Dutch Government Announces Energy Bill Relief

20 Sep 2022
Actual, EU, Netherlands
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Governments and energy companies have largely agreed on measures to reduce energy costs. While final details are still being worked on, Dutch Minster Jetten’s climate and energy plans are due to be formally announced this afternoon and are focused on an energy price ceiling. These plans will ensure energy bill relief in the current times of inflation.

 

Prinsjesdag

The third Tuesday of September is called Prinsjesdag in the Netherlands. The head of state then delivers the Speech from the Throne in a United Assembly of the States General. In this speech, the government indicates in general terms what government policy will be for the coming year. At the same time, the budget of millions and the national budget for the following year will be presented on that day. Currently, the national budget (Miljoenennota) has been leaked and assumptions for the inflation relief can be identified.

 

Brief overview

The heart of the plan is that the Dutch government takes over a part of the energy bills of households. With this measure starting from the 1st of January next year, the aim is to prevent a million Dutch people from getting into -further- financial trouble. This year November and December, the monthly advance payment will already get reduced.

Moreover, this winter energy companies are not allowed to cut off households due to difficulty paying. People who cannot pay energy bills are given a six-month grace period. In the case that there is no payment arrangement within this half year is still the subject of consultation. The government also inquires energy companies to offer multi-year energy contracts to customers again. Further, in the leaked national budget (Miljoenennota), the cabinet has already announced a reduction in the energy tax for next year and an energy surcharge of 1,300 euros for people with a minimum income. This is helpful for Dutch citizens to know what they can expect.

 

Concrete plans

From the start of next year onwards, the first part of the energy and gas bill will mimic the consumption prices from this January – before the war with Ukraine. In reality, smaller apartments with decent insulation can potentially cover their complete energy bill. When energy consumption is higher, people need to pay the energy prices according to the current market price.

 

Price ceiling

To calculate the “first part” rates, the government will most likely use the average energy consumption per year. According to consultancy firm Milieu Centraal (see NOS), the average is 1169 m3 gas and 2479kWh electricity. Further, the energy companies send the other part of the bill to the government, which adjusts the difference between the costs and what the consumer is charged. Interestingly is that this price cap for household energy bills is based on consumption instead of income. While this can have a levelling effect, since fewer income households live on averagely in smaller houses, people will most likely not be left behind. In this way, the government assists people to pay for their energy consumption but still encourages them to use gas and electricity responsibly.

 

While it is clear that this relief budget will cost the cabinet many billions, the exact amount has yet to be determined. However, the Dutch government has a strong income flow due to the tax on the raised energy prices and the proceeds of gas that has been extracted from the seabed and ground in the Netherlands. Moreover, the potential European measurement to skim off the profits of electricity producers who are not affected by high gas prices should also benefit the Dutch treasury.

 

Security

To continue, the government aims to ensure long-term security for Dutch inhabitants again. In the current situation, people can only opt for a variable rate with a new contract. This variable rate is normally adjusted twice a year, but now more frequently due to the market price. As a result, financial security and stability are difficult to take into account. Jetten, Minister for Climate and Energy Policy of the Netherlands, therefore announced that energy companies must offer multi-year contracts again to regain financial stability. To compensate for the financial risks of the energy companies, the fine to terminate a long-term contract will be raised from 50 euros to 100 euros per contract. In this light, the attractiveness to cancel a permanent contract if prices suddenly fall sharply, and thus leave the energy companies with expensive energy with a potential bankruptcy, as a result, is less attractive with new and realistic penalty clauses.

