Mergers and Acquisitions Transactions in the Netherlands

The M&A landscape in the Netherlands has been rapidly changing. The article discusses the fundamental decisions that a buyer must make, such as deciding whether to purchase shares or assets of a target firm, and how to finance an acquisition.

Private M&A transactions are generally not governed by law, however, parties can agree on their own legal structure within the contract of sale (the BV or the NV). The Dutch Civil Code (DCC) is, however, a set of common terms for the sale of shares, businesses or assets, and also outlines the formalities required when a public sale is involved.

A public M&A transaction may require approval by the Authority for Consumers and Markets or by the European Commission. In addition, the Work Councils Act (Wet op the Ondernemingsraden) and competition laws may be applicable to certain types transactions.

You can acquire shares and business of the target company in various ways, including issuance of new stock as a payment for the transaction. Share mergers are exempt from capital contribution tax in the Netherlands. Dividend withholding tax (WHT) however, is usually due on the profits distributed by the buying company.

The Netherlands allows the depreciation of goodwill for accounting purposes whenever a business or asset is purchased. This can be carried out over a period of ten years, unless included as a group relief for CIT (clawbacks could apply). Service entities, such as branches in other countries, are subject to transfer pricing rules and could be eligible for assurance in advance of the tax consequences of proposed related-party transactions, through the use of international rulings.