Lease
On April 22,November 1, 2016, we entered into a lease agreement with Stichting Incubator Utrecht for approximately 11,13011,125 square feet of office and laboratory space in Utrecht, the Netherlands. The lease has a term of five years and expires on April 22,October 31, 2021. The agreed rental price is €402 thousand per year.
D. Exchange Controls.
Under the existing laws of the Netherlands, there are no exchange controls applicable to the transfer to persons outside of the Netherlands of dividends or other distributions with respect to, or of the proceeds from the sale of, shares of a Dutch company.
E. Taxation.
The following paragraphs summarize a number of material Dutch tax considerations relating to the purchase, ownership and disposition of our common shares. The following is intended as general information only, and is in no way a comprehensive or complete description of all aspects of Dutch tax law that may be relevant for a holder of common shares.
Prospective shareholders should consult their tax advisor regarding the tax consequences of any purchase, ownership or disposal of common shares.
The following summary is based on the Dutch tax law as applied and interpreted by Dutch tax courts, and as published and effective on the date hereof, without prejudice to any amendments introduced at a later date and implemented with or without retroactive effect.
For the purpose of this paragraph, “Dutch Taxes” shall mean taxes of whatever nature levied by or on behalf of the Netherlands or any of its subdivisions or taxing authorities. The Netherlands means the part of the Kingdom of the Netherlands located in Europe.
Where in this Dutch taxation paragraph reference is made to “Shareholder,” that concept includes, but is not limited to:
| (1) | an owner of one or more common shares who has both an economic interest in those common shares, as well as the title to those common shares; |
| (2) | a person who, or an entity that, holds the entire economic interest in one or more common shares; |
| (3) | a person who, or an entity that, holds an interest in an entity, that is transparent for Dutch tax purposes, such as a partnership or a mutual fund, the assets of which comprise of one or more common shares, within the meaning of items (1) or (2) above: or |
| (4) | a person who is deemed to hold an interest in common shares, as referred to under items (1) through (3), pursuant to the attribution rules of article 2.14a, of the Dutch Income Tax Act 2001 (Wet inkomstenbelasting 2001, or ITA), with respect to property that has been segregated, for instance in a trust or a foundation. |
Taxes on Income and Capital Gains
This section provides an overview of general Dutch tax consequences that may be relevant for Shareholders, but does not describe the possible Dutch tax considerations or consequences that may be relevant to a Shareholder who is:
| • | | an individual for whom the income or capital gains derived from the common shares is attributable to employment activities including deemed employment activities performed by such holders or certain individuals related to such holders (as defined in the ITA) or statutory directors (bestuurders) or supervisory directors (commissarissen) of a company resident in the Netherlands, the income from which is taxable in the Netherlands; |
an entity that is not subject to Dutch corporate income tax or is in full or in part exempt from Dutch corporate income tax (such as pension funds), as well as entities that are exempt from Dutch corporate income tax, as well as entities that are exempt from Dutch corporate income tax in their country of residence, such country of residence being another state of the European Union, Norway, Liechtenstein, Iceland or any other state with which the Netherlands have agreed to exchange information in line with international standards;
| • | | an investment institution (beleggingsinstelling) as defined in article 6a (vrijgestelde beleggingsinstelling) or 28 (fiscale beleggingsinstelling)of the Dutch 1969 Corporate income tax act (Wet op de vennootschapsbelasting 1969, or CITA); |
| • | | entitled to the participation exemption regime (deelnemingsvrijstelling) with respect to the common shares as defined in article 13, CITA. A participation generally exists in case of a shareholding of at least 5% of the company’spaid-in share capital. A holder may also have a participation if such holder does not have a 5% shareholding but a related entity (statutorily defined term) has a participation or if the company in which the shares are held is a related entity (statutorily defined term); |
| • | | a holder of a lucrative interest (lucratief belang as defined in article 3.92b ITA), as we assume no employees of the company purchased the common shares issued in our initial public offering; or |
| • | | a holder of a substantial interest(aanmerkelijk belang as defined in chapter 4 ITA), which is generally the case when the Shareholder, alone, or where such shareholder is an individual, together with his or her partner (statutorily defined term), directly or indirectly, holds or is deemed to hold (a) an interest of at least 5% in either the capital or the voting rights of any class of shares in the Company, (b) rights or
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| options to obtain such interest or (c) certain profit sharing rights in the Company. A deemed substantial interest may arise if part of a substantial interest in a company has been disposed of, or is deemed to have been disposed of, on a non-recognition basis.
