introducing christie duchateau from bnc tax.
Even in normal times, tax accountants are invaluable partners for entrepreneurs. They not only provide a way to navigate the legalities of starting and running a business but also point to beneficial opportunities. Whilst entrepreneurs are focused on growth, accountants are focused on fuelling and easing that growth. But as parts of the world start to emerge from the coronavirus pandemic, accountants will be vital for guiding businesses through the new and ever-changing tax laws.
BNC Tax are specialists in international tax, with their Amsterdam branch acting as a bridge between U.S accounting and Dutch accounting primarily for U.S. entrepreneurs, businesses and expats. They also help Dutch businesses with U.S. interests. We talked to Christie DuChateau, Tax Advisor and SME Accountant, about how accountants can help businesses thrive after the pandemic, the silver linings of difficult times and a lesser known tax advantage in the Netherlands.
BNC Tax is headquartered in California, and you also have a branch in Mexico. Why did you choose Amsterdam as your first and only (so far) European branch?
Can you believe more than 35,000 Americans are living in The Netherlands? And that figure doesn’t take into account the Dutch citizens who also hold an American passport – sometimes known as “Accidental Americans”. When we started BNC Tax in Amsterdam, we had the idea to help expats navigate accounting and tax issues while living and working abroad. That was back in 2015. We had no idea that so many Americans were living here and that so many more would move here in the coming years. Amsterdam has become such a hub for internationals.
From a tax point of view, do you see the Netherlands as a supportive place for entrepreneurs?
Tax benefits for entrepreneurs in The Netherlands range as you go from a small one-man shop to a large company. There are benefits at every step. Very small businesses can benefit from things like the “kleineondernemersregeling” where you can be exempt from VAT, and the MKB discount, which offers self-employed persons a discount on the taxable amount of their business profits. Larger companies benefit from relatively low corporate tax rates and payroll discounts.
One lesser known, but very interesting, tax advantage is the “Innovation Box”. Companies who apply for it receive effectively an 80% tax advantage on profits stemming from innovation. Profits from innovation are effectively taxed at 5%; much lower than the normal 25% corporate tax rate. There are, of course, specific guidelines to receive this advantage and businesses need tax advisory to navigate the implementation, but it is there.
Why do you think entrepreneurs come from the USA to Amsterdam to both live and start businesses?
The Dutch American Friendship Treaty (DAFT) has been gaining popularity in recent years. Americans looking for a way to move to Europe have focused on the Netherlands because of the ease of starting a business as an American. The Netherlands provides an entrepreneurs’ visa for Americans looking to start a business. The process requires a very low amount of capital investment of €4500, and there are also options to apply for the 30% ruling, which can lower personal taxes significantly for up to five years. These benefits attract U.S. businesses to make The Netherlands their home.
BNC help Dutch businesses with U.S. interests. Do you think there is a potentially valuable opportunity for Dutch businesses to look towards the U.S.?
The U.S. is not often considered a tax haven. One way in which Dutch businesses can take advantage of the U.S. tax code is by setting up a U.S. “Limited Liability Company”. As part of an international tax structure, a U.S. LLC offers greater privacy than incorporating in many other domains. It is possible to set up a completely anonymous LLC in some states such as Delaware, New Mexico, or Wyoming. Other reasons to set up an LLC include the ease of accessing customers in the U.S. marketplace, and interacting with American banks or taking credit. BNC Tax advises those who want to use this structure to stay compliant with the Internal Revenue Service (IRS).
How does BNC help SMEs specifically?
Entrepreneurs are usually not accountants themselves. Often, administration is their least favorite part of the job. We help SMEs find tech-based solutions, like setting up accounting systems which can be partially or mostly automated. We also help them navigate the different rules which apply to bookkeeping practices when they need to report their business profits in multiple jurisdictions.
For example, American entrepreneurs need to report their profits in The Netherlands but also in the U.S. There are different rules for depreciating assets or accounting for things like meals, in each country. It is important to have a set of books which can be relied upon for each set of reporting requirements. BNC Tax provides advisory and accounting services to fill the gap between Dutch accounting and international accounting.
Coronavirus has changed a lot. What have been the primary challenges for BNC Tax in the face of such fundamental changes?
Tax advisors need to stay up to date on all the emerging law which is coming out of the coronavirus response. Governments are trying to write legislation which benefits businesses and individuals struggling financially during the crisis. We are spending a lot of time sifting through the laws and interpreting the pieces which are useful to our clients. That in itself has been a significant challenge simply to stay on top of developments and respond accordingly. But it’s a necessary challenge; when businesses are struggling to make it through the midst of a crisis, the last thing they need is to make poor decisions based on incorrect interpretations of the law.
And how are you adapting to meet these challenges?
All staff at BNC Tax participate in the required continuing education programs to maintain licensing as Enrolled Agents of the IRS or Certified Public Accountants. This year, much of our education has shifted to studying the new laws put in place in the wake of the pandemic. In the U.S. that means the CARES Act, which was responsible for providing all American citizens under a certain income level with a $1200 check to help stimulate the economy. Even those living as expats, like many in The Netherlands, received the money. We have helped countless expats and Accidental Americans to get the funding.
Do you think there will be any positive, long-term tax benefits after coronavirus?
In the short term, companies will be looking to utilize the tax breaks that will be available due to loss of profits and economic recession. This might mean carrying back losses to prior profitable years and amending tax returns for a refund. It may mean strategic investment and looking for tax incentives in innovation. It may mean searching for a workforce outside the traditional realm.
Longer term, I imagine we will see an interesting trend as more companies start to embrace “remote first” work. We are already starting to see companies plan for a future where employees can work from anywhere. This will pose challenges in the form of international payroll processing and compliance as more and more people decide to test out expat life. Companies will benefit from employee happiness and (hopefully) retention but will be held liable for employees living and working in jurisdictions outside the organizations former home base. I think this will present opportunities for tax optimization for both employers and employees.
Do you think tax accountants may play a new role after the outbreak in restarting and re-energising businesses and helping individuals navigate uncertain times ahead?
It is often said that accountants are the first hired and the last fired in any business. That is because tax accountants provide invaluable insights which can save companies money in the most uncertain times. Tax accountants will play an important role in helping businesses navigate the quickly changing laws which may be beneficial to them as governments work through how to jumpstart the economic recovery.
How has your mindset shifted during the pandemic?
I find the scale of the pandemic something of a wonder. We all know that we live in a global society and seeing how quickly the virus spread throughout the globe and has affected billions of lives has driven that point home. We are a community on one planet and there is no going back. It is better to embrace both the challenges and opportunities presented in a global world. For all of the negativity the virus has brought, for me, it shows that we are intricately connected.
I am expecting my first child later this year. That has added a layer of dread – what can be scarier than an invisible deadly virus waiting to attack? – but also a layer of hope. In the early days of the lockdown when the world seemed to come to a screeching halt, we all had the chance to slow down and reflect on the important moments, values, ideas and people in our lives. It has been a gift to have that time with my husband and family before starting the journey into parenthood.