An Overview of the New Changes in China’s Tax law

An Overview of the New Changes in China’s Tax law

In order to encourage the development of certain industries, tax reform in China has continued by a publication of a host of tax incentives in begin 2019, ranging from adjustment of value-added tax (“VAT”) rate to reduction of corporate income tax (“CIT”). This article highlights the changes that may directly affect doing business in China by foreign taxpayers.

  1. New VAT policies

The Ministry of Finance, State Taxation Administration, and the General Administration of Customs have jointly on April 1, 2019, released several new policies on VAT to fundamentally reshape the country’s VAT regime, aiming to encourage economic growth in certain industries by lowering VAT rates and increasing VAT credits. The latest changes mark the final stages of China’s overhaul of its VAT system.

Three major changes to the new VAT policies are highlighted hereinafter.

(1) Reducing VAT rate

Starting from April 1, 2019, Chinese taxpayers who were originally subject to VAT rates of 16% (manufacture industry) and 10% (real estate industry; telecommunication industry; agricultural industry) on import and export goods, will now be subject to an reduced 13% and 9 % respectively, 6% VAT rates remain the same. [1]

For goods purchased by overseas travelers, the departure tax refund rate has now been adjusted to 11% and 8% from 13% and 9% respectively.

(2) Changing the redemption of input VAT credit for real estate and projects under construction

From April 1, 2019, the company registered as a general VAT taxpayer in China can claim the full input VAT credit (meaning added cash flow into the company) all at once for purchases of real estate and construction services. Previously, it was stipulated that the input VAT credits for purchases of real estate and construction services are claimed over a two-year period.

(3) Allowing input VAT credits for excess input VAT credits

According to old rules, when a company’s input VAT exceeds the output VAT, meaning the VAT charged and collected from customers, the excess VAT will be carried forward to offset the output VAT in the next tax period.

Under the new policy, companies are able to enjoy a refund on their excess input VAT under paragraph 8 of the policy,[2] if the following criteria are met:

  • If the overdraft VAT for each of the six consecutive months (two consecutive quarters if taxed quarterly) is not less than RMB 500,000;
  • The taxation credit is rated as A or B;
  • They have not received refunds on their levy;
  • There have been no penalties by tax authorities 36 months before its claim for VAT refund; and
  • They have not committed VAT fraud in the last 36 months prior to claim.
  1. New CIT

A new corporate income tax (CIT) policy was released in order to encourage enterprises to engage in pollution prevention and control which is aligned with the government’s environmental goals.

The policy was jointly announced by the Ministry of Finance, State Administration of Taxation, National Development and Reform Commission, and Ministry of Ecology and Environment on April 13 in The Announcement on the Third Party Enterprise Income Tax Policy Concerning Pollution Prevention and Control.[3] It will be implemented retroactively from January 1, 2019 until December 31, 2021.

Under Article 5 of the incentive, a reduced CIT rate of 15% is rewarded to qualified enterprises that are commissioned by enterprises or the government to operate or maintain environmental pollution control facilities. Requirements for qualified enterprise are:

  • The enterprise shall be registered in accordance with PRC law;
  • The enterprise has been operating or maintaining environmental pollution control facilities for more than a year;
  • The enterprise shall hire no less than five technicians with intermediate titles, or two with senior titles;
  • The annual income deriving from environmental protection services must account for at least 60% of total revenue;
  • The enterprise shall have resources and laboratory of its own to meet the testing standards of pollutants;
  • The enterprise shall be able to ensure normal operation so that pollutants can be continuously monitored and treated to meet required standards; and
  • The enterprise shall have a tax credit rating not assessed as C or D within the past three years.

Enterprises may self-declare to be included within the regime of the incentive. Afterwards, the ecology and environment department may be engaged in when verifying an enterprise’s eligibility.

Wintertaling China Desk will you posted about the implementation of new legislation in China. Should you have any questions, please do reach out to us. We accept no liability for any mistakes or misinterpretation. This article is merely a general advice.

