The Dutch tax framework enables the structuring of a tax efficient securitisation transaction. For instance, where the receivables remain on the balance sheet of the originator, the transfer of the receivables to the issuing vehicle in the process of the securitisation is generally not considered as a transfer for tax purposes either. Furthermore, since securitisation transactions are generally viewed by the tax authorities as risk free financing transactions, the income received by securitisation vehicles is not (materially) taxed at the issuer level. In many cases clarity on tax consequences is obtained beforehand from the Dutch tax authorities by way of a tax ruling.
A number of specific tax related issues are relevant for holders of notes issued by Dutch securitisation vehicles.
Generally, payments of interest and principal by the Dutch issuer under the notes can be made free of withholding or deduction of or for any taxes imposed, levied, withheld or assessed by the Netherlands or any political subdivision or taxing authority thereof or therein.
Taxes on Income and Capital Gains
A holder of notes will generally not be subject to any Dutch taxes on income or capital gains in respect of the notes, including such tax on any payment under the notes or in respect of any gain realised on the disposal, deemed disposal or exchange of the notes, provided that the noteholder is not a (deemed) tax resident of the Netherlands or is subject to Dutch tax by virtue of having a permanent establishment (vaste inrichting), a permanent representative (vaste vertegenwoordiger) taxable in the Netherlands.
A holder of notes will also not be subject to taxation in the Netherlands by reason only of the execution, delivery and/or enforcement of the transaction documents and the issue of the notes or the performance by the issuer of its obligations there under or under the notes.
Value Added Tax
There is no Dutch value added tax payable by a holder of notes in respect of payments in consideration for the acquisition of notes, payments of interest or principal under the notes, or payments in consideration for the disposal of notes.
The value added tax implications of any services to be provided to the issuing vehicle will merit careful consideration as not all fees payable in respect of those services may be subject or exempt from value added tax. Consequently, the issuing vehicle may not always be able to recover the input value added tax it incurs in full, whereby any such irrecoverable value added tax may become a cost to the transaction.
FATCA and CRS
As part of a global push towards tax transparency, the Netherlands have enacted legislation in respect of FATCA and the CRS, both of which relate to a reporting obligation by and for financial institutions (with the FATCA rules reflecting the US approach and CRS the standard put forward by the OECD). As part of that legislation, entities that are (deemed to be) a financial institution are subject to particular reporting obligations. Where an issuer of a securitisation is considered such a financial institution, the issuer may require noteholders or other transaction parties to provide, any information regarding their and, in certain circumstances, their controlling persons’ tax status, identity or residence in order to satisfy its reporting requirements which the Issuer may have as a result of CRS and FATCA. Any such information may then be disclosed by the Issuer to the Dutch tax authorities. The Dutch tax authorities will exchange any such information pursuant to the rules implemented FATCA and CRS with the tax authorities of other participating jurisdictions, as applicable.
Generally, no Dutch registration tax, capital tax, custom duty, transfer tax, stamp duty or any other similar documentary tax or duty, other than court fees, will be payable in the Netherlands in respect of or in connection with the execution, delivery and/or enforcement by legal proceedings of the transaction documents.