Vistaprint 2012 Annual Report Download - page 34

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We may not be able to make distributions or repurchase shares without subjecting our shareholders to
Dutch withholding tax.
A Dutch withholding tax may be levied on dividends and similar distributions made by Vistaprint N.V. to its
shareholders at the statutory rate of 15% if we cannot structure such distributions as being made to shareholders in
relation to a reduction of par value, which would be non-taxable for Dutch withholding tax purposes. We have
repurchased our shares and may seek to repurchase additional shares in the future. Under our Dutch Advanced
Tax Ruling, a repurchase of shares should not result in any Dutch withholding tax if we hold the repurchased shares
in treasury for the purpose of issuing shares pursuant to certain employee share awards or for the funding of
acquisitions. However, if the shares cannot be used for these purposes, or the Dutch tax authorities challenge the
use of the shares for these purposes, such a repurchase of shares for the purposes of capital reduction may be
treated as a partial liquidation subject to the 15% Dutch withholding tax to be levied on the difference between our
recognized paid in capital per share for Dutch tax purposes and the redemption price per share. Our recognized
paid in capital per share for Dutch tax purposes is €28.99 per share translated as of the date of our reincorporation
to the Netherlands on August 28, 2009.
We may be treated as a passive foreign investment company for United States tax purposes, which may
subject United States shareholders to adverse tax consequences.
If our passive income, or our assets that produce passive income, exceed levels provided by law for any
taxable year, we may be characterized as a passive foreign investment company, or a PFIC, for United States
federal income tax purposes. If we are treated as a PFIC, U.S. holders of our ordinary shares would be subject to a
disadvantageous United States federal income tax regime with respect to the distributions they receive and the
gain, if any, they derive from the sale or other disposition of their ordinary shares.
We believe that we were not a PFIC for the tax year ended June 30, 2012 and we expect that we will not
become a PFIC in the foreseeable future. However, whether we are treated as a PFIC depends on questions of fact
as to our assets and revenues that can only be determined at the end of each tax year. Accordingly, we cannot be
certain that we will not be treated as a PFIC for our current tax year or for any subsequent year.
If a United States shareholder acquires 10% or more of our ordinary shares, it may be subject to increased
United States taxation under the “controlled foreign corporation” rules. Additionally, this may negatively
impact the demand for our ordinary shares.
If a United States shareholder owns 10% or more of our ordinary shares, it may be subject to increased
United States federal income taxation (and possibly state income taxation) under the “controlled foreign
corporation” rules. In general, each U.S. person who owns (or is deemed to own) at least 10% of the voting power
of a non-U.S. corporation, “10% U.S. Shareholder,” and if such non-U.S. corporation is a “controlled foreign
corporation”, or “CFC,” for an uninterrupted period of 30 days or more during a taxable year, then a 10% U.S.
shareholder who owns (or is deemed to own) shares in the CFC on the last day of the CFC's taxable year, must
include in its gross income for United States federal income tax (and possibly state income tax) purposes its pro
rata share of the CFC's “subpart F income”, even if the subpart F income is not distributed. In general, a non-U.S.
corporation is considered a CFC if one or more 10% U.S. Shareholders together own more than 50% of the voting
power or value of the corporation on any day during the taxable year of the corporation. “Subpart F income”
consists of, among other things, certain types of dividends, interest, rents, royalties, gains, and certain types of
income from services and personal property sales.
The rules for determining ownership for purposes of determining 10% U.S. Shareholder and CFC status are
complicated, depend on the particular facts relating to each investor, and are not necessarily the same as the rules
for determining beneficial ownership for SEC reporting purposes. For taxable years in which we are a CFC for an
uninterrupted period of 30 days or more, each of our 10% U.S. Shareholders will be required to include in its gross
income for United States federal income tax purposes its pro rata share of our subpart F income, even if the subpart
F income is not distributed by us. We currently do not believe we are a CFC. However, whether we are treated as a
CFC can be affected by, among other things, facts as to our share ownership that may change. Accordingly, we
cannot be certain that we will not be treated as a CFC for our current tax year or any subsequent tax year.