[1] Announcement on deepening policies related to VAT reform, <>

[2] Announcement on deepening policies related to VAT reform, <>



The Food & Beverage Industry in China, An Attractive Destination

The Food & Beverage Industry in China

An Attractive Destination

  1. Overview

The ever-growing Food and Beverage (F&B) industry in China, with a US$ 700 billon share of the global market, is currently deemed as an attractive destination for many investors. The revenue of the F&B industry in 2019 has amounted to US$22.7 billion, demonstrating a growth of 22.5 percent comparing with that in 2018.[1] This makes China’s F&B market the biggest revenue generator in the world.

Consumer dynamic in the country is usually what the potential investors often first take notice of. According to China Brief, a growing awareness of health foods is demonstrated in Chinese consumer behavior, which has impacted on their purchasing behavior. Consumers in tier one cities (Beijing, Shanghai, Chongqing, etc.) have shown a high level of demand for foreign F&B products, and the demand for foreign F&B products are also strong in tier two and three markets.[2]

After studying the market potential for F&B products, foreign investors need to pay close attention to China’s food safety laws and import regulations as China maintaining a strict regulatory for F&B products. Foreign F&B products are falling under the regime as soon as they reach the country.

  1. China’s Food Safety Law

(1) Health food

Health foods that contain ingredients outside the approved list of health food ingredients must be registered with China Food and Drug Administration (hereinafter “CFDA”).[3] CFDA recordal is required when health food is imported for the first time and serve to supplement vitamins, minerals and other nutrients. Other health food must be recorded with provincial level food and drug administrations. The recent draft of Implementing Regulations has suggested that importation should have recordal of three months.

Furthermore, label and instruction on packages of health food shall contain the statement “this product cannot replace medicine.”[4] That is, it should not refer to any preventive or therapeutic function. Functions and ingredients of the health foods must be consistent with those stated on their packages.

(2) Online food platform

Ordering food online is now a vital trend in China for both domestic and foreign investors. The safety of food purchased over the internet has raised issues. Providers of third-party online food trading platforms must review a trader’s permit and the real identity of the trader shall be registered. As soon as online food platform provider is aware of food safety violations, it shall stop the retailers from such activities and report them to local FDAs. For serious violations, the provider must immediately stop providing the internet platform service.

(3) Food additives

According to Article 3 of GB 2760-2011[5], the usage principle of food additives is that, firstly, it should not generate any health hazard for our body. Secondly, it should not conceal food decay and deterioration. Thirdly, the additives should not be used for the purpose of addition, adulteration and falsification. Furthermore, it should not reduce the nutritional value of food itself and the usage amount in food should be reduced as far as possible. Permitted food additives are listed in the instrument as annex.

  1. Import Regulation / Labelling

A manufacturer and international exporter must be registered upon approved organisms as the Certification and Accreditation Administration (“CAA”) in the country where the product will be exported in the “list of importations of food submitted to the registration of the company”. Health food products are submitted to special conditions for registration which is valid for 4 years and the term is extendible if needed.

China requires all imported food products to be labelled in Chinese simplified characters in order to facilitate the comprehension and the clearance, but also need to mention:[6]

  • Standard name of the food product
  • List of ingredients in percentage
  • Names and addresses of manufacturers, local agents or distributors
  • Date of production, date of suggested consumption, expiry date and guide for the storage.
  • Country of origin
  • Category of quality
  • Code of national norm / Industrial norm for the production
  • Specials contents

The content of the label shall be approved by the Service of Inspection and Quarantine (CIQS), as the regulations are continuously changing, Wintertaling China Desk is ready to assist you in your F&B investment in China.

[1] DBS Bank, China/Hong Kong Industry Focus: China Food & Beverage Sector, pp. 1 <>

[2] DBS Bank, China/Hong Kong Industry Focus: China Food & Beverage Sector, pp. 3 <>

[3] 2015 Food Safety Law of the People’s Republic of China (Food Safety Law), <>

[4] Andrew Sim , Esq., and Yilan Yang, Esq, China: An Overview of the New Food Safety Law, <>


[6] Prepackaged foods Label Regulation, GB771, 8-2011, <>

Event GO!-NH – 8 May 2019

Event GO!-NH – 8 May 2019

On Wednesday 8 May we will host another meeting of GO!-NH. GO!-NH is an accelerator programme of the Province of Noord-Holland and Innomics. The program accelerates start-ups and innovation teams of large organizations in a three-month program, from an idea to a company that is ready to storm the market with innovative solutions. They receive training, tools and professional support from experts including Wintertaling.