 

 

Sources

https://nos.nl/artikel/2445215-overheid-springt-bij-energierekeningen-vanaf-november-omlaag

https://www.hln.be/nieuws/nederlandse-regering-en-energiebedrijven-akkoord-over-prijsplafond~a0dddd3f/

https://www.rtlnieuws.nl/nieuws/nederland/artikel/5334240/prijsplafond-energiecrisis-gas-elektra-energierekening-november

https://www.rtlnieuws.nl/nieuws/nederland/artikel/5334240/prijsplafond-energiecrisis-gas-elektra-energierekening-november

Germany invests another tens of billions to help the country through winter

06 Sep 2022
Actual, Europe, Inflation
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In the third support package totalling more than 65 billion euros, the German government attempts to combat inflation and high energy costs. German Chancellor Scholz announced in the press conference that while “this is the largest package to date”, the investment is necessary for “our country to get through this crisis well”.  Read more to learn about the German measurements taken to withstand the crisis.

 

Support packages

For the third time this year, the German government has announced a comprehensive relief package that needs to assist the Germans in the contemporary period of inflation. The previous two support packages (in total around 30 billion) presented by the German government included an energy surcharge, a reduction in excise duty on fuel and the 9-euro public transport ticket. The latter could be bought and utilized by both German nationals and internationals and enables the buyer to unlimitedly use the public transport for a month. Whilst these measurements assisted the German inhabitant, a third relief package is recently announced.

 

After negotiations of around 20 hours, Olaf Schultz and his coalition parties announced this new package. In the attempt to assist Germans through the winter, the slogan of this package: “You’ll never walk alone” signifies the feeling of unity. Scholz argues that “we will never leave anyone behind”, which emphasises the fact that this relief package is mainly focussed on the lower incomes, the students and the retirees. While concerns are growing in Germany about the high cost of living, the trade unions and opposition parties Die Linke and AfD are considering demonstrations and the German trade union movement is warning that inflation could lead to considerable social unrest. However, Scholz argues that he is completely aware of this and that “we take all these concerns very, very seriously. You will never be alone. We will not leave anyone behind.”.

 

New measurements

To compensate these groups, this new package includes a reduced price for basic electricity consumption, an energy surcharge for students and pensioners, and a prolongation of the discounts on public transport. Moreover, retirees can receive a one-off of 300 euros to compensate for the energy inflation, for students this compensation is 200 euros. For single-person households, that are entitled to housing benefits, this amount is 415 euros, and for a household with two people, this one-off compensation is 540 euros and increases by 100 euros per additional family member.

 

The child benefit (currently 219 euros per child) will be increased considerably. After the New Year, the child benefit increases by 18 euros per month for their first and second child. Furthermore, the 9-euro ticket introduced in the previous package gets prolonged but will likely be more expensive. An amount of 49 to 69 euros per month is considered to freely use German public transport. In addition to this, more Germans will be able to apply for housing benefits. The limit will be raised to 1,600 euros per month, and 2,000 euros per month next year. It is estimated that this will increase the number of subsidy recipients from 700 thousand to 2 million. This group of “low earners” will have to pay less for their social contributions and employers give an up to 3,000 euro tax-free “inflation premium”. Especially for smaller businesses to keep running, there will be more tax easing. This does not apply to the “low earners” due to their relative low spending budget.

 

More measurements

The German coalition consisting of the social democratic SPD, The Greens and the liberal FDP, have argued about even more measures to include in the package. While the SPD and the Greens were fond of an excess tax, where companies have to pay more tax on their profits above a certain threshold, the FDP argued that this excess tax will be harmful to the German business climate and the attraction of businesses. However, while the excess tax is not part of the relief package, the German government has promised to explore the possibilities at the European level to skim off the high profits of energy companies. In this proposal, a price ceiling for exceptionally profitable energy producers is considered. The German government first wants to look at including this measurement on a European level, but in the case that this is deemed unsuitable, the government will regulate this in a short period on the national level.

 

Conclusion

In conclusion, Scholz argues that the enormous rise in energy prices is the result of the ongoing gas war. Scholz continues about the Germany-Russia relationship: “He has committed a breach of contract, something that never happened even in the Cold War, and in doing so he has proved that Russia is no longer a reliable energy supplier”. In establishing this new relief package, Germany aims at supporting the lower incomes, retirees, and students through the high energy consumption of the winter. According to Scholz, German needs to become independent from Russia- as soon as possible.

