Which City will be the Capital of Blockchain Technology?

Leaving Silicon Valley

Silicon Valley has long been the de facto location for budding startups to set their roots and grow into multimillion-dollar businesses, but it may not be the capital of blockchain technology. As of July 2017, 62 out of the 105 total U.S. companies valued at over $1B are located in California. To put that into perspective, New York has the second highest amount with only 15 businesses.

However, with the power of decentralization, blockchain-based startups are proving that you can find success outside of the Silicon Valley bubble. Cities around the world, whether it be through looser regulations, strong financial ties, or some unknown factors, have started vying for the title of “capital of blockchain” and are emerging as meccas for young cryptocurrency companies. Although a forerunner hasn’t emerged yet, there are a few regions beginning to develop as hot spots for this new innovation.

Chicago, USA

Flying under the radar, Chicago is quickly building itself to be a world leader in cryptocurrency. The Chicago Mercantile Exchange (CME) and Chicago Board Options Exchange (CBOE) were two of the first U.S. financial exchanges to support Bitcoin futures trading.

Lesser known, the Illinois government was one of the first to embrace blockchain technology by forming the Illinois Blockchain Initiative (IBI). The IBI is a dedicated approach to:

Create non-onerous legislation surrounding the technology,
Perform blockchain pilot programs within government organizations, and
Develop the blockchain ecosystem in Chicago.

The Chicago Blockchain Center (CBC) is spearheading objective number three. The CBC hosts developer workshops and meetups as well as supports local startups through incubation. All of this combined has led to the growth of a large blockchain community in the Windy City.

In fact, Chicago is a leader in venture-backed blockchain startups. Chicago companies have raised over $69 million to date – more than three times the amount of Austin, Denver, and Seattle combined.

Notable Companies/Projects: Bloq, CFX Markets

Austin, USA

Fielding refugees from San Francisco’s inflated housing market, Austin is carving a niche for itself with blockchain startups. Having no income tax and a natural Libertarian attitude, the state capital is primed for crypto-minded entrepreneurs.

The city has hosted the Texas Bitcoin Conference since 2014 but more famously brings in hundreds of thousands of attendees for South by Southwest (SXSW) each spring. Although not focused on cryptocurrency, SXSW this year included several speakers and panels focused on blockchain and its impact on other industries.

As one of the fastest-growing cities in the U.S., it wouldn’t be surprising to see Austin solidify itself as the place to settle down a cryptocurrency headquarters.

Notable Companies/Projects: Factom, Wanchain

New York City, USA

Although many have fled due to the implementation of its BitLicense, New York is still a hotbed for blockchain innovation. With deep roots in financial markets, it’s only natural that the Big Apple is home to some of the most well-known crypto companies and exchanges.

Beyond New York’s sheer population dominance over other cities, it also hosts one of the largest blockchain conferences in the world – Consensus. This year, the conference has even expanded to an entire “Blockchain Week”. CoinDesk and the New York City Economic Development Corporation have partnered to organize the week’s events with the goal of making NYC a global blockchain capital.

With massive amounts of investment capital and the Winklevoss twins leading the charge for self-regulation, New York City could easily become the new capital of blockchain.

Notable Companies/Projects: Gemini, Blockstack, Consensys

Singapore

A country rather than a city, Singapore is a strong magnet for companies looking to ICO. The Monetary Authority of Singapore (MAS), has stated time and again that they have no plans to regulate the industry and instead provide ample support.

They’ve embraced the new tech in an experimental project, Ubin. The project is in partnership with R3, and the goal is to “explore the use of Distributed Ledger Technology (DLT) for clearing and settlement of payments and securities.” Although not directly affecting regulation, Ubin helps members of the MAS further understand blockchain and the value it can bring.

The MAS has even gone further by allocating $150 million towards FinTech projects in the country.

Singapore also is home to FinTech Festival – the largest FinTech conference in the world. Over 30 thousand people from around the globe participate in the festival, bringing loads of talent to the small nation.