Nine teams will visit us. They will start in the morning with a workshop given by Tim Carapiet from Wintertaling and Rutger Kemper from Leapfunder. In the afternoon there will be intakes that will be joined by four more external organizations. The day will end with a drink in our bar.

More information:


European Market is more attractive for Chinese investors: New rules on the review of foreign investment in the United States are in place

by Xuehan Yang


After hitting a record high in 2016, China’s overseas M&A activity has entered a “pressure period”, which can be said to be squeezed by internal and external supervision. The first wave of pressure from the foreign investment since the end of 2016 domestic tightening regulation, the second wave of the pressure from the United States, since 2017, the U.S. national security review of foreign investment heavily regulated, strengthen the Foreign Investment Risk Review Modernization Act (FIRRMA) by the national security review subject departments namely Committee on foreign investment in the United States (CFIUS) in August this year.

On October 10th America’s Treasury, the arm of CFIUS, tightened the rules further by issuing provisional rules on FIRRMA’s pilot programme.


27 industries facing scrutiny over new U.S. regulations

The interim rules mainly involve two changes. One is to expand CFIUS’s jurisdiction to cover non-controlling and non-passive investments, such as those in key technology sectors, that are subdivided. Second, for the trade of key technologies in the industry covered by the pilot program, a simple and mandatory declaration procedure must be added. A declaration of no more than 5 pages of basic information about the transaction must be submitted 45 days before the expected completion date of the transaction. Failure to do so could result in fines of up to the value of the transaction.

According to information released by the U.S. Treasury Department, the pilot program covers 27 industries, including aircraft manufacturing, aircraft engine and parts manufacturing, computer storage equipment, radio, television and wireless communication equipment, as well as biotechnology research and development, semiconductor and related equipment manufacturing.

The pilot program is scheduled to start November 10. In a statement, the Treasury Department said CFIUS would take public opinion on the interim rules into account in formulating its final rules. CFIUS is also drafting detailed FIRRMA legislation that will be fully implemented in February 2020.


Chinese buyers are looking into new markets in northern and eastern Europe

Chinese investors have been looking to Europe and other unconventional markets for some time amid a tightening regulatory environment in the US.

Germany is a major destination for Chinese investment in the EU, however, the German government is considering further lowering the 25% reporting threshold for non-EU companies buying stakes in German companies to 15% this year, with a need to keep a close eye on key investments in defense, infrastructure and IT.

A similar national-security review framework for foreign investment is also in the pipeline in Britain, amid signs that more Chinese buyers are looking for targets in unconventional markets.

But markets like northern and eastern Europe may not yet have a similar framework. So this might be a good chance for more and more Chinese investors to invest in Netherlands, Finland or other European countries.


Investment and Financing under Chinese New Normal – After the Adoption of the Amendment of PRC Company Law in 2018 – regarding repurchase of share capital in listed Chinese companies

By Hanren Xiao

 On the 26th of October 2018 China has adopted a major amendment of its Company Law which is a remarkable symbol that the legislation of the Chinese capital market is gradually becoming mature.

The amendment is for the most part about share repurchase. Share repurchase refers to the situation that a company acquires the issued shares of itself – which is an internationally accepted way to accomplish merger and reorganization, optimize governance structure, and stabilize stock price. It is also the basic institutional arrangement for a company in the capital market.

Article 142 PRC Company Law is amended as follows:

“A company shall not purchase its own shares except under any of the following circumstances:

  1. To decrease the registered capital of the company;
  2. To merger another company holding shares of this company;
  3. To use the shares for employee stock ownership plans or equity incentives;
  4. It is requested by any shareholder to purchase his shares because this shareholder objects to the company’s resolution on merger or split-up made by the assembly of shareholders;
  5. To use the shares for the conversion of corporate bonds issued by listed companies that can be converted into stocks;
  6. For the necessity that listed companies maintain the company’s value and shareholder’s rights.
  • Where a company needs to purchase its own shares for any of the reasons as mentioned in Items (1), (2) of the preceding paragraph, it shall be subject to a resolution of the shareholder’s assembly. Where a company needs to purchase its own shares for any of the reasons as mentioned in Items (3), (5), (6) of the preceding paragraph, it could be subject to article of association or the authorization of shareholder’s assembly and decided by more than 2/3 of the directors present at the board meeting.
  • After the company purchases its own shares pursuant to the provisions of the preceding paragraph, it shall, under the circumstance as mentioned in Item (1), write them off within 10 days after the purchase; while under either circumstance as mentioned in Item (2) or (4), transfer them or write them off within 6 months; while under either circumstance as mentioned in Item(3), (5) or (6), the total number of shares of the company held by itself shall not exceed 10% of the total issued shares of the company and shall transfer them or write them off within 3 years.
  • A listed company that acquires shares of itself shall perform information disclosure obligations in accordance with the provisions of the PRC Security Law. The listed company shall conducted through open and centralized trading while acquiring shares of itself by under either circumstance as mentioned in Item (3), (5) or (6).
  • No company can accept any subject matter taking the stocks of this company as a pledge.”


The three main changes in article 142 are : First, it implements the conditions in which a share repurchase is permitted. Second, it simplifies the resolution process of share repurchase, raise the maximum amount of shares held by the company by itself and extend the period in which the company can hold the repurchased shares. Lastly, it adds regulatory rules for listed companies.

This amendment has further consolidated the basic capital market system, and is providing strong legal support for promoting the steady and strong development of the Chinese capital market. Consequences of this amendment is enormous. Firstly, it helps to improve the value of listed companies. Secondly, it helps improving the financial capital management system and further financial reform. Lastly, it is aiding the protection of rights and interests of most small and mid-size investors in China.

The China Securities Regulatory Commission (CSRC) expressed that they will take measures to strictly investigate and penalize the following illegal acts: insider trading by using share repurchase, manipulating the market, and illegal information disclosure.

Giving more possibilities on allowing the company to repurchase its shares could be more flexible to meet the practical requirements of stabilizing the stock price especially when the stock price is generally undervalued, or the price has undergone an irrational decreasing.



North Technology group takes over MBrands International 

North Technology group takes over MBrands International 

As of the 3rd of January, MBrands B.V. (Mystic and Magic Marine) and North Technology Group (North Kiteboarding) will unite under one umbrella creating a new dynamic enterprise called North Actionsports Group.

The end of an era is always an intriguing time, especially for a family company. When Max Blom Sr. bought MBrands International (B.V.) in 2007 he never could’ve imagined making this decision. “Back then the happiness of creating and building beautiful brands with my son, and later on also with my daughter, predominated our state of minds. However, a beautiful future lies ahead. By mustering forces with probably the best player in our industry we managed to combine the best of both worlds. A result to most definitely be proud of.” affirms Max Blom Sr. (Owner/CEO MBrands International) positively.

MBrands International is the owner of the worldwide brand registration rights for Mystic, Magic Marine and Maui Magic.

MBrands International was advised by Marein Smits from Wintertaling advocaten en notarissen.

Press release:


Philips Innovation Award

Wintertaling helpt studenten voor de Philips Innovation Award

De Philips Innovation Award is de grootste studenten-ondernemersprijs van Nederland. Gedurende het jaar zullen er rond de 10 seminars plaatsvinden in heel Nederland, waarin studenten de kans krijgen om deel te nemen en de felbegeerde prijs van 50.000 euro te winnen met hun idee. Wintertaling neemt plaats in de Business Panel en kijkt de businessplannen na op het legal aspect. Zie hier de aftermovie van vorig jaar.

Daarnaast is Wintertaling ook aanwezig tijdens de Philips Innovation Market / halve finale op 20 maart 2019 en de finale op 6 mei 2019.


Startende kandidaat-notaris gezocht!

Vacature startende kandidaat-notaris

Wintertaling is een in Amsterdam gevestigd onafhankelijk advocaten- en notarissen kantoor. Het kantoor bestaat uit meer dan 25 advocaten en (kandidaat-)notarissen die gespecialiseerd zijn op het gebied van Corporate| M&A, Vastgoed en vermogende particulieren. De samenwerking tussen advocatuur en notariaat maakt ons kantoor interessant.