 

Sources

https://nos.nl/artikel/2443251-duitsland-steekt-nog-eens-tientallen-miljarden-in-lastenverlichting

https://www.volkskrant.nl/nieuws-achtergrond/lees-hier-het-liveblog-van-zaterdag-3-en-zondag-4-september-terug~b71c17db/?referrer=https%3A%2F%2Fwww.google.com%2F

https://www.volkskrant.nl/nieuws-achtergrond/eenmalige-uitkeringen-lagere-belastingen-en-overwinstbelasting-voor-energiebedrijven-zo-wil-de-duitse-regering-het-land-door-de-winter-helpen~b1d7c56a/

https://www.focus.de/politik/deutschland/zdf-sommerinterview-im-liveticker-kurz-nach-merz-stellt-sich-scholz-den-fragen-zu-neuen-entlastungen_id_140694526.html

https://www.merkur.de/politik/wen-entlastungspaket-deutschland-ampel-koalition-scholz-spd-gruene-fpd-preise-soeder-massnahmen-wann-fuer-zr-91766057.html

The Nitrogen Problem in the Netherlands: How it Works

23 Aug 2022
Actual, EFRAG, EU, Netherlands, nitrogen

While the Dutch society needs to deal with new nitrogen regulations, the European Commission has hardly any insights into the nitrogen problems in the individual EU member countries. While these countries do no research or are not sharing information regarding nitrogen, the approach in regulations differs from country to country. How does this work while all living in the European Union?

 

Utilizing handkerchiefs and the reversed Dutch flag (blue-white-red), farmers and their aficionados show their displeasure with the new nitrogen regulations. The Netherlands, which is according to the experts the country with the greatest nitrogen problem, is also the only country that is consistently reporting these figures. In the EU, passing on nitrogen figures is not mandatory and is therefore not linked to a fine. In the case these figures are present, the “culprit” for the nitrogen crisis can be identified and thus extra regulations can be made.

 

Every six years, EU countries are required to assess the quality of the Natura 2000 protected areas. This way, the threats to nature are identified and the data is shared with the European Commission. In the latest report in 2022, it is argued that Dutch nature is doing bad and even worse than the other EU countries. While the quality of Nature 2000 protected areas is used to form this conclusion, the reported nitrogen data by the Netherlands also played a huge role in determining the effect of nitrogen on these protected areas.

 

According to Van der Sluis, Wageningen University and contributor to the reports on behalf of the European Commission, other Western countries have similar nitrogen problems. However, these countries do not report “nitrogen” in the same manner or the same amount of information. These countries most often report on “agriculture” and “fertilisation”. In general, it is argued that the consequences of nitrogen in the EU are therefore underestimated. EFRAG aims at motivating the agricultural sector to participate in sharing CSR data. In the future, this might become mandatory for specific enterprises.

 

While the overarching picture remains partly unclear, Van der Sluis argues that the nitrogen problem in the Netherlands is remarkably evident. Due to the intensive livestock farming, as Van der Sluis continues, the 2020 report states that 88% of Dutch nature is identified as “moderate” or “poor” condition. However, the arbitrarily of the figures and the lack of shared information makes the issue difficult to assess. For example, when an EU country shared the issues or presence of “agriculture” but lacks the division between “nitrogen” or “fertilization”, the impact of nitrogen is unclear. This is linked to the recognition or the ignorance of the nitrogen crisis.

 

Due to consistently sharing data regarding nitrogen, the situation in the Netherlands now has become a nitrogen crisis. Since the agricultural sector, in special the livestock farmers, are the leaders in nitrogen emissions, regulations are made by the Dutch government. These regulations can have the form of an emission counter on the farms, or scaling the farm/livestock down. The regulations can vary on the state of the nitrogen emissions in that specific area.

 

One might argue to stop sharing the nitrogen data with the European Commission. However, lawyers emphasise that the Netherlands cannot suddenly halt sharing this information While other countries refrain, De Graaf, professor of administrative law and sustainability at University Groningen, argues that it does not mean that the Netherlands can ignore this problem. De Graaf emphasises that “once you have the data, you know what to do. You cannot suddenly delete it.”