Notable Companies/Projects: Digix, TenX, Zilliqa

Zug, Switzerland

Already commonly called ‘Crypto Valley’, Zug is the current leader for the capital of blockchain title, and it’s clear why. Switzerland has historically been fairly lenient when it comes to banking and financial regulations.

On top of that, Zug has some of the lowest taxes in the nation and has taken a business-friendly approach to cryptocurrency. The government supports citizens paying in Bitcoin for some services and also uses Ethereum in a digital ID system.

Bitcoin Suisse, the financial service provider behind numerous high profile ICOs (Status, OmiseGo, SingularityNET) also calls Zug home.

Entrepreneurs in the area have formed the Crypto Valley Association to help foster growth of the ecosystem. This association collaborates with partners around the world and works with the local government to create fair blockchain regulations. Even so, the canton is far from having all the answers on how to regulate this new asset class. It’s a good sign, though, that government officials are openly working with the people that it affects most.

Notable Companies/Projects: Bitcoin Suisse, Xapo, ShapeShift, Monetas, Tezos

Decentralizing the Capital of Blockchain

These are just a few of the regions making a name for themselves in the blockchain space. With the decentralized nature of the industry, it’s entirely possible that one single “capital of blockchain” never surfaces. And, that’s a good thing.

In the end, we’re all on the same team. Projects should continue to collaborate across borders to ensure the success of the entire industry. Because when blockchain wins, we all win.

For further information about blockchains and the public policy regarding cryptocurrencies, please contact us via info@companynl.com.

This article by Steven Buchko was originally published at CoinCentral.com.

Doing Business in Singapore: The perfect base for your Dutch hub

If you are an international entrepreneur thinking of expanding in Asia, then we suggest that you consider Singapore.  This cosmopolitan metropolis has successfully managed to reconcile traditional Asian characteristics with a modern Western appearance.  Thus, while Singapore still highly values the welfare of the community, it is, with the aid of digital progress, winning the centuries-old battle for new chances and a better life.  Furthermore, this modernization has ensured considerable improvements in working life.  Here, we set out the advantages for you of doing business in Singapore.

Languages in Singapore

Along with the local dialects, Malay and Tamil, the Singaporean population also speaks Mandarin and English.  Through this, the country can act as a gateway to both China and the West.  Above all, all government institutions, courts and schools, as well as the business world, use English as the main language.  Consequently, there is no question of a language barrier.

Business in Singapore

Love of country

It is not difficult to become enamoured with Singapore, with its beautiful nature and sophisticated facilities.  If you are in the presence of Singaporean clients, never forget to mention the beauty of their country.  Singaporeans are very patriotic.  Therefore, criticism will not be appreciated if you are asked for your opinion about their country, which often happens at the start of a meeting.  Watch out, however, that your praise doesn’t become too familiar.  Similarly, digressions about family matters, religion and/or politics are not appropriate.

Meetings

One of the great advantages of Singapore is the extreme importance that its people attach to order and punctuality.  You will not be made to wait for a business associate.  You can also assume that the meeting will proceed pleasantly, as Singaporeans will never raise their voice or show that they are in bad humour when they do business.  This friendly atmosphere is confirmed with the exchanging of business gifts.  These gifts symbolize the hope for successful business contacts and an amicable relationship.  The line between being colleagues and friends is thus thin.  When a business meeting concludes, it is, for example, customary to eat together to strengthen the personal connection.  After that, you should continue your discussion for at least an hour.

Company hierarchy

In doing business in Singapore, one also sees the productive intertwining of traditional values and modern ideals coming to the fore.  Thus, the clear hierarchical structure is an unmistakeable testament to Asian culture.  The boss enjoys the most respect and authority.  Nevertheless, in this aspect, Singapore appears to be more progressive than many “modern” Western countries.  After all, there is no glass ceiling in Singapore.  Through this, women have no difficulty in assuming important roles in company life.

 

Government Subsidies

If the productive trade climate or the versatile culture and nature have still not been able to convince you to do business in Singapore, then maybe the government can change your mind. The local government, in particular, offers various subsidies and tax provisions to native and foreign companies that set up in Singapore.

