1. Fiscal aspects on insolvency Hans Eppink KroeseWevers Enschede, The Netherlands september 2008

2. KroeseWevers  Chartered accountants and tax consultants  Subvention / Corporate Finance  Staff 350 / 18 partners  Member of Nexia Netherlands  Dutch competence center (Nexia NL) at the University of Nijenrode

5. Insolvent companies  Risks  Opportunities

6. Insolvent companies  “Risks, risks, risks”  “No money to pay my fee”  Save the economic activity  Minimize tax risks  “The fee is at the tax authorities”

7. Case insolvent subsidiary A B

8. Main subjects  Treatment of losses  Loan  Capital  Fiscal unity CIT  VAT

9. Losses in CIT  Carry back only one year!  Carry forward for nine years  Special provisions after transfer of shares “Plan the profits and losses”

10. Consequences Parent - CIT  Loan  Capital

11. “loan (1)” Commercial and fiscal qualification Dutch fiscal law:  Loan  Informal capital  Unbusinesslike loans (UBL) – since 09/05/08

12. “loan (2)” 1) The commercial loan is a fiscal loan  Depreciation of the loan  Loss by remission deductable 2)Informal capital in X BV  Participation exemption (in this case) 3)UBL  loss is not deductable  Interest?

13. Capital Participation Exemption:  Loss on the paid up capital  Loss on the informal capital  Paid up “interest” (fiscal qualified as dividend) taxplanning! Exception: Losses at liquidation

14. Taxation of the subsidiary - CIT  Release of the debt to the Parent  Thin capitalisation (debt : equity ratio)

15. Release of the debt to the Parent  Moment: after liquidation  Profit on remission under conditions tax free (planning)

16. Fiscal Unity and release of debts A B

17. VAT aspects  Transactions being unpaid  Parent liable for this VAT?

18. Cross border insolvency  Legal structure  Finance structure (intercompany)  Carry back and forward of losses  Losses after transfer of shares  Fiscal unity (CIT and VAT) Pay attention in advance!