It's destination Holland for Indian companies

The Hindu Business Line
31 May 2010, by Vishwanath Kulkarni

http://www.thehindubusinessline.com/2010/06/01/stories/2010060152730100.htm

Indians have emerged the fastest growing expatriate community in Amsterdam because Indian companies are making a beeline for the Netherlands to take advantage of the favourable tax regime.

An estimated 50 Indian companies, mainly IT firms, have set up shop in Holland in the past three years. About a third of the knowledge workers who migrate to the Netherlands are from India, followed by the US and China.

“Indians, numbering around 4,000, are the fastest growing expat community in Amsterdam,” said Ms Hilde van der Meer, Managing Director of Amsterdam in Business, the Amsterdam foreign investment agency.

The spin off: Vegetarian restaurants and cricketing events are becoming popular. The Netherlands fields a cricket team in the ICC World Cup.

“About 80-100 Indians migrate every month to the Netherlands, taking advantage of the 30 per cent tax ruling,” said Mr Vikas Chaturvedi, Senior Tax Manager at PriceWaterhouseCoopers. Under the 30 per cent tax ruling, only 70 per cent of the income for a knowledge migrant professional is taxed, making it attractive for the knowledge workers.

“Indian companies that hold their active international subsidiaries through Dutch Holding Companies do not have to pay any taxes on the dividend income that flows from international subsidiaries to the Netherlands. In addition, capital gains income arising from the sale of international subsidiaries is also not taxed in the Netherlands,” Mr Chaturvedi added.

Further, the Indian firms that carry out R&D activities can benefit from the Innovation Box Regime of the Netherlands in which royalty income is taxed only at 5 per cent, Mr Chaturvedi said. “The corporate tax rate in the Netherlands is on low side compared to other EU countries,” he added.

In recent years, TCS, Infosys, Wipro, NIIT, Nucleus Software, Omnitech, Dishman Pharma and Suzlon, among others, have set up shop in the Netherlands. Mid-size IT firms such as Mastek, Mascon Global and CMC are also exploring options. “We are exploring options but haven't decided as yet,” said Mr Ashank Desai, Chairman, Mastek.

Amsterdam In Business expects 8-10 Indian companies to set up shop this year. “We are now trying to attract the Indian pharma companies,” Ms Meer said. Further, Netherlands is also trying to attract Indian banks. “We are also working to set up an Indian Saturday school. Besides this, we have launched the Indian Expat society last year and organise an annual cricket and Diwali event,” Ms Meer said.