If setting up a business in Singapore is only the beginning for your international adventurers, we advise you to consider incorporating a Dutch affiliate. The Dutch entity then operates as a gateway to Europe. Moreover, besides economic, cultural and practical advantages of the Netherlands, this offers you undeniable fiscal opportunities. Not only does the Dutch-Singaporean tax treaty grants you the opportunity to avoid double taxation, taxes in the Netherlands itself progressive as well.

Therefore, do not hesitate to contact us for more information about international business or doing business in Singapore and/or in the Netherlands.  We are only too glad to be of assistance.

To Be or Not to Be: Dutch Dividend Withholding Tax

Limited liability company in the Nederlands

The new coalition agreement rocked the boat in the Netherlands. Especially the alleged abolishment of the dividend withholding tax made a wave. By abolishing this tax, government Rutte III hopes to attract more international entrepreneurs to the Netherlands. Even the renowned tv-host Lubach discussed the country’s international appeal in his show Zondag met Lubach. He illustrated his point of view with the DTS-page on European tax rates. Whether or not the final ruling of the First Chamber might put the people at ease, remains yet to be seen.

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2018’s Fiscal Resolutions by the Dutch Government

changes tax 2018

 

changes tax 2018

The new year usually comes with new resolutions and plans. This isn’t any less true for the Dutch government. It plans on several law adjustments that will be in effect starting January 1, 2018. Among these adjustments are tax changes.

The resolution behind these changes is the aim to improve the Netherlands’ fiscal climate. In order to achieve this ambitious plan, the government will adapt corporate income tax, dividend tax and VAT. Furthermore, there are several other rearrangements concerning multinationals.
The most relevant of tax changes are discussed below.

Corporate Tax

First of all, the government hopes to attract foreign entrepreneurs by lowering the corporate tax rates. Starting January 2019, the rates will decrease with 1.5%-points. By 2021, this should result in 16% of taxable profit up to EUR 200 000 and 21% of the taxable profits exceeding this limit. In addition, the government will raise the corporate tax rate of the innovation box from 5% to 7%.

VAT

VAT rates will increase as well. In 2018 tax authorities will demand 9% instead of 6% VAT.

Dividend tax

Dividend tax, on the other hand, will be abolished altogether by January 2018. To prevent tax abuse, however, companies will still be subjected to withholding tax on outgoing interest and royalty flows to low tax jurisdictions.

Other resolutions

Finally, the Dutch government officially pronounced to reduce the 30% ruling term to five years. This decree will be in effect starting January 1, 2018. It is one of the measures to restrict expats’ tax benefits.
If you have more questions regarding these and other fiscal adjustments, please feel free to contact us. We are happy to assist you.

Expansion of the dividend withholding tax exemption and broadening dividend withholding tax base to include holding cooperatives.

dividend withholding tax obligation and exemption holding cooperatives

dividend withholding tax
Great News! 
The draft bill concerning the Dutch withholding tax contains several decrees that both tightens and broadens the Dutch dividend withholding tax exemption has been sent to parliament. It provides for relief from double taxation in genuine corporate structures.

This legislation makes the Netherlands more attractive for corporate structures.

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The Dutch 30%-ruling

Dutch 30% ruling

Dutch 30% ruling

The Netherlands love their expats. The Dutch ones abroad, but even more so the foreign ones over here. To attract highly skilled and well-paid professionals, the Dutch Tax Authorities grant them the so-called 30% ruling. The 30% ruling seems as simple as it is attractive: 30% of your salary will not be taxed.

I can’t possibly say it is not attractive. Getting and keeping it, however, may be tricky. We have seen applications been turned down for lack of evidence; we have met expat paying thousands of euros too much tax for lack of trying.

Of course, there are conditions: you have to make more than EUR 52.699 (gross) annually; you have to have lived more than 150 kilometres (93 miles) from the Dutch border for at least two-thirds of the 24 months before starting your job in The Netherlands; and if you are a football player, you have to be a pretty good one.

Just to give you an idea: at a EUR 100.000 income, the Netherlands 30% ruling saves the expat 8 years * 15.000 = EUR 120.000. That is worth a try, isn’t it? Moreover, that is worth letting an experienced professional file the application.