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Dutch Residents
The description of certain Dutch tax consequences in this paragraph is only intended for Shareholders that are either individuals who are resident or deemed to be resident in the Netherlands for Dutch income tax purposes, (“Dutch Individuals”), or entities that are subject to the CITA and are resident or deemed to be resident in the Netherlands for corporate income tax purposes, (“Dutch Corporate Entities”).
Dutch resident individuals
Dutch Individuals that derive or are deemed to derive any benefits from common shares (including any capital gains realized on the disposal of such common shares) which benefits are attributable to an enterprise from which the Dutch Individual derives profits, whether as an entrepreneur (ondernemer) or pursuant to aco-entitlement to the net value of an enterprise (medegerechtigd tot het vermogen), other than as a shareholder, are generally subject to Dutch income tax on those benefits at progressive rates with a maximum of 52%.
Dutch Individuals that derive or are deemed to derive any benefits from common shares, including any gains realized on the disposal of such common shares that constitute benefits from miscellaneous activities (resultaat uit overige werkzaamheden), are generally subject to Dutch income tax at progressive rates on such benefits with a maximum of 52%.
Dutch Individuals may, among other things, derive, or be deemed to derive, benefits from common shares that are taxable as benefits from miscellaneous activities in case the investment activities go beyond the activities of an active portfolio investor (normaal actief vermogensbeheer), due to, for instance, the use of insider knowledge (voorkennis) or comparable forms of special knowledge.
Dutch Individuals, whose common shares are not attributable to an enterprise, and whose common shares do not qualify as generating income from miscellaneous activities will not be subject to Dutch income tax on the actual income (including capital gains) derived from the common shares. Instead, those Dutch Individuals will be taxed at a flat rate of 30% on the deemed income from savings and investments (sparen en beleggen). This deemed income is set at 4% of the yield basis (rendementsgrondslag) of the Dutch Individual. The yield basis would normally consist of the fair market value of the common shares generally to be determined at the beginning of the year to the extent that such yield basis exceeds the exempt net asset amount (heffingsvrij vermogen) amounting to € 24,437 (or € 48,874 in case of fiscal partnership) for the relevant year.
As of 2017 the tax regime for income from savings and investments will be amended.
Dutch resident entities
Dutch Corporate Entities are subject to corporate income tax on income, including capital gains, derived from the common shares. The first € 200,000 profits are taxable at a rate of 20%, while any profits in excess of € 200,000 are taxable at a rate of 25%.
Non-Dutch residents
Non-Dutch resident individuals
A Shareholder that is an individual and not a resident or deemed resident of the Netherlands,(“Non-Resident Individuals”), for Dutch tax purposes, will not be subject to any Dutch taxes on income (other
than the dividend withholding tax described below) or capital gains in respect of dividends distributed by the Company or in respect of any gains realized on the disposal of common shares unless:
theNon-Resident Individual derives profits from an enterprise, or pursuant to aco-entitlement to the net value of such enterprise, other than as a holder of securities, which enterprise either is managed in the Netherlands or carried out, in whole or in part, through a permanent establishment or a permanent representative which is taxable in the Netherlands and the common shares are attributable to such enterprise; or
theNon-Resident Individual derives benefits or is deemed to derive benefits from common shares that are taxable as benefits from miscellaneous activities in the Netherlands.
If either of the conditions above apply, income or capital gains in respect of dividends distributed by the Company or in respect of any gain realized on the disposal of common shares will in general be subject to Dutch income tax at the progressive rates with a maximum of 52%, on the understanding that such benefits derived as benefits from miscellaneous activities will only be taxable in the Netherlands if such activities are performed or deemed to be performed in the Netherlands.
Non-Dutch resident entities
A Shareholder, other than an individual, that is not a resident or deemed resident of the Netherlands for Dutch tax purposes, will not be subject to any Dutch taxes on income or capital gains (other than the dividend withholding tax described below) in respect of dividends distributed by the Company or in respect of any gain realized on the disposal of common shares, unless that Shareholder derives profits from an enterprise, or pursuant to aco-entitlement to the net value of such enterprise other than as a holder of securities, which enterprise either is managed in the Netherlands or carried out, in whole or in part, through a permanent establishment or a permanent representative which is taxable in the Netherlands and the common shares are attributable to such enterprise.
If the condition above applies, income and capital gains derived from the common shares will, in general, be subject to regular Dutch corporate income tax. The first € 200,000 profits are taxable at a rate of 20%, while any profits in excess of € 200,000 are taxable at a rate of 25%.