Wij zijn opzoek naar een startende kandidaat-notaris voor onze sectie Ondernemingsrecht.

Als startende kandidaat-notaris werk je samen met ervaren (kandidaat)-notarissen aan dossiers. Je gaat mee naar cliëntbesprekingen en je stelt akten, stukken en adviezen op. Naast alle ervaring die je in de praktijk opdoet volg je ook de door de Koninklijke Beroepsorganisatie verzorgde Beroepsopleiding voor het Notariaat.


–        je hebt een afgeronde WO opleiding notarieel recht;

–        je hebt een scriptie geschreven op het gebied van ondernemingsrecht;

–        je beschikt over een uitstekende beheersing van de Engelse taal;

–        je bent analytisch sterk;

–        je hebt een commerciële en dienstverlenende instelling;

–        je beschikt over goede sociale en communicatieve vaardigheden.

Binnen Wintertaling bieden wij een inspirerende, plezierige werkomgeving waar een gedegen opleiding wordt geboden. Er is ruimschoots mogelijkheid voor het nemen van initiatief. Daarnaast zijn wij een hecht kantoor met een informele en open werksfeer. Het kantoor is gevestigd bij de Zuidas en is makkelijk bereikbaar.

Ben jij die enthousiaste (bijna) afgestudeerde student notarieel recht die wij zoeken? Stuur dan je CV, cijferlijst, eventuele stage beoordeling en motivatie. Voor vragen kan je contact opnemen met Tara Hassani ( of 020 – 330 59 58).

Legal and economic aspects of Chinese “One Belt One Road” investments into Europe via The Netherlands

IPBA – legal update

Bart Kasteleijn wrote an article for the The Inter-Pacific Bar Association. See here the article


President Xi JinPing has in his opening speech at the 19th Congress of the Communistic Party of China in October 2017 highlighted the ambitious plans of the Peoples Republic of China (“PRC” or “China”) to expand its new Silk Road to Europe also named as One Belt One Road, abbreviated to “OBOR”.

Command of competition law and harmonization law of the European Union (“EEC” law) is vital for attorneys advising Chinese investors in regard to their European inbound investments in capital markets, private companies and real estate. EEC law is extensive and detailed, even for lawyers specialized in this domain. This article describes the macro-economic and legal backdrop against which Chinese investments should be perceived, from a Dutch/EU perspective.


Economic data

To start with, the economic parameters of the trade and investment flows between the PRC and the EU, as reported by the EU Statistical bureau Eurostat  for the calendar year 2015, as reported on 12 June 2016, are summed up as follows:

Imports from the PRC to EU totaled € 350,5 billion, and the breakdown of this figure is as follows: primary goods € 8,1 billion (of which food/drink 4,8, raw materials 2,9 and energy 0,4), manufactured goods € 341 billion (chemicals 12, machinery & vehicles 176, other manufactures 149) and Others € 1,3 billion.

Exports from the EU to PRC totaled € 170 billion, resulting in an overall trade deficit (for the EU) of € 180,5, or approximately 50%.

The ranking of EU countries for China (“CN”) imports into Europe is: Germany € 69 billion, The Netherlands (“NL”) € 66 billion (primarily due to its trans-shipment function towards  the European hinterland), UK € 55 billion, France € 28 billion and Italy € 27 billion.

The Chinese Ministry of Commerce for the period January to September 2016 ( reports a combined export and import volume NL/CN totaling $ 57.7 billion, a decrease of 4,6% compared to 2015. Export NL to CN during this period was: $ 8,33 billion, with an increase of 12%. Import CN to NL was $49,35 billion, a decrease of 6,9%. The trade deficit is $41,01 billion, a decrease of 10%.

Goods exported to China are mainly: electronics, food, drink, tobacco and watches. Imports into EU from China consist of a wide range of manufactured and raw materials.

The major competitors in Europe of China are Germany, US and Japan. China stays competitive in labor-intensive sectors, like furniture, toys and textile.

Many leading and midsized Chinese corporations have located their European headquarters, marketing and sales forces, customer care centers, and assembly & repair activities centers in NL due to its geographical, logistical and organizational gateway function to the heart of Europe. Rotterdam is the largest container seaport in the EU and Schiphol airport ranks number 3 in EU (2016).