Had I already mentioned that your bonus is included in this ruling? That you can transfer your 30% ruling to another employer, even if that employer is your own company? And that you do not have to report your capital to the Dutch Tax Authorities?

So: are you a foreigner working in The Netherlands, making more than EUR 52.699, and don’t you have the 30% ruling? Get in touch. Are you a foreigner considering working in The Netherlands? Get in touch. Are you an independent entrepreneur thinking of moving to The Netherlands? Do not hesitate to get in touch with us!

The whys and wherefores of doing business in the Netherlands: the attraction of the Low Countries

why business in the Netherlands

why business in the Netherlands

The Netherlands: Are you planning to launch a new business? Or are you considering taking your existing operations to an international level? Then you may well be doing yourself a disservice by dismissing the Netherlands out of hand! For this reason, we have put together the following selection of Dutch plus points.

 

Official name:Population:
Kingdom of the Netherlands17,080,575
Capital city:Seat of government:
AmsterdamThe Hague
Currency:Surface area:
Euro41,543 km2 (16,040 mi2)

 

Geography and infrastructure

The Netherlands’ central location and state-of-the-art infrastructure have made it the obvious gateway to Europe. Both Amsterdam (Schiphol Airport) and Rotterdam (boasting Europe’s largest port) represent logistical hubs. Hence, the Netherlands provides easy access to the European market. Moreover, Schiphol Airport currently ranks fourth in the “premier league” of European airports. The water transport from Rotterdam Port onwards is impressively well organized, too.  In addition, the country offers a conveniently dense road network that is well looked after. Last but not least, there is the eastbound Betuwe Railway Line. This 160 kilometer (100 miles) long freight transport connection enables the rapid and efficient transport of commodities from Rotterdam Port to the German border and on to the hinterland.

Economy

The Dutch open economy is characterized by a great deal of economic interaction involving international trading partners. Furthermore, the above-average stability of the Dutch economy boosts the profitability and solvency of its business community. Businesses are quite adroit at “rolling with the punches” of a fluctuating international economy. The oil refinery sector, chemicals, food processing, electronics development and pharmaceuticals are the Netherlands’ main industrial activities. It mainly exports to Germany, Belgium, the United Kingdom, France, the United States and Italy. Significant import countries are Germany, Belgium, China, the USA and the UK.

Tax friendliness

Another great asset is the extensive double taxation convention network. This network involves a host of foreign countries. Moreover, domestic tax rates are relatively low and competitive. The corporate income tax rate, for example, is 20% for taxable amounts of up to EUR 200,000. Excess earnings being taxed at 25%. The Netherlands offers further attractive tax schemes. Examples are the 30% ruling, the participation exemption scheme. Another interesting fact is the zero withholding tax rate on interest or royalties. Find out more about the Netherlands’ 30% ruling here: https://www.companynl.com/30-ruling-netherlands/.

People

The Dutch tend not to be backward in coming forward. As counterparts in business, they have a reputation of being quick-witted and easy to deal with. Furthermore, they are straight shooters who tend not to dilly-dally. At European level, the Dutch workforce ranks as one of the most educated. Workers tend to be quite flexible and have a good command of the English language.

Do you want to find out more about the legalities of establishing a Dutch-based business or the Dutch tax system? Please do not hesitate to contact CompanyNL. It will be our pleasure to provide you with additional information!

Opening a Dutch bank account

BSN number

BSN number

How hard can it be to open a bank account in a foreign country? Actually, it can be quite a challenge if this country is the Netherlands! This blog offers you a selection of “tips and tricks”, to help you negotiate the rocky road to Dutch bank account ownership.


Opening a business account 

Opening a business account with a Dutch bank in principle calls for a Chamber of Commerce (KvK) file number. The only way of obtaining such a file number is by having your business entered in the Commercial Register. There are two possible ways to do so: First, you can set up a Dutch branch of a foreign-based business. This should be pretty straightforward, as the business will boast a Dutch address. The second option is to become an “establishment-less” performer of particular business operations in the Netherlands.  This is not always as undemanding as you might have expected it to be. The business will not only need a Dutch-based address but will also have to have access to the relevant premises.