 

To conclude, European countries often have missing or incomplete data regarding the protected nature areas and/or nitrogen emissions. While the Netherlands report all the data accurately, eleven countries skip the assessment of these protected areas and twelve countries do not report the threats to the protected wildlife. In retrospect, the Netherlands create new and strict regulations (mainly for the agricultural sector) to tackle the nitrogen crisis, while just across the border in Germany this problem is unexistent. This showcases the difference in approach under the common denominator of the European Union.

 

Sources:

https://nos.nl/artikel/2441696-veel-eu-landen-rapporteren-cijfers-stikstof-niet-aan-brussel

https://www.ft.com/content/90e38fb5-e942-4afd-994d-048dc40579a2

https://www.efrag.org/Assets/Download?assetUrl=%2Fsites%2Fwebpublishing%2FSiteAssets%2FEFRAG%2520Due%2520Process%2520Procedures_V04.pdf&AspxAutoDetectCookieSupport=1

https://www.eea.europa.eu/publications/state-of-nature-in-the-eu-2020

 

 

Webinar: Efficient Consolidation Software Solutions

17 Aug 2022
Actual

Is your company state-of-the-art concerning international financial reporting?​

In a globalised society, many German and Dutch companies are active across Europe or even worldwide. This leads to complex challenges in the area of an international tax strategy and an optimal corporate structure for different business areas.

 

Information: We give you – free of charge – an introduction to Amelkis Opera, the consolidation software with the highest user growth. The webinar will focus on the benefits and how this intuitive solution works and how you can get support with the implementation and use of the Opera consolidation technology.

 

Target group: This webinar is aimed at companies that have business contacts with Germany and/or the Netherlands or are planning activities in one of these countries. The webinar is aimed at managing directors, financial controllers and finance managers as well as employees from the finance department. The number of participants is limited to 12; therefore there is a waiting list for external consultants. The webinar language is German.

 

About the expert lecturer: Frank Huster is Managing Director at Global Connect Admin BV in Amsterdam as well as at the sister company Global Connect Consultancy B.V. Both companies are your competent partner in questions of international company administration, financial management as well as bookkeeping and accounting. He and his staff support German and Dutch companies worldwide in consolidation, XBRL, IFRS 16, intercompany and leasing processes.

 

About the webinar: The webinars are free of charge and given in German on 07-09 and in English on 14-09-2022. Be aware that the registration deadline is on 2 and 9 september consecutively. For further questions, please contact us via mail or telephone.

Registration can be done on via the DNHK: German webinar registration (7-9) and English webinar registration (14-9)

Preventing Trademark Revocation in China

09 Aug 2022
Actual, China, IP

An increasing amount of overseas companies are registering their trademarks in China. While following the updated intellectual property (IP) regulations in China, solely registering the trademark is not sufficient. In certain cases, your trademark can be revoked or cancelled by the administrating Trademark Office. In this article, the reasons for trademark revocation, the consequences, and methods to prevent this revocation in China are addressed.

 

Introduction

Trademark revocation could happen to a successfully registered trademark. This happens most frequently when the owner of the trademark uses or administrates the trademark improperly. In the case that a trademark gets cancelled or revoked, the company suffers not only economic losses but also the corporate image, branding and marketing strategies can be negatively impacted. In combination with the revoking or cancellation of the trademark, the owner of the trademark also risks the permanent loss of the trademark. To avoid unnecessary hassle around trademark management, especially foreign investors should be acquainted with the everchanging regulations around (protecting) Intellectual Property.

The Trademark Law of China, emphasises that a registered trademark can be both cancelled or revoked by the Trademark Office for a multitude of reasons. Here are the four main reasons described:

 

  • The trademark registrant fails to renew the trademark in time.

