Additional information
A refund of Dutch dividend withholding tax is available for:
(i) legal entities which are exempt from corporate income tax
in the Netherlands, such as pension funds; (ii) (as from
January 1, 2007) legal entities resident of another Member
State of the European Union which are exempt from profit
tax in their state of residency and which would have been
exempt from corporate income tax had they been residents
of the Netherlands; (iii) entities which are qualified as
portfolio investment institutions for Dutch corporate income
tax purposes; (iv) entities holding shares as part of an
enterprise conducted in the Netherlands, provided that the
dividends and similar proceeds from the shares form
exempt income under Dutch corporate income tax rules.
Furthermore, an exemption from dividend withholding tax
applies in case a shareholding could be qualified as a
participation (deelneming) for Dutch corporate income tax
purposes, which is generally the case if the shareholder
holds at least 5 percent of the nominal value of the paid-in
share capital. As from January 1, 2007 this exemption is
under certain conditions also available for corporate
shareholders residing in another Member State of the
European Union than the Netherlands in case the
shareholding equals at least 5 percent of the nominal value
of the paid-in share capital.
Under the double taxation convention in effect between the
Netherlands and the United States (the "Treaty"), dividends
paid by Ahold to a resident of the United States (other than
an exempt organization or exempt pension organization) are
generally eligible for a reduction of the 25 percent Dutch
withholding tax rate to 15 percent, or in the case of certain
U.S. corporate ADS and/or common share and/or
cumulative preferred financing share holders owning at least
10 percent of Ahold's voting power, a reduction to 5 percent,
unless the ADSs and/or common and/or cumulative
preferred financing shares held by such resident are
attributable to a business or part of a business that is, in
whole or in part, carried on through a permanent
establishment or a permanent representative in the
Netherlands. Due to the reduction of the Dutch withholding
tax to 15 percent as per January 1, 2007, residents eligible
under the Treaty for a reduction to 15 percent are not
required to invoke the reduction of the withholding tax
clauses in the Treaty anymore. The Treaty provides for
a complete exemption for dividends received by exempt
pension organizations and exempt organizations, as defined
therein. Except in the case of exempt organizations, the
reduced dividend withholding tax rate can be applied
immediately upon payment of the dividends, provided that
the proper forms (IB92 U.S.A. or IB95 U.S.A.) have been
filed in advance of the payment. Qualifying U.S. exempt
organizations must seek a full refund of the tax withheld by
filing the proper forms. A holder of ADSs, common and/or
cumulative preferred financing shares other than an
individual will not be eligible for the benefits of the Treaty
if such holder of ADSs and/or common and/or cumulative
preferred financing shares does not satisfy one or more of
the tests set forth in the limitation on benefits provisions of
Article 26 of the Treaty.
The Depositary for the ADSs has entered into a special
arrangement with the Dutch tax authorities, which may be
amended from time to time, regarding the application of the
Treaty to dividends paid to holders of ADSs. Under such
arrangement, the Depositary has agreed to provide a single
tax form to Ahold indicating the number of ADSs owned by
residents of the United States entitled to an exemption from,
or reduction of, Dutch withholding tax under the Treaty. In
case of dividends paid by the Depositary by wire transfer or
similar method to a bank, broker or depositary (such as The
Depositary Trust Company), the Depositary will withhold
25 percent (or 15 percent as from January 1, 2007) of any
dividends payable and such bank, broker or depositary may
claim on behalf of its client a refund of such taxes from the
Depositary in the form of a supplemental dividend check.
An exempt organization that is resident in the United States
and is entitled to a full exemption from Dutch withholding tax
under Article 36 of the Treaty cannot use the special
arrangement described in this paragraph. Accordingly,
Dutch withholding tax will be imposed on dividends payable
to such a holder at a rate of 25 percent (or 15 percent as
from January 1, 2007) and such holder may claim the
benefits of the Treaty by filing a form IB95 U.S.A. directly
with the Dutch tax authorities. The Depositary will provide to
holders of ADSs, prior to each dividend payment, a notice
setting forth the procedures for obtaining a reduced rate of,
or exemption from, Dutch withholding tax.
According to an anti-dividend stripping provision, no
exemption from, reduction of, or refund of, Dutch dividend
withholding tax will be granted if the recipient of a dividend
paid by us is not considered the beneficial owner of such
dividend. Such recipient is not considered the beneficial
owner if such recipient paid a consideration (in cash or in
kind) to another party in connection with the dividend and
such payment forms part of a sequence of transactions (as
defined below), and further it is likely that (i) such other
party, an individual or a company (other than the holder of
the dividend coupon) benefited, in whole or in part, directly
or indirectly, from the dividend and such other party,
individual or company would not, or to a lesser extent be
entitled to an exemption from, reduction of, or refund of,
Dutch dividend withholding tax than the recipient of the
dividend, and (ii) such other party, individual or company,
directly or indirectly, retains or acquires a position in the
ADSs, common and/or cumulative preferred financing
shares that is comparable with his/her or its position in
similar ADSs, common and/or cumulative preferred
financing shares that he/she or it had before the sequence
of transactions began. The term "sequence of transactions"
as used herein includes the sole acquisition of one or more
dividend coupons and the establishment of short-term rights
of enjoyment on ADSs, common and/or cumulative
preferred financing shares, while the transferor retains the
ownership of the ADSs, common and/or cumulative
preferred financing shares.
144 Ahold Annual Report 2006
