•  State of affairs concerning flexibilization of BV legislation and legislative proposal for limited liability partnerships (personenvennootschappen)

In previous years we have discussed changes in the field of flexibilization of BV legislation and a legislative proposal for limited liability partnerships. According to sound Dutch practice, both proposals have been scrutinized by a range of special interest groups (employers’ associations, employees associations and small & medium-sized enterprises). Their observations have triggered new adjustments to the legislative proposal. For the record: the proposal for flexibilization of BV legislation refers to the introduction of shares with no voting right, the abolition of the obligation of a minimum start-up capital and the extension of the possibilities of directors’ liability.  

Directors must give their consent to payments to shareholders. In this respect the interests of the corporation in the area of solvency and cash flow must be closely monitored. If the General Meeting of Shareholders decides to make a payment, such decision must ultimately be approved by the director. The most recent change refers to criticism from the business community to this aspect of the legislation, as it puts pressure on the relationship between General Meeting of Shareholders and director. The protocol has been adjusted in this respect.

  

•  Employment law

For a long time, jurisdiction in the field of employment law contained huge differences in the level of the redundancy payment. This has come to an end with the introduction of the Dutch common-law redundancy lump-sum system (known as kantonrechtersformule) in 1999. This formula is based on the following parameters: duration of the employment relationship, age of the employee, salary level, and ground for dismissal. 

The Dutch common-law redundancy lump-sum system has been adjusted as of 1 January 2009. Since then, due to this adjustment, redundancy payments have dropped to a lower level than before 1 January 2009. Meanwhile a new legislative proposal has been submitted that will limit the redundancy payment to employees with an annual income of € 75,000 or more in the event of dissolution of a contract of employment to the annual salary, unless this would be unacceptable under the given circumstances according to the principles of reasonableness and fairness. 

The Dutch common-law redundancy lump-sum system consists of the following three elements:

·                                       A, the number of weighted years of service

·                                       B, the monthly salary

·                                       C, the adjustment factor 

A = number of weighted years of service

Not all years of service carry the same weight in the calculation of the redundancy payment. Such years of service carry more weight if they have been performed at an older age. This system works as follows:

·                                       years of service up to age 35 count as ½, previously factor 1 up to age 40;

·                                       years of service between age 35 and 45 count as 1, previously from age 40 to was factor 1.5;

·                                       years of service between age 45 and 55 count as 1½, previously age 50 and up was factor 2

·                                       years of service above age 55 count as 2 

B = monthly salary

The so-called B factor expresses the gross monthly salary, increased by fixed additional payments such as the holiday allowance, a possible overtime pay or unsocial hours bonus and a possible “13^th month” extra pay. 

C = adjustment factor

The adjustment factor enables the District Court to take into account which party is more to blame for the dismissal: the employer or the employee. In a neutral situation, adjustment factor 1 is the starting point. 

In other words, it has become more attractive to recruit younger staff, which has met with criticism from employees associations as older people have even more trouble finding work.

 

•  Measures within the context of the credit crisis

Tax measures

Various tax measures were imposed late last year to support the economy. A Ministerial Regulation has created a temporary possibility for a discretionary or premature asset write-off.

This measure implies that companies can write off investments made between 1 January 2009 and 31 December 2009 over a period of two years, i.e. a maximum of 50% in 2009 and 50% in 2010. Certain assets are excepted, including buildings, intangible assets, non-fuel-efficient passenger cars, and assets primarily made available to third parties.

In addition to the possibility of discretionary or premature write-off, the lowest bracket [schijf] for corporate income tax has been increased to Euro 275,000 with retrospective effect from 1 January 2008. In 2009, this bracket will be reduced to Euro 200,000. The intention is that for 2009 and 2010  the rate of corporate income tax for that bracket will be set at 20%. This means that a single tax rate of 20% will apply to profits up to Euro 200,000, with the rate for profits in excess of that amount being 25.5%.

Abolition of airline ticket tax

At the introduction of the airline ticket tax the aviation industry still showed an organic growth of approximately 4 % per year. As a result, the pre-calculated effect of the airline ticket tax in 2011 boiled down to a delayed growth of several years. Due to the economic crisis the aviation has suffered, too. Both passenger transport and air freight have shown sharp falls in turnover.

What will happen next?
In view of the dramatically plunging turnovers, the Dutch Cabinet has decided to put an end to the levy of airline ticket tax. The Cabinet endeavours to apply a zero rate for airline ticket tax as of 1 July 2009. The date, however, depends on the support of Schiphol Airport N.V. Therefore, the Minister of Transport, Public Works and Water Management will contact Schiphol in order to accomplish a further reduction of the costs of the airport.

The best option for consumers who have already paid airline ticket tax for a flight, while on the departure date airline ticket tax is no longer payable, is to turn to their travel agent.

What does this mean?
By abolishing the airline ticket tax (Euro 11.25 for short flights and Euro 45 for long-haul flights) and due to the airport cost cutdown the costs of airline tickets will drop.

VAT

Before
Many businesses pay VAT every month. They pay the balance of the VAT payable to the authorities for goods and services sold less VAT received back from the authorities VAT for goods and services purchased.

