Hand out

                                    DUTCH FINANCE COMPANY
                                    Dutch companies are frequently used in international finance
                                    structures. The Netherlands’ extensive tax treaty network
                                    provides in significant reductions of foreign withholding taxes
                                    on interest. Advance tax rulings allow for a relatively small
                                    spread to be taken into account for Dutch corporate income
                                    tax purposes.

                                    Withholding taxes

                                    Foreign interest receipts by Dutch companies can often benefit from a
                                    significant reduction of foreign withholding taxes, under tax treaties
                                    concluded by the Netherlands with countries worldwide. Outbound

                                    interest does not suffer withholding tax, simply because the
                                    Netherlands do not levy withholding tax on interest.

                                    Finance spread
                                    An arm’s length spread for Dutch corporate income tax purposes has to
                                    be taken into account by the Dutch finance company for its
                                    intermediary finance services. This spread needs to be determined and
                                    documented on the basis of accepted transfer pricing methods. In this
                                    respect, an Advance Tax Ruling can be obtained from the Dutch tax
                                    authorities if certain substance and risk requirements are met.
                                    Substance requirements relate to the composition and expertise of the
                                    board of directors, corporate address, management decisions,
                                    bookkeeping and banking. Trust companies usually provide services
                                    that comply with these substance requirements. Substance requirements
                                    also expect that the financial service company has sufficient equity. The
                                    banking guidelines provided by the Basel II Accords are considered to
                                    be a reliable guideline to determine an adequate amount of equity for
                                    intra-group finance activities. Risk requirements include bad debtors
                                    risks, currency exchange risks, market risks and operational risks. A
                                    finance company is considered to run actual risks if the equity capital
                                    equals or exceeds the lesser of (i) 1% of the outstanding loans, or (ii) an
                                    amount of EUR 2 million, provided that equity is realistically
                                    threatened if risks arise.

                                                          Fund Provider

                                                          loan                       Investment
                                                                          interest     Target

                                                          Dutch Finance
Strik can assist you in finding your way in the favourable Dutch ruling practice, that both follows
EU and OECD guidelines and keeps the Netherlands attractive as an intermediary finance

                                            Address; Strawinskylaan 1439
                                                1077 XX Amsterdam

                                           Telephone +31 (0) 20 662 55 01
                                             Telefax +31 (0) 20 664 34 16

                                      F OR FURTHER INFORMATION ABOUT
                                        OUR SERVICE WE REFER TO OUR
                                       WEBSITE AT : WWW . STRIK - LAW . NL

 This handout is prepared by Strik Attorneys at Law and Tax Advisors. The information contained in this
 handout is provided for reference only. While every effort is made to ensure the accuracy of this handout,
 events move quickly and circumstances may change. Strik Attorneys at Law and Tax Advisors can therefore
 not be held liable for the consequences of any actions taken on the basis of this handout. Further information
 on the subjects covered in this handout may be obtained from Strik Attorneys at Law and Tax Advisors.

H A ND O UT                                                                                                 Page 2

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