After the date of registration, the registered trademark is valid for ten years. Within the 12 months before the expiry date of the trademark, the registrant is able and ought to renew the trademark. Whenever the registrant does not complete the formalities before this stipulated period, an extension of six months (grace period) can be possibly allowed. If the registration is not completed within this “grace period”, the trademark gets cancelled.

 

  • Trademark fail to use the trademark properly.

The Chinese trademark law argues that the trademark needs to be consistently used with the registered trademark. Changes to the registration data, such as inconsistencies in colour, font, logo, combination of elements, etc. are seen as the non-standard usage of the trademark. In this case, the trademark registrant is ordered to clarify these disputes by the local administration for market regulation (local AMR). Whenever the registrant does not follow this order, the Trademark Office will revoke the registered trademark.

 

  • The trademark registrant fails to practically and continuously use the registered trademark.

The Chinese trademark law obliges that the registered trademark needs to be continuously and actively used for the registered product/service. Further, the trademark should be used in the registered region (e.g. Beijing). If the trademark is unutilized for over three years consecutively, and there is no legal reasoning behind the lack of usage, any organisation or individual can apply to the Trademark Office for revocation of this particular trademark. In recent years, the lack of actual and continuous usage of the trademark is the most common cause of trademark revocation in China.

 

  • The trademark becomes a generic name of the approved commodity

In the case when a certain name can refer to a class of goods Chinese law emphasises that this name shall be recognized as a generic overarching name. China-Briefing mentions that the brand name Simmons (席梦思) has its origin as a trademark registered in the United States by Mr Zalmon G. Simmons.  The trademark “Simmons” was used for his mattress brand, however, it quickly became widely used in China to refer to “refined spring mattress”. As the name for a special good became applicable to the commodity of a spring mattress, the Trademark Office declined the registration of this trademark in 2015 due to becoming a generic name in Chinese society. In the Netherlands, this shift from good to commodity is comparable to the activity around the brand name “ty-rip”. Whereas this product launched in 1958 as a stand-alone product, the name “ty-rip” is now utilized for all products looking like or having a similar function as the original ty-rip.

Knowing that trademark revocation after three-year inactivity is the most common reasoning for trademark revocation, the underlying incentive to let the Trademark Office revoke another’s trademark is obvious. Living in the era of globalisation and developing technology, all market players can stay updated on others’ intellectual property. Applicants revoking another’s trademark can use this to take advantage. The business value attached to the trademark can be destroyed by revoking or cancelling the trademark.

However, this attached value can also be used to gain own profit by using this business value or by linking their own products to this trademark. Another case can be that their own trademark registration is blocked by the Trademark Office due to the similarities to this already existing trademark. All these reasonings can be a strategical approach to entering the (Chinese) market or to eradicate the competition.

 

Revoked or cancelled trademark

When the trademark gets revoked or cancelled, the trademark cannot be legally used on the registered goods/services. Trademark owners continuing to use their trademark, do not only act against the Chinese trademark law but can also infringe the other’s similar trademark which can lead to a lawsuit and economic compensation liabilities.

While losing the trademark can result in economic losses, disputes in the corporate image, and incoherent marketing strategies, the following year the revoked/cancelled trademark cannot be re-approved by the Trademark Office. This means that a similar trademark will also not be approved. In this case, the registrant needs to wait for minimally a year to re-apply for the trademark. After one year, the competitor is also able to simultaneously apply for their trademark. In China’s “first to file” approach, this can lead to the loss of your original trademark.

In the case that trademarks are applied to be revoked by others, the trademark owner receives a request from the Trademark Office to reply within two months to receive additional information. Included in this data are:

  • Defend that the trademark is not a generic name
  • Showcase evidence of actual use in the last three years of the trademark
  • State the reason for not using the trademark

This information can be provided in various document types (e.g. invoices, contracts, etc.) and is analysed by the Trademark Office. If the evidence is deemed effective, the Trademark Office will reject the other party’s request. However, if the information is insufficient the trademark will get revoked by the Trademark Office.