After
The Cabinet enables businesses to opt for deferred payment of VAT. Instead of paying the VAT each month, the VAT can now be paid per quarter. Businesses that submit a monthly VAT return may thus apply for a quarterly tax return, and from now on they only have to pay the VAT payable by them over the first and second month of a quarter together with the VAT payable over the third month. In other words, they are held to pay VAT at the latest at he end of the month following the end of the quarter. This measure will take effect as of 1 July 2009.

What does this mean?
This measure will lead to a cash flow impulse for the business community of approximately 4 billion Euro per month.  

Reduction of working time

In order to support enterprises during the credit crisis, the Dutch authorities have created a possibility for reduction of working time. By doing so the authorities wish to prevent that enterprises have to dismiss people hastily, as the financial results of their company are lagging behind. Companies who wish to make use of this scheme must meet a series of conditions. An application for the reduction of working time may be submitted for a period of six weeks, in principle. Afterwards this period may be extended three times by the same period.

 

•  Changes in the litigation practice

The Dutch Government wishes to make the administration of justice more accessible to the citizen. In the future the threshold for bringing relatively simple cases before the sub-district court will be lowered, meaning that the parties will no longer need to engage a lawyer.

Until today, cases concerning employment and tenancy, as well as civil cases involving less than Euro 5000 have been heard by the sub-district court. Litigants may now appear on their own behalf before such court, meaning that they do not need to engage a lawyer or other legal representative.

The Government intends to allow the sub-district court to rule on cases involving up to Euro 25,000. It also proposes that all disputes in the future regarding consumer purchases and consumer credit (up to Euro 40,000) should be dealt with by the sub-district court. This will make it easier for people to take legal action for relatively simple matters.

The Government has agreed to submit the relevant parliamentary bill to the Council of State for its opinion. The opinion given by the Council or State and the actual wording of the bill will be published once the bill has been submitted for approval to the Lower House of Parliament.

•   Amendments to the Telecommunications Act

a. ‘Don’t Call Me’ register

The amendment to the Telecommunications Act deals to a considerable extent (paragraph 5 through paragraph 13 from Section 11.7 Telecommunications Act) with the introduction of the statutory opt-out register. Deregistering is done via the opt-out method. People who no longer wish to be approached by telephone (both landline and mobile) for commercial purposes or charity missions may get registered in the opt-out register. Entry into this register is valid for an indefinite term, in other words until the moment when the registered party explicitly declares that he or she no longer wishes to be recorded in the register. The operational supervision of registrations and de-registrations is in the hands of the Ministry of Economic Affairs, which yet has to appoint a supervisor. Apart from this, many more implementation regulations are about to be drawn up, such as how an opt-out must be communicated, by whom, how fast and when the register must be used.

A call centre employee does not have to give consideration to the opt-out register if the address and telephone number have been obtained when selling a product or service, or within the scope of a donation to an idealistic or charity organisation, in other words if it refers to customers or donors. In this respect there is a restriction, it being understood that the further use of the telephone number for commercial purposes or charity missions must be limited to their own similar products or services, respectively donations to the idealistic or charity organisation. Please keep in mind that if someone has had his personal data blocked pursuant to the Dutch Personal Data Protection Act, such customer can no longer be contacted by telephone.

This law amendment will officially take effect on 1 July 2009.

The other development has to do with tell-a-friend systems within web sites. On 3 December 2008 four conditions have been published in the joint legal opinion of the Dutch Data Protection Authority (Cbp) and the Dutch Independent Post & Telecommunications Authority (OPTA). The four conditions for tell-a-friend actions must be met immediately by e-mail marketing companies, or else they run the risk of a (hefty) financial penalty imposed by the OPTA.


b. B-to-B e-mail
For b-to-b e-mail the same rules will apply as of 1 July 2009 as were already applicable for b-to-c e-mail. This means, as a principal rule, that prior consent must be requested if the e-mail address is used for commercial purposes or charity missions. Incidentally, such prior consent is also mandatory by law for other messages that can be filed in the network or peripherals, such as fax, text messages / multimedia messaging service, voice mail and unsolicited communications sent via computerized (call) systems in which the message has been pre-recorded for commercial purposes or charity missions.

E -mail marketing companies do not require prior consent in the b-to-b-relationship for commercial purposes or charity missions, if

·         the e-mail address has been disclosed by the legal persons or natural persons themselves within the scope of performing a profession or conducting a business, and is used in this respect for the purposes for which the company wants to be approached (Section 11.7 paragraph 2 Telecommunications Act new),

·         the company receiving the e-mail is domiciled in a country outside the European Economic Area and the local legislation of the country concerned is complied with (Section 11.7 paragraph 2 Telecommunications Act new), and

·         the e-mail address has been obtained within the scope of the sales of a product or service and the e-mail address is used for own similar products and services for commercial purposes or charity missions, provided that when obtaining the e-mail address the option to unsubscribe is offered and, if no use was made thereof, in every e-mail message the option is offered to block the e-mail address (Section 11.7 paragraph 3 Telecommunications Act renumbered).