Sectors such as electronics, automotive and aviation are heavily represented by Chinese investments. In the Dutch high tech industry, outbound investment from NL to PRC focuses on environmental technique, food processing and agriculture technique. The main motivating factor behind such investments is “technology transfer” sought by Chinese companies, rather than market expansion.

NL ranks number 3 (2015) on the European index of National Gross Product, the most prominent indicator of prosperity and wealth.

The Dutch Government, within the parameters of EU legislation actively promotes and encourages research & development through expansive subsidies and tax credits.


Market access of investment

There is no EU agency that generally supervises, let alone approves foreign direct investment (“FDI”) from outside the EU, but each EU member state is allowed to operate an approval system as long as it does not distort the intra-EU community free flow of capital. The Dutch typically scrutinize FDI in the domains of national security, sea and airport infrastructure, nuclear energy, military equipment and IT/telecom and also in all domains all goods originating from United Nations and OECD blacklisted countries.

NL pursues a completely non-discriminative treatment of FDI shareholding in Dutch companies and allows the appointment of non-residents of NL and non-Dutch nationals to the management or supervisory board of directors, capital contribution and repayment, cross border debt borrowing and lending and for repatriation of dividend (profit), royalties and management fees.

All public procurement of goods and services by the government in each EU member State must undergo a EU-wide public tender published in the EU journals, though only above certain thresholds, e.g. for supplies under defense contracts to the central government of each member state >The EU threshold (in the year 2016) for defense was € 135,000, for non-defense € 209,000, for works contracts in general € 5,225,000, for water, energy, transport and postal services € 418,000. So most of the significant public procurement is tendered.


Foreign Exchange control

Several EU countries have some form of foreign exchange  control on inbound investment or trade payments. NL only requires reporting, for purely statistical purposes, to the Dutch Central Bank (“DNB”) of transactions in excess of € 25,000.

Also, it should be noted that the 2005 EU Directive 2005/60/EF on Anti-Money Laundering requires all financial service providers (including attorneys) to report so called “unusual transactions“ to the domestic Financial Intelligence Unit (“FIU”) agencies.


Competition law

European competition policy under the EU Treaty on the Functioning of the European Union (“TFEU”) is a vital part of the EU internal market aiming at the optimal allocation of production means and locations, lowest price-setting and free flow of goods and services within the entire EU internal market. EU competition legislation and case law (from the European Court of Justice) originating from the 1950s forms a comprehensive set of rules that restrict the abuse of a dominant position of companies by limiting concentration and  establishes a level playing field among the market participants by prohibiting state aid, import tariff and non-tariff barriers, cartels and price fixing.

Dutch domestic competition law is greatly inspired by EU law and is, for a greater part, replaced by it, above EU thresholds including merger control for a € 5,000 million (combined) turnover worldwide and a turnover of € 250 million EU wide.

Competition law is excluded (the so called “de-minimis” threshold) in the event of less than 10% of the total relevant market share and if less than eight companies are involved with a combined annual turnover not exceeding € 5.5 million (for supply of goods) or € 1.1 million in all other cases.


Forms of investment

FDI can vary from a non-capital cooperation to shareholders’ equity investment. The “light” versions are commercial agency (1986 EU Directive 86/653/EC) implemented in national law e.g. regulating goodwill compensation at termination and, secondly distributorship which falls under the EU Vertical Restraints Regulation regarding interstate restrictions such as price fixing. Few EU member states (including Belgium, not NL) have national legislation on distributorship protecting the distributor when terminated.

The “heavy” versions of FDI are the branch (a non-independent part of the foreign “parent”) and the incorporated limited liability companies (“Ltd.’s”, in NL “Besloten Vennootschap”, abbreviated to “BV”) which are harmonized under several  EU Directives, allowing member states within limits to create their own versions, such as the Dutch “Flex BV” introduced in 2010 with innovative options like non-voting and non-profit shares and a minimum paid-up equity of € 0.01.

The Dutch public company (“NV”) alternative is not suitable for most FDI. Establishment of a BV must be done by a deed executed by a civil law notary, a specialized lawyer. No approval for incorporation is required from the Dutch State.

