Additional information
Ownership of ADSs in general
For U.S. federal income tax purposes, a holder of ADSs
generally will be treated as the owner of the common shares
represented by such ADSs.
The U.S. Treasury Department has expressed concern that
depositaries for ADSs, or other intermediaries between the
holders of shares of an issuer and the issuer, may be taking
actions that are inconsistent with the claiming of U.S. foreign
tax credits by U.S. Holders of such receipts or shares.
Accordingly, the analysis regarding the availability of a
U.S. foreign tax credit for Dutch taxes and sourcing rules
described below could be affected by future actions that
may be taken by the U.S. Treasury Department.
Distributions
The gross amount of any distribution Ahold makes of cash
or property (other than certain distributions, if any, including
distributions representing a partial liquidation or
distributions of common shares distributed pro rata to all its
shareholders, including holders of ADSs) with respect to
common shares or ADSs, before reduction for any Dutch
taxes withheld therefrom, will be includible in income by
a U.S. Holder as dividend income to the extent such
distributions are paid out of our current or accumulated
earnings and profits as determined under U.S. federal
income tax principles. Non-corporate U.S. Holders may
be taxed on any such dividends received in a taxable year
beginning on or before December 31, 2010 at the lower tax
rate applicable to long-term capital gains (i.e. gains from the
sale of capital assets held for more than one year).
In order to qualify for the preferential rate of taxation, certain
requirements must be met, including certain holding period
requirements and the absence of certain risk reduction
transactions with respect to the common shares or ADSs.
To the extent, if any, that the amount of any distribution
Ahold makes exceeds its current and accumulated earnings
and profits as determined under U.S. federal income tax
principles, it will be treated first as a tax-free return of the
U.S. Holder's adjusted tax basis in the common shares or
ADSs and thereafter as a capital gain. Ahold does not
maintain calculations of its earnings and profits under
U.S. federal income tax principles.
Any such dividend paid in euros will be included in the gross
income of a U.S. Holder in an amount equal to the U.S.
dollar value of the euros on the date of receipt, which in the
case of ADSs, is the date they are received by the Depositary.
The amount of any distribution of property other than cash
will be the fair market value of such property on the date
of distribution.
A U.S. Holder may elect to deduct in computing his/her or its
taxable income or, subject to certain complex limitations on
foreign tax credits generally, credit against its U.S. federal
income tax liability Dutch withholding tax at the rate
applicable to such U.S. Holder. As discussed under "Dutch
Taxation for Non-Resident ADSs, Common and/or Preferred
Shareholders - Withholding Tax" above in this Item 10 under
the Treaty (including a treaty that may replace such treaty
from time to time), dividends paid by us to a U.S. Holder
generally will be subject to a Dutch withholding tax rate of
15 percent. Such reduced rate of withholding will apply only
if the U.S. Holder is treated as a resident of the United States.
for purposes of such Treaty and otherwise is entitled to the
benefits of the Treaty and the dividends are not effectively
connected with a permanent establishment or fixed base of
such U.S. Holder that is situated in the Netherlands.
For purposes of calculating the U.S. foreign tax credit for
taxable years beginning before January 1, 2007, dividend
income with respect to the common shares or ADSs should
generally constitute "passive income" or, in the case of
certain U.S. holders, "financial services income," and for
taxable years beginning after December 31, 2006, such
dividend income should generally constitute "passive
category income" or, in the case of certain U.S. holders,
"general category income." U.S. holders should consult
their tax advisors regarding the availability of, and limitations
on, any such tax credit.
If and to the extent that Ahold pays a dividend on the
common shares or ADSs out of dividend income from its
non-Dutch subsidiaries and is therefore entitled to a credit
for Dutch tax purposes for foreign taxes attributable to such
dividend income from non-Dutch subsidiaries, there is a risk
that the U.S. Internal Revenue Service might take the
position that Ahold's allowable credit for Dutch tax purposes
constitutes a partial subsidy of its withholding tax obligation
and that, therefore, a U.S. Holder would not be entitled to
a foreign tax credit with respect to the amount so allowed.
However, this Dutch tax credit is available only to Ahold and
does not reduce the amount of withholding tax applied
against the dividends paid by the Company. Ahold believes
that such a position would not be correct because such
Dutch credit is based primarily on the net dividend received
and the U.S. Holder does not receive any benefit from such
Dutch tax credit available to the Company.
Subject to the discussion under "Backup Withholding Tax
and Information Reporting Requirements" below in this
Item 10, a Non-U.S. Holder of common shares or ADSs
generally will not be subject to U.S. federal income or
withholding tax on dividends received on common shares
148 Ahold Annual Report 2006