c. Tell-a-friend
The Cbp and OPTA have set tighter rules for tell-a-friend actions in web sites. In this respect the starting point for Cbp and OPTA is the requirement, even if it is a friend, that friends must give permission for receiving e-mail from other friends for commercial purposes or charity missions. Cbp and OPTA acknowledge, however, that tell-a-friend actions also constitute a form of communications for personal purposes, to which the consent requirement (for e-mail) is not applicable. The 4 conditions for a tell-a-friend action permitted by law are in line with this and read as follows:

1. The tell-a-friend action must be fully at the personal initiative of the friend (the originator). In the action it is no longer allowed to propose a chance for a reward such as a prize or an extra chance to win a prize, neither for the one friend, nor for the other friend;
2. It must be clear to the receiving friend which friend has sent the e-mail, so that the receiving friend can hold the other friend accountable (the originator) for this;
3. Before sending the e-mail, the friend (the originator) must have insight into the full message that is sent in his or her name to the receiving friend, so that the sending friend (the originator) can take full responsibility for this; and
4. The e-mail addresses and other personal data can only be used for sending only once, and cannot be processed or filed any further.

 

•  Liquidated costs in IP Litigation
  
  The system of liquidated costs (costs that have to be paid by the losing party to the winning part) in the Netherlands is as follows.

The amount of liquidated costs depends on the proceedings by the attorney-at-law and on the financial value of the matter at hand. According to this concept the Presiding Judge in a ‘kort geding’ (summary proceedings) can settle the costs in cases without complicated factual or legal aspects for a minimum of € 527 and in other cases for amounts between a minimum of € 816 and a maximum of € 9.475.

As of August 1, 2008 new rates of liquidated costs are applied (only) in IP litigation. The following standards and rates are formulated:

The party who wins the case is entitled to a full compensation of the actual costs. There exists an indication of the maximum amount of procedural costs that by and large can be regarded as reasonable and proportionate. The rates offer only a handle to judge the reasonableness of the procedural costs as claimed by the parties. Judges can deviate from the rates. It is to be expected that a detailed report is made regarding the involved attorney fees and the hours worked on a case together with an actual description of the work that has been done. If the costs that a party claims are higher than the indicated rates it should be motivated properly, if the other party contests the claim. 

The rates distinguish between simple cases and other cases. For an assessment of the time involved in the proceedings amongst other things the following can be taken into account: the extent of time reasonably necessary for factual investigations, before the proceedings were started; the extent of the relevant factual situation; the legal foundations of the claims; the extent of the defense; the amount of relevant exhibits. Furthermore it can be checked if the call in of the amount of involved lawyers was reasonable and proportionate in the perspective of the extent and complexity of a case. The financial value of a case is not decisive for the distinction.
 

The indication ratesare:
Simple summary proceedings € 6.000
Other summary proceedings € 15.000

Simple proceedings on the merits without reply and rejoinder: maximum € 8.000
Other proceedings on the merits without reply and rejoinder: maximum € 20.000

Simple proceedings on the merits with reply, rejoinder and/or counsel’s plea: maximum € 10.000
Other proceedings on the merits with reply, rejoinder and/or counsel’s plea: maximum € 25.000

These amounts concern only the proceedings of the attorney-at-law and are exclusive VAT. VAT is only taken into account if a party can not deduct this in an own VAT declaration. The amounts enclose also pre-procedural attorney-at-law costs, but not the costs for involved experts.

The rates are only applied in cases that are based on the regulations mentioned in art. 1019 Rv, to be short, cases regarding the enforcement of IP rights.

If a claim is not only based on infringement of an IP right, but also for example also on unlawful advertising, the court should estimate the costs that relate to the infringement part of the proceedings. The order to pay these costs should be based on art. 1019h CPC. The other part of the costs should be calculated according to the scales of liquidated costs that I sketched above (which is applicable in all civil – non-IP - matters).

The rates are only applicable for proceedings in first instance.

The rates are also applicable in proceedings that follow in first instance after the main proceedings (for example the follow-up procedure for the determination of damages; enforcement proceedings) and proceedings that deal only with the validity of an IP right or only with a declaration of non-infringement.

The rates are not applicable in patent cases. There is a possibility however that in the future also for patent cases indication rates shall be determined.

The extent in which an infringement can be blamed is as a general rule not relevant for the application of art. 1019h CPC. On grounds of fairness there is a possibility to deviate from a order to pay the costs calculated according to art. 1019h CPC, but fairness as such is not a ground to refrain from an order to pay all the procedural costs, because there is not a deliberate infringement. The same applies for the circumstance that one of the parties is more (or less) wealthy than the other one.

If the cost report of a party is not disputed, that report shall as a general rule be followed, even if the costs are higher than the indication rates. Unless indicated otherwise or if this follows unambiguously from a parties’ report the amount of costs that has been reported shall be regarded as including all disbursements and exclusive VAT.

Art. 1019h CPC will only be applied if this is claimed explicitly. There is no need for a defendant to lodge a counterclaim, but the defendant has to raise the cost calculation according to art. 1019h CPC as an explicit defense in the principal proceedings