Unilever 2001 Annual Report Download - page 117

Unilever Annual Report & Accounts and Form 20-F 2001
TAXATION FOR US RESIDENTS >114
The following notes are provided for guidance. US residents
should consult their local tax advisers, particularly in
connection with potential liability to pay US taxes on
disposal, lifetime gift or bequest of their shares:
Netherlands
Taxation on dividends
Dividends of companies in the Netherlands are subject
to dividend withholding tax of 25%. Where a shareholder
is entitled to the benefits of the current Income Tax
Convention (‘the Convention’) concluded on 18 December
1992 between the United States and the Netherlands, when
dividends are paid by NV to:
> a United States resident;
> a corporation organised under the laws of the
United States (or any territory of it) having no permanent
establishment in the Netherlands of which such shares
form a part of the business property;
> or any other legal person subject to United States Federal
income tax with respect to its world-wide income, having
no permanent establishment in the Netherlands of which
such shares form a part of the business property;
these dividends qualify for a reduction of Netherlands
withholding tax on dividends from 25% to 15% (to 5%
if the beneficial owner is a company which directly holds
at least 10% of the voting power of NV shares and to 0%
if the beneficial owner is a qualified ‘Exempt Organisation’
as defined in article 36 of the Convention).
The entire dividend (including the withheld amount) will
be dividend income to the United States shareholder not
eligible for the dividends received deduction allowed to
corporations. However, the Netherlands withholding tax will
be treated as a foreign income tax that is eligible for credit
against the shareholder’s United States income taxes.
Where a United States resident or corporation has a
permanent establishment in the Netherlands, which has
shares in Unilever N.V. forming part of its business property,
dividends it receives on those shares are included in that
establishment’s profit. They are subject to the Netherlands
income tax or corporation tax, as appropriate, and the
Netherlands tax on dividends will be applied at the full rate
of 25%. This tax will be treated as foreign income tax
eligible for credit against the shareholder’s United States
income taxes.
Under a provision of the Netherlands Dividend Tax Act NV
is entitled to a credit (up to a maximum of 3% of the gross
dividend from which dividend tax is withheld) against the
amount of dividend tax withheld before remittance to the
Netherlands tax authorities. For dividends paid on or after
1 January 1995, the United States tax authority may take
the position that the Netherlands withholding tax eligible
for credit should be limited accordingly.
Under the Convention, qualifying United States
organisations that are generally exempt from United States
taxes and that are constituted and operated exclusively to
administer or provide pension, retirement or other employee
benefits may be exempt at source from withholding tax on
dividends received from a Netherlands corporation. A recent
agreement between the United States and the Netherlands
tax authorities describes the eligibility of these US organisations
for benefits under the Convention and the procedures for
them to claim benefits under the Convention. This agreement
was published by the US Internal Revenue Service on
20 April 2000 in release IR-INT-2000-9 and these procedures
apply to dividends made payable after 30 June 2000.
A United States trust, company or organisation that is
operated exclusively for religious, charitable, scientific,
educational or public purposes, is now subject to an initial
25% withholding tax rate. Such an exempt organisation
is entitled to reclaim from the Netherlands Tax Authorities a
refund of the Netherlands dividend tax, if and to the extent
that it is exempt from United States Federal Income Tax and
it would be exempt from tax in the Netherlands if it were
organised and carried on all its activities there.
If you are a Unilever shareholder resident in any country
other than the United States or the Netherlands, any
exemption from, or reduction or refund of, the Netherlands
dividend withholding tax may be governed by the ‘Tax
Regulation for the Kingdom of the Netherlands’ or by the
tax convention, if any, between the Netherlands and your
country of residence.
Taxation on capital gains
Under the Convention, if you are a United States resident or
corporation and you have capital gains on the sale of shares
of a Netherlands company, these are generally not subject
to taxation by the Netherlands. The exception to this is if you
have a permanent establishment in the Netherlands and the
capital gain is derived from the sale of shares which form
part of that permanent establishment’s business property.
Succession duty and gift taxes
Under the Estate and Inheritance Tax Convention between
the United States and the Netherlands of 15 July 1969,
United States individual residents who are not Dutch citizens
who have shares will generally not be subject to succession
duty in the Netherlands on the individual’s death, unless the
shares are part of the business property of a permanent
establishment situated in the Netherlands.
A gift of shares of a Netherlands company by a person who
is not a resident or a deemed resident of the Netherlands is
generally not subject to Netherlands gift tax. A non-resident
Netherlands citizen, however, is still treated as a resident
of the Netherlands for gift tax purposes for ten years and
any other non-resident person for one year after leaving
the Netherlands.