Ergo, if you intend to carry on operations in the Netherlands without incorporating a company under the laws of the Netherlands, you will still need some sort of address in order to register with the KvK (as a national “Registrar of Births, Deaths, Marriages and Civil Partnerships for Businesses” of sorts).

You can provide yourself with a Dutch address and bank account without actually having to come to the Netherlands. Still, you will need to send in an authenticated copy of your identity record.

Opening a bank account without a Chamber of Commerce file number

Selected banks – such as ABN AMRO Bank – offer the option of opening a business account without a KvK file number. However, the fees for such an arrangement are several times higher than those charged for a “regular” business account. In particular, the fee for opening such a “disembodied” account starts at € 109.00.

Opening a private account

You can also open a private bank account in your capacity of Dutch-resident natural person. In this context, most banks will expect you to put in a personal appearance at one of their branches. (We would point out that it is impossible to open a private bank account in the Netherlands for anyone who is not Dutch-registered.)

Reference is made to the overview for an enumeration of Dutch banks and the fees they charge for opening an account with them.

If you require more detailed information about opening a bank account or securing a Dutch address, please do not hesitate to contact CompanyNL. It will be our pleasure to be of service to you!

Dutch participation exemption

opening dutch bank account

Gains and losses from a participation are normally no part of the taxable profits. The Dutch Participation Exemption (PE) scheme guarantees that profits, which are charged at a subsidiary, will not be charged again at the parent company. This article explains how the exemption works in practice.

participation exemption

Companies which are tax resident in the Netherlands are generally subject to Dutch corporate income tax (CIT). The regular CIT rate of 20-25% applies to a company’s worldwide profits. The worldwide profits include business income, trading income, dividend income, royalty income and interest income.

Under the application of the PE regime, income items received in connection with a qualifying shareholding are exempt from CIT. This income includes dividends, other profit distributions, capital gains and foreign exchange rate results realized by a Dutch resident company. Furthermore, losses are non-deductible, except for liquidation losses/ loss on a dissolution and currency exchange losses in case the tax-payer chooses (conditions apply).

You can perform 5 tests in order to determine if a subsidiary qualifies for the PE regime:

  1. The subsidiary needs to be a company for Dutch tax purposes (“Company Test”);
  2. The shareholder needs to be the legal owner of 5% in the nominal paid-up share capital in the subsidiary (“Shareholding Threshold Test”) (exception include a.o., 5% voting-power, member of Cooperative);
  3. The shareholder does not intend to hold the subsidiary as portfolio investment (“Intention Test”);
  4. The subsidiary is not a deemed portfolio investment (“Deemed Portfolio Investment Test”);
  5. If 4 applies, then the subsidiary may be a qualifying portfolio investment (“qualifying portfolio investment exception test”).

Based on tests 1, 2 and 3, one can determine if the PE-regime applies to a specific participation. Moreover, test 4 investigates whether the subsidiary is a deemed portfolio investment. Then, one needs to determine if the subsidiary is a qualifying portfolio investment (5).

Ad 5) Qualifying Portfolio Investment Exception Test

If the subsidiary meets test 4, the PE-regime is still available if the participation meets the qualifying portfolio investment exception test (5). In particular, this is the case if it meets either of two tests:

  1. Less than 50% of the assets of the participation directly and indirectly consist of “low-taxed free portfolio investments» (“Asset Test «); or,
  2. The participation is subject to a profit tax that results in a genuine levy according to Dutch tax standards (“ETR Test”).

If the participation does not meet the above conditions, the PE is not suitable. In this case, a credit for underlying tax may be available. Other exceptions apply to real estate companies. Here, tax-exempt investment vehicles do not own real estate and rights.

Do you want to know more about the Dutch PE? Please do not hesitate to contact us! We can tell you more about the requirements and how to apply for the exemption. In addition, we have a one-pager about the Dutch PE and a white paper (15 pages) available for free, as well.