 

Conclusion

To conclude, registering your trademark in China is not sufficient. To prevent the cancellation or revoking of your trademark in China, assure to continuously utilize the trademark according to the Chinese trademark regulations. Lastly, be assured to take action and reply within the given period to prevent revocation as raised by another party.

 

Sources:

Trademark Revocation in China: A Practical Guide (china-briefing.com)

The “use” requirement in trademark revocation cases in China – HEFFELS SPIEGELER ADVOCATEN

Trade Marks Laws and Regulations Report 2022 China (iclg.com)

India Preparing for Digital Sustainability Reporting

26 Jul 2022
Actual, BRSR, EFRAG, XBRL
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The vanguard of digital reporting, India, is preparing to enable the filing of the new Business Responsibility and Sustainability Report (BRSR) in XBRL format. The two major stock exchanges in India announced the availability of online XBRL submission portals for listed companies. If your business is active in India, then filing BRSR could be mandatory in the financial year 2022-2023.

This month, two of the principal stock exchanges of India have issued circulars announcing online XBRL submission portals for listed companies. Both the National Stock Exchange of India (NSE) and the BSE (formerly known as Bombay Stock Exchange) have reported on the availability of this online XBRL for Business Responsibility and Sustainability Report (BRSR) reporting.

The BRSR filing is developed by the Securities and Exchange Board of India (SEBI) and is the “more detailed and comprehensive” replacement for the current Business Responsibility Report (BRR). As of now, this BRSR filing is -just like the ongoing EFRAG drafts– voluntary. Whereas the latter is still in the draft phase and awaits further developments to become part of the reporting environment, the BRSR is voluntary in the 2021-2022 financial year. During this period, Indian businesses are allowed to “establish and improve their reporting processes”. Yet, in the second phase of the BRSR development (the fiscal year 2022-2023), the BRSR shall be mandatory for the top 1,000 companies in India. Currently, both the XBRL and PDF format are required for the BRSR filing.

eXtensible Business Report Language (XBRL) is a standard global framework which enables the effective exchange of data using the (online) XBRL reporting format. With various countries hopping on the global trend of XBRL adaptation, implementing an XBRL software solution results in various benefits and is deemed as a requirement to maintain efficiency and stay competitive in the current marketplace.

With the flexibility and extensibility of XBRL, enterprises can utilize and extend taxonomy to fit their specific needs. The usage of XBRL creates emphasise on these standardized “tags”, resulting in enhanced and automatic validation, comparison, and analysis of data. While this reduces labour due to efficient and effective “tagging”, using the overarching and commonly-known XBRL taxonomy for filing data creates immediate comparable data and financial transparency for investors.

Moreover, to assist these listed entities in understanding the “updated disclosure requirements and concepts associated with the new format of BRSR”, the National Stock Exchange of India (NSE) has in cooperation with the Stakeholder Empowerment Services (SES) released 38 sector-specific guides in understanding the BRSR format. These guides provide in-depth information regarding the parameters in the format and give guidance on how to report and measure these parameters.

 

Sources:

https://www.xbrl.org/news/india-gears-up-for-digital-sustainability-reporting/

https://static.nseindia.com/s3fs-public/inline-files/NSE_Circular_08072022_1.pdf

https://www.nseindia.com/resources/insights-panel-discussions-seminars-corporate-governance

Digital incorporation of limited liability companies

19 Jul 2022
Actual
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As of 1 August 2022 digital incorporation of a capital company will be possible under directive 2019/1151 of the European Parliament and of the Council of June 20, 2019 (the “Directive“). This means that the costs, time, and administrative burdens will be drastically reduced and setting up a Dutch BV will be more accessible through the system of digital incorporation of limited liability companies.

Digitizing the setting up of a Dutch BV is an important step towards the modernization of Dutch company law in general, as well as the notarial profession as a whole. Important to note it will only be possible for Dutch BV’s to be incorporated online if the shares are paid-up in cash.

