Summary Business Management part 2
Lecture 14: Eric Claassen
How enterprises use their money:
Money coming in.
Money goes out.
Money left over.
You always have to pay profit
taxes.
Employees get paid:
(Profit)
- Minus what retailers keep
- Minus transport
- Your benefits
- Your taxes
Remaining money
After today you have to know:
B.V. (Limited liability, named shares, offer shares to partners)
N.V. (LLC and numbered shares, sell shares freely)
Holding and personal-holding (B.V. or N.V.)
Opco B.V. or N.V. (Operating Company)
Gross and Net Profit (profit-tax) and EBITDA
Dividend (dividend tax)
Zero or 25 % tax depending on sizable interest (>>5%, private vs corporate <<5%)
Tax latency
Control ( > 50%)
Liability:
Limited liability: where a business owner is only liable for their original investments should
the business fall into debt. The business and the owner have separate legal identitites. PLC
and LTD.
Unlimited liability: if a business has debts the owner must pay even if this means selling their
own possessions to find the money. Sole trader and partnerships.
Limited liability is one of the major advantages of the private limited company (NV/BV), but
also:
- Limited liability
- Tax advantages
- Finance and resources
- Business continuity (Jumbo founders children of Jumbo)
, VOF / Limited partnership are the most dangerous in the Netherlands. You might lose your
house. Cooperation (Rabobank / insurance companies), Foundations, Associations can be
there as well, but not in pharma industry. Just NV/BV are options in pharma industry.
So, in the end:
B.V. (Limited liability, named shares, offer shares to partners)
N.V. (Limited liability, numbered shares, sell shares freely)
In BV – there is some shares majority, if you have 5% you have to go with the majority and
are not in the position to stay in the company.
UBO / OPCO / Holding
- UBO – Ultimate beneficial owner (who is the leader / makes the most profit?) In the
Netherlands it is not possible to not know the UBO. UBO is used in drugs markets.
Banks in the Netherlands have to know who the UBO is.
- OPCO – operating companies (this is what makes the good stuff Heineken brewery).
This UBO of OPCO is rich.
- Holding – holds money (companies which hold shares / holds money). This can be for
an (in)definite time if a holding goes bankrupt, the owner has a problem.
Shareholders will get dividend:
- Dividend: a distribution representing a share in a the percentage of profits of a
company you own
- It’s your reward for investing and holding the shares of a company
- Business that pay out dividends every year, and increase the size of the dividends
every year, can be highly profitable for investors over the long term. These are
referred to as dividend growth stocks.
- Example companies: RBC; Pepsi; Johnson & Johnson; 3M
No withholding tax, when a dividend is paid by a Dutch company to a European parent
company that owns at least 5% of the capital (or voting rights).
The table besides is presented for the
threshold 5%, both on the dividend
earnings and the selling of your
shares.
Holland tax paradise:
- Dividend tax is 0% (if less
than 5%) No corporate
dividend tax with sizable
interest (Dividendvrijstelling)
- Tax latency (belastinglatentie)
- Holding tree (Heineken
model) for control of company
Lecture 14: Eric Claassen
How enterprises use their money:
Money coming in.
Money goes out.
Money left over.
You always have to pay profit
taxes.
Employees get paid:
(Profit)
- Minus what retailers keep
- Minus transport
- Your benefits
- Your taxes
Remaining money
After today you have to know:
B.V. (Limited liability, named shares, offer shares to partners)
N.V. (LLC and numbered shares, sell shares freely)
Holding and personal-holding (B.V. or N.V.)
Opco B.V. or N.V. (Operating Company)
Gross and Net Profit (profit-tax) and EBITDA
Dividend (dividend tax)
Zero or 25 % tax depending on sizable interest (>>5%, private vs corporate <<5%)
Tax latency
Control ( > 50%)
Liability:
Limited liability: where a business owner is only liable for their original investments should
the business fall into debt. The business and the owner have separate legal identitites. PLC
and LTD.
Unlimited liability: if a business has debts the owner must pay even if this means selling their
own possessions to find the money. Sole trader and partnerships.
Limited liability is one of the major advantages of the private limited company (NV/BV), but
also:
- Limited liability
- Tax advantages
- Finance and resources
- Business continuity (Jumbo founders children of Jumbo)
, VOF / Limited partnership are the most dangerous in the Netherlands. You might lose your
house. Cooperation (Rabobank / insurance companies), Foundations, Associations can be
there as well, but not in pharma industry. Just NV/BV are options in pharma industry.
So, in the end:
B.V. (Limited liability, named shares, offer shares to partners)
N.V. (Limited liability, numbered shares, sell shares freely)
In BV – there is some shares majority, if you have 5% you have to go with the majority and
are not in the position to stay in the company.
UBO / OPCO / Holding
- UBO – Ultimate beneficial owner (who is the leader / makes the most profit?) In the
Netherlands it is not possible to not know the UBO. UBO is used in drugs markets.
Banks in the Netherlands have to know who the UBO is.
- OPCO – operating companies (this is what makes the good stuff Heineken brewery).
This UBO of OPCO is rich.
- Holding – holds money (companies which hold shares / holds money). This can be for
an (in)definite time if a holding goes bankrupt, the owner has a problem.
Shareholders will get dividend:
- Dividend: a distribution representing a share in a the percentage of profits of a
company you own
- It’s your reward for investing and holding the shares of a company
- Business that pay out dividends every year, and increase the size of the dividends
every year, can be highly profitable for investors over the long term. These are
referred to as dividend growth stocks.
- Example companies: RBC; Pepsi; Johnson & Johnson; 3M
No withholding tax, when a dividend is paid by a Dutch company to a European parent
company that owns at least 5% of the capital (or voting rights).
The table besides is presented for the
threshold 5%, both on the dividend
earnings and the selling of your
shares.
Holland tax paradise:
- Dividend tax is 0% (if less
than 5%) No corporate
dividend tax with sizable
interest (Dividendvrijstelling)
- Tax latency (belastinglatentie)
- Holding tree (Heineken
model) for control of company