Dividend withholding tax
Dividends payments, or Dividend Payments, made by the Company are generally subject to 15% Dutch dividend withholding tax. The Company is responsible for withholding the Dutch dividend withholding tax, while the tax is ultimately for the account of the Shareholder. The term ‘Dividend Payments’ includes, but is not limited to:
distributions in cash or in kind, as well as deemed or constructive distributions;
liquidation proceeds, proceeds of redemption of common shares or, generally, considerations in excess of the averagepaid-in capital recognized for Dutch dividend withholding tax purposes, paid upon the repurchase of common shares by the company;
the nominal value of common shares issued to a holder of common shares or an increase of the nominal value of common shares, to the extent that it does not appear that a contribution, recognized for Dutch dividend withholding tax purposes, has been made or will be made; and
| • | | partial repayment ofpaid-in capital, recognized for Dutch dividend withholding tax purposes, if and to the extent that there are Net Profits (zuivere winst), unless |
the general meeting of the shareholders has resolved in advance to make such repayment; and
the nominal value of the common shares concerned has been reduced by a corresponding amount by way of an amendment of the Company’s articles of association in advance of such a repayment.
The term Net Profits includes anticipated profits that have yet to be realized but that are reasonably certain and determinable.
If a Shareholder is a resident for Dutch tax purposes of a country other than the Netherlands, and is considered to be a resident of Aruba, Curacao or St. Martin under the provisions of a Tax Convention for the Kingdom of the Netherlands (Belastingregeling voor het Koninkrijk), or is considered to be a resident of a country other than the Netherlands under the provisions of the double taxation convention between that country of residence and the Netherlands, that Shareholder may be eligible for a full or partial exemption from, or refund of Dutch dividend withholding tax, depending on the terms of the applicable double taxation convention.
In addition, subject to certain conditions and based on Dutch legislation implementing the EU Parent Subsidiary Directive (Directive 90/435/EEG, as amended), an exemption from Dutch dividend withholding tax may exist for Dividend Payments to certain qualifying entities that are resident in another EU Member State or in a State of the EEA appointed by Ministerial Decree, if that entity holds at least 5% of the share capital of the Company.
A qualifyingtax-exempt entity that is a resident of a Member State of the EU, or that is a resident of a State of the EEA that has been specifically designated in a Ministerial Regulation (e.g. Norway, Iceland and Liechtenstein), may be eligible for a refund of withheld Dutch dividend withholding taxes, if the entity would not have been subject to Dutch corporate income tax had it been a tax resident of the Netherlands
Qualifying investors (such as pension funds, sovereign wealth funds and exempt government bodies) from outside the EU and the EEA(so-called third countries) may be eligible for a refund of Dutch dividend withholding tax. The refund only applies to portfolio investments when the following conditions are cumulatively met:
the Shareholder is resident in a designated country with which the Netherlands has concluded adequate arrangements for the exchange of information; and
the Shareholder is not subject to any profits tax or is exempt from any profits tax in the country of its residence and would not have been subject to Dutch corporate income tax, if the Shareholder had been resident in the Netherlands.
Dutch Individuals and Dutch Corporate Entities can generally credit Dutch dividend withholding tax against their personal income tax respectively corporate income tax liability. The same generally applies to Shareholders that are neither resident nor deemed resident of the Netherlands if the common shares are attributable to a Dutch permanent establishment of such anon-resident Shareholder.
Due to legislation introduced to counteract the practice of dividend stripping, a reduction, exemption, credit or refund of Dutch dividend withholding tax is denied if the recipient of the Dividend Payment does not qualify as the beneficial owner (uiteindelijk gerechtigde) of that Dividend Payment. Theanti-dividend stripping legislation generally targets situations in which shareholders retain their economic interest in common shares but reduce the withholding tax due on the Dividend Payment by entering into a transaction with another party with (mainly) that intent. The Dutch Ministry of Finance takes the position that the definition of beneficial ownership introduced by this legislation will also be applied in the context of a double taxation convention.
Gift tax and inheritance tax
Dutch Residents
Gift or inheritance taxes will arise in the Netherlands with respect to a transfer of the common shares by way of a gift by, or, on the death of, a holder of common shares who is resident or deemed to be resident in the Netherlands at the time of the gift or his/her death.
No Netherlands gift tax will arise in case of a gift of the common shares under a condition precedent (opschortende voorwaarde) by an individual who at the date of the gift was resident or deemed to be resident, but at the date of the fulfillment of the condition was neither resident nor deemed to be resident in the Netherlands, unless such individual deceases within 180 days after the date of the fulfillment of the condition, while being resident or deemed to be resident in the Netherlands.
