The initial term of each of the three agreements is for a
period of five years, which started in December 2005. At
Ahold's sole discretion and by prior written notice, Ahold is
entitled to extend the term of each agreement for two
additional one-year periods. Further extensions require
mutual consent.
The agreements contain customary termination provisions,
including Ahold's right to terminate each agreement for
convenience by providing six months prior written notice
and payment of early termination fees. Ahold also has the
right to terminate the agreements within nine months
following a change of control of Ahold or one of its
outsourcing partners. Each of Ahold's outsourcing partners
may only terminate their respective agreement in the event
Ahold should fail to timely pay certain periodic charges. The
agreements also contain customary restrictions with respect
to assignment of rights and obligations under the
agreements. Pursuant to the terms and conditions of the
agreements, Ahold is entitled to conduct audits to determine
the functionality of each outsourcing initiative.
A major part of the transition costs related to these initiatives
was incurred in 2006.
Pursuant to the terms and conditions of the three IT
outsourcing agreements and based on expected levels of
services, Ahold expects its total costs during the initial
five-year terms to be approximately EUR 467 million.
Taxation
Dutch taxation
The following is a summary of material Dutch tax
consequences of the acquisition, ownership and disposition
of Ahold's ADSs, common shares and cumulative preferred
financing shares under current Dutch tax law. This summary
does not discuss every aspect of such taxation that may be
relevant to a particular taxpayer under special
circumstances or who is subject to special treatment under
applicable law, nor does it address the income taxes
imposed by any political subdivision of the Netherlands or
any tax imposed by any other jurisdiction. The Dutch tax
laws upon which the summary is based may be subject to
change, possibly with retroactive effect. Each holder and
prospective investor should consult his or her own tax
advisor with respect to the tax consequences of acquiring,
owning and disposing of ADSs and/or common shares and/
or cumulative preferred financing shares.
General
Holders of ADSs will be treated as the beneficial owners of
Ahold's common shares represented by such ADSs. An ADS
will, in general, for Dutch tax purposes, be identified with a
share in Ahold.
Dutch Taxation for Non-Resident ADS and/or
Common Shareholders - Withholding Tax
The following is a summary of the material Dutch tax
consequences for an owner of Ahold's ADSs, common
shares and/or cumulative preferred financing shares who is
not, or is not deemed to be, or who has not opted to be taxed
as a resident of the Netherlands for the purpose of the
relevant Dutch tax law.
Withholding tax
Dividends distributed by Ahold are generally subject to
a withholding tax imposed by the Netherlands at a rate of
25 percent. This rate is reduced to 15 percent as from
January 1, 2007. The expression "dividends distributed by
Ahold" as used herein includes, but is not limited to:
(i) distributions in cash or in kind, deemed and constructive
distributions and repayments of paid-in capital, which
capital is not recognized as such for Dutch dividend
withholding tax purposes; (ii) liquidation proceeds, proceeds
from the redemption of ADSs, common shares and/or
cumulative preferred financing shares or, as a rule,
consideration for the repurchase by Ahold of its ADSs and/or
common shares and/or cumulative preferred financing
shares in excess of the average paid-in capital which capital
is recognized as such for Dutch dividend withholding tax
purposes; (iii) the par value of ADSs and/or common shares
and/or cumulative preferred financing shares issued to a
holder of ADSs, common shares and/or cumulative
preferred financing shares or an increase of the par value
of ADSs, common shares and/or cumulative preferred
financing shares, as the case may be, to the extent that it
does not appear that a contribution, recognized for Dutch
dividend withholding tax purposes, has been made and
(iv) partial repayment of paid-in capital, which is recognized
as such for Dutch dividend withholding tax purposes, if and
to the extent that there are net profits (zuivere winst), unless
the General Meeting of Shareholders has resolved in
advance to make such repayment and provided that the par
value of the ADSs and/or common shares and/or cumulative
preferred financing shares concerned has been reduced by
an equal amount by way of an amendment to the Articles
of Association.
If a holder of ADSs, common shares and/or cumulative
preferred financing shares is resident in a country other than
the Netherlands and if a double taxation convention is in
effect between the Netherlands and such country, such
holder of ADSs, common shares and/or cumulative
preferred financing shares may, depending on the terms
of such double taxation convention, be eligible for a full or
partial exemption from, or refund of, Dutch dividend
withholding tax.
Ahold Annual Report 2006 143
