • 15% Dutch dividend withholding tax may be applicable if the debt is granted under such terms and conditions that it is capable of being classified as or actually functions as an equity interest in the Dutch borrower (eg, a loan which has no term or a term in excess of 50 years, which has a profit-contingent interest and which is subordinated to claims of other creditors); in these cases, Dutch conditional withholding tax on these deemed dividends may be due, which may effectively result in 25.8% withholding tax being due. With the entry into force as from 1 January 2021 of the Dutch conditional withholding tax in respect of interest payments as mentioned above, the inclusion of a Qualifying Lender con- cept in case of a Dutch borrower generally in line with the LMA standard has become standard. 8.3 Thin-Capitalisation Rules There are no thin-capitalisation rules in the Neth- erlands as such, but in addition to the various interest deduction limitations that may apply to a Dutch borrower in respect of intragroup debt financing, there is a general interest deduction limitation that applies to a Dutch taxpayer’s intragroup and/or third-party net borrowing costs for each financial year to the highest of: (i) 24.5% of the EBITDA (for tax purposes); and (ii) EUR1,000,000.
Apart from antitrust scrutiny by the European Commission and the Dutch Authority for Con- sumers and Markets (ACM), acquiring privately owned companies is in principle not regulated in the Netherlands. Specific regulatory approvals or notifications may be required based on the sector in which the target company operates, and supervision is carried out by various authori- ties. The Dutch Central Bank ( De Nederlandsche Bank , DNB), the Dutch Authority for Financial Markets ( Autoriteit Financiële Markten , AFM) and the European Central Bank oversee M&A activity involving financial institutions such as banks and insurers, the DNB supervises M&A transactions involving corporate services providers (eg, trust firms), the Dutch Healthcare Authority ( Neder- landse Zorgautoriteit ) regulates the healthcare industry and the Minister of Economic Affairs and Climate Policy ( Minister van Economische Zaken en Klimaat ) oversees certain large energy installations. Any acquisition resulting in a change of con- trol of a regulated entity typically requires prior approval from the relevant regulatory authority. The approval process involves an assessment of the acquirer’s suitability, financial stability and strategic intentions. The acquiring party must submit detailed information to the regulator, including the business plan, financial statements and any other relevant documents. Unlike public M&A, there is no statutory requirement to submit “certain funds” statement to the relevant regula- tor (see 9.2 Listed Targets ), but the transaction documentation will obviously contain relevant provisions in this respect. Generally speaking, lending to businesses is not regulated in the Netherlands and it is not
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