For purposes of Netherlands gift and inheritance taxes, amongst others, a person that holds the Dutch nationality will be deemed to be resident in the Netherlands if that person has been resident in the Netherlands at any time during the ten years preceding the date of the gift—in case of a gift under a condition precedent, the date of the fulfillment of the condition—or the date of the death of this person. Additionally, for purposes of Dutch gift tax, a person not holding the Dutch nationality will be deemed to be resident in the Netherlands if that person has been resident in the Netherlands at any time during the 12 months preceding the date of the gift or- in case of a gift under a condition precedent- the date of the fulfillment of the condition. Applicable tax treaties may override the tax implications of deemed residency.
Non-Dutch Residents
No Dutch gift or inheritance tax will arise on the transfer of common shares by way of a gift by, or on the death of, a holder of common shares who is neither resident nor deemed to be resident in the Netherlands, unless:
| • | | in case of a gift of the common shares under a condition precedent (opschortende voorwaarde) by an individual who at the date of the gift was neither resident nor deemed to be resident in the Netherlands, such individual is resident or deemed to be resident in the Netherlands at the date of the fulfillment of the condition; or |
in case of a gift of the common shares by an individual who at the date of the gift or, in case of a gift under a condition precedent, at the date of the fulfillment of the condition was neither resident nor deemed to be resident in the Netherlands, such individual is deceased within 180 days after the date of the gift or the fulfillment of the condition, while being resident or deemed to be resident in the Netherlands.
Furthermore, Dutch inheritance tax will arise in case of a gift under a condition precedent by an individual who, at the date of the gift, was neither resident nor deemed resident of the Netherlands, but at the date of his or her death was resident or deemed to be resident in the Netherlands, and the condition was fulfilled after the date of his or her death.
Value added tax
No Dutch value added tax will be due in the Netherlands in respect of payments made in consideration for the issue of common shares, or in respect of the transfer of common shares.
Other taxes
No Dutch registration tax, customs duty, stamp duty, real estate transfer tax or any other similar documentary tax or duty will be due in the Netherlands in respect of or in connection with the mere issue, transfer or delivery of the common shares.
Residency
A Shareholder will not become, and will not be deemed to be, resident in the Netherlands merely by virtue of holding a common share or by virtue of the execution, performance and/or delivery of any relevant documents related thereto.
Material U.S. Federal Income Tax Considerations for U.S. Holders
The following is a description of the material U.S. federal income tax consequences to the U.S. Holders described below of owning and disposing of common shares. It is not a comprehensive description of all tax considerations that may be relevant to a particular person’s decision to acquire securities. This discussion applies only to a U.S. Holder that holds common shares as a capital asset for tax purposes (generally, property held for investment). In addition, it does not describe all of the tax consequences that may be relevant in light of a U.S. Holder’s particular circumstances, including state and local tax consequences, estate tax consequences, alternative minimum tax consequences, the potential application of the provisions of the Code known as the Medicare contribution tax, and tax consequences applicable to U.S. Holders subject to special rules, such as:
certain financial institutions;
dealers or traders in securities who use amark-to-market method of tax accounting;
persons holding common shares as part of a hedging transaction, “straddle,” wash sale, conversion transaction or integrated transaction or persons entering into a constructive sale with respect to the common shares;
persons whose “functional currency” for U.S. federal income tax purposes is not the U.S. dollar;
tax exempt entities, including “individual retirement accounts” and “Roth IRAs”;
S corporations or entities classified as partnerships for U.S. federal income tax purposes;
regulated investment companies or real estate investment trusts;
persons who acquired our common shares pursuant to the exercise of an employee stock option or otherwise as compensation;
persons subject to special tax accounting rules as a result of any item of gross income with respect to the common shares being taken into account in an applicable financial statement;
persons that own or are deemed to own ten percent or more of our voting shares;shares by vote or value; and
persons holding common shares in connection with a trade or business conducted outside the United States.
If an entity that is classified as a partnership for U.S. federal income tax purposes holds common shares, the U.S. federal income tax treatment of a partner will generally depend on the status of the partner and the activities of the partnership. Partnerships holding common shares and partners in such partnerships are encouraged to consult their tax advisers as to the particular U.S. federal income tax consequences of holding and disposing of common shares.
The discussion is based on the Code, administrative pronouncements, judicial decisions, final, temporary and proposed Treasury Regulations, and the income tax treaty between the Netherlands and the United States (the “Treaty”