In NL there is no legal entity version for FDI similar to the Chinese Wholly Foreign Owned Enterprise (“WFOE”) and the Sino-Foreign Equity Joint venture (“SFEJV”).

The corporate data are lodged with the Commercial Register which is publicly accessible through


Finance rules

The Dutch Financial Services Act appoints DNB to license and supervise all financial institutions (such as banks) and the Autoriteit Financiële Markten (“AFM”) for the monitoring of capital markets.

EU “passports” from the European Central Bank (“ECB”) in Frankfurt simplify obtaining branches of financial institutions in each EU member state.

Investment funds comprise two versions under the 2011 EU Directive 2011/61: Undertakings for the Collective Investment in Transferable Securities (“UCITS”) and Alternative Investment Fund Managers (“AIFM”).

In NL, public offerings of shares are prospectus-free if offered to no more than 150 natural or legal persons or if the nominal value per share is below € 100,000.


Mergers and acquisitions (M&A)

The popular alternative to a green field investment is the acquisition of a going concern or the statutory merger of the shares or the assets of two existing companies, abbreviated to “M&A”. A cross border statutory merger with a non–EU company is not permitted. So, a PRC company is not eligible for a merger, unless it first creates a EU subsidiary as its EU merger vehicle.

The process of an acquisition of shares (or assets) is in line with international standards, such as non-disclosure agreement, letter of intent, memorandum of understanding, due diligence, share purchase agreement and share transfer agreement (only by notarial deed) and escrow of purchase price. Dutch documents are typically far more brief than Anglo-American style documents.


Real estate

In NL there are no  nationality or residence based restrictions in regard to ownership of real estate. Transfer of property is solely by notarial deed. The public land registry can be relied upon as to ownership entitlement.



EU tax rules and regulations have substantial effect on domestic tax legislation which however retains its sovereignty regarding the tax rates and the sorts of taxes (mainly Corporation tax, Income tax, Inheritance tax). Value Added tax (VAT) is however harmonized within the EU due to frequent inter-state transactions, but the rates differ per country.

In NL there are special regimes for foreigners for example 30 percent points reduction of Income tax, and bonded warehousing for customs and VAT. Corporate tax is 20 to 25 % (for profits above €400,000). Dividend withholding tax (15%) is lowered to a 5% source tax in the treaty CN/NL but can be lowered even to zero % by interposing a Dutch cooperative. The source tax between NL and Hong Kong is zero %. However, the government may abolish the dividend tax altogether as of 1 January 2018, both  for foreign and domestic shareholdings.



For work and a stay longer than 3 months, a stay permit “Machtiging Voorlopig Verblijf (“MVV”) must be applied from the Dutch embassy in Beijing, the consulates in Shanghai, Guangzhou, Chongqing and a number of dedicated agencies in second-tier cities in China. For work, the most popular method to obtain a MVV is the so called “highly-skilled” or “Knowledge Migrant” (“KM”) procedure. The KM employee must hold a Dutch employment contract for an indefinite period at a gross monthly salary of at least € 3,170 for age below 30, € 4,342 above age 30 and € 2,272 if graduated in NL. The employer must obtain a KM sponsor license from the Dutch Immigration Authority (“IND”), if existing shorter than 18 months or with less than 50 staff. The employer must draw up a business plan. One-time KM sponsor license costs for an unlimited number of KM workers are € 5,276 or € 2,638 for a start-up company.

The 2013 Modern Migration Policy Regulation (“MoMi”) of IND simplifies residence procedures into one single application.

A “golden visa“ is available for wealthy migrant  with a  personal capital over € 1,250,000 in cash or invested in an own company or in real estate or in qualified investment funds.


Labour law

NL labour law is comprehensive and changes fairly often reflecting labour market conditions, new notions of cooperation within trade and industry and the general state of the economy.



The Netherlands is an obvious intermediate or final destination for OBOR investments from China, due to its logistic position in Western Europe and historic economic ties with China.

Getting familiar with EU and Dutch law, albeit through professional lawyers, is crucial for Chinese OBOR investors.


Bart Kasteleijn

Wintertaling lawyers & civil law notaries


The Netherlands