Innovative tax-legal structuring for social enterprises

innovative-tax-legal-structuring-for-social-enterprises

Unlike other jurisdictions, the Netherlands does not have a fixed structure for social enterprises. Koele Tax & Legal Perspecta puts the right structure in place, be it for entrepreneurs with a social mission, non-profit organizations that work with entrepreneurs, health care institutions with complex dynamics at the intersection between for-profit and non-profit paradigms, and public benefit organizations with a business vision.
The possibilities at the intersection between for-profit and non-profit organizations are becoming ever more varied.  

Connecting legal concepts

We construct solutions for different types of social enterprises by using and connecting different legal concepts for companies that operate on the intersection between for-profit and non-profit. We do this for:   

  • Non-profit organizations with real estate and/or business models
  • Forms of collaboration between non-profit organizations and entrepreneurs (among others, in health care)
  • Lasting management buy-ins with win-win solutions for the selling party, successors, and society
  • Long-term estate structuring of family businesses and family foundations
  • Social enterprises that are also interested in acquiring (international) funds
  • NGOs that want to concertize possible bequests in the form of "shared gifts" (www.gedeeldgeven.nl), whereby the usufruct of the income generated by the assets is optimized by the donor during his or her life and the impact of the gift is visible.

CASE: Sustainable management buy-in: a win-win solution

A successful and socially engaged entrepreneur has set up a large consulting firm that he would like to transfer to someone homegrown to ensure that his vision is continued and he can take on a different role in the company. A durable management buy-in that uses a hyper-flexible form of cooperation seems to be the best solution for both the selling party, the successors, and the company’s societal function.

The members of the management team cannot afford to take over the company at market value. The solution consists of reducing the company’s value by taking the goodwill, which was created in part by the current management, out of the property's private sphere. This goodwill is linked to a public benefit organization that is established in parallel and also boosts the company’s reputation.

The solution: balancing interests and purposes

This solution consists of the owner accepting a lower sales price, which is also acceptable for tax purposes. The managers can take over "their" company in a way that ensures that everyone is pulling in the same direction because "profit maximization" as an abstract purpose has been written out of the structure. A constructive link with the company's societal impact is created at the same time. The result is a privately owned social enterprise whereby the members' vision is driven by the structure. The whole set up is the manifestation of the owners' overall intentions. 

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Social Enterprises in the Dutch landscape

In the Dutch landscape, various forms of social enterprises exist and emerge from different types of activities.

Publications

Enlarging Space for International Philanthropy Following up on her analysis on the topic in her doctoral dissertation, Dr.

Dutch foundations - ANBI or not ANBI With Brexit on the agenda, there is increased attention for the use of charitable organizations in the Netherlands.

Tax issues of public interest generosity In the annual book 2016/2017 of 'De Dikke Blauwe' in relation to Philanthropy, Major Donors and Social Enterprises, Ineke Koele has written an analysis (in Dutch) of the tax issues of public interest generosity.

Quote interview Family Wars As a specialist on Tax and Wealth Disputes, Ineke Koele has been interviewed by Sander Schimmelpenninck for the November issue of 'Quote'  on Family Wars.

The Dutch Private Foundation in comparison with trusts: for the same purpose but rather different Trusts & Trustees, Oxford University Press, February 2016, p. 140-145.  The Dutch Private Foundation provides an alternative paradigm for sustainable asset protection purposes.