A digital deed of incorporation will be utilized along with the digital identification by the notary by way of livestream video connection. This eliminates the requirement to be physically present at the office of the notary to execute the notarial paper deed of incorporation. A new title is added to the Civil-Law Notaries Act. This title paves the way towards the digital execution of the incorporation deed.

The Royal Notarial Professional Organization provided a centralized online execution platform that has implemented the digital incorporation process including a digital identifier that uses the highest security level pursuant to the EU regulation on electronic identification and trust services for electronic transactions in the European Single Market (eIDAS regulation). This maintains the gatekeeper role of the notary. The parties execute the deed by way of an electronic signature through the online platform.

The Dutch Ministry of Justice and Security have approached the completion of the legislation process in a cautious manner. The Netherlands embarks to implement the Directive as soon as possible but in any event before 1 August 2022.

The first version of the Digital Incorporation System is already finalized and is therefore ready to use when the Directive is implemented. The KNB is currently working on a platform for notaries to become acquainted with the Digital Incorporation System. There will also be an opportunity to give feedback on the system. Based on this, the KNB will improve the Digital Incorporation System for the final version.

 

Sources:

https://vancampenliem.com/blog/digital-formation-of-a-dutch-private-company-with-limited-liability-the-so-called-dutch-bvs/

https://www.kvk.nl/english/rules-and-laws/rules-and-regulations-changes-for-businesses-as-of-1-july-2022/

https://business.gov.nl/amendment/setting-up-bv-through-video-connection/

Stimulating Market Integration: Developments Around ESAP

12 Jul 2022
Actual, Current news, ESEF

At the recent XBRL Europe conference (13-14 June 2022), Jean-Phillippe Rabine from the European Commission (EC) provided an update on the revolutionary European Single Access Point (ESAP). With the ESAP platform, more than 150,000 entities file data to create a centralized search system covering all public information on companies or financial products. This way, enterprises are more integrated into the market and cross-country investors can establish contact in an uncomplicated manner.

The update on the developments of the European Single Access Point (ESAP) entails the goal to provide unified access to a huge amount of information, relevant to investors of all sizes. This unified access is projected to cover the regulated activities of over 150,000 companies. This target group includes investment funds, insurance companies, public companies, banks, rating agencies and around 45,000 large private companies that will disclose sustainability information on the ESAP platform. In general, ESAP is a centralised search system that makes companies more visible to cross-border investors and promotes market integration. In this light, the ESG data provided by the companies will assist in the transition to a green economy.

While the ESAP platform is comparable to EDGAR and EDINET, the main difference in ESAP is to be far-reaching and thus more information gathering can be possible. However, the establishment and the undertaking of ESAP are fairly complicated. The requirement to aggregate and/or index data provided to the national registers and regulators from over 27 countries, as well as numerous EU data collections, is the foundation for the complicated system of ESAP. The platform will be owned by the European Securities and Markets Authority (ESMA), operated by ESMA in cooperation with EBA and EIOPA,  and will have input from several other European agencies.

ESAP has high relevance to Inline XBRL filings, as it will be responsible to host all EU-filed financial statements made in European Single Electronic Format (ESEF). Moreover, on par with these statements, ESAP also hosts the upcoming sustainability disclosures as readable in the CSRD. In the long term, the format for the data hosted by ESAP can change from Inline XBRL to various formats. However, while the platform might not be necessarily linked to Inline XBRL in the long run, the European Commission (EC) will have the power to direct that specific disclosures need to be made utilizing a specific machine-readable format.

The intention is that ESAP is accessible free of charge and includes actions covering access via API and bulk downloads. However, ESMA can charge fees on certain occasions or services. To conclude, “the phasing-in phase of legislation and the ESAP system will commence in 2024 and drive through to at least 2026”. Here, Europe’s aims for ESAP are wide-ranging with improvements to capital allocations, providing assistance towards the green economy, and integrating financial services.

 

Sources

https://www.xbrl.org/news/esap-latest-eu-drives-towards-transparency/

https://www.xbrleurope.org/?p=5268

https://www.xbrleurope.org/wp-content/uploads/2022/04/1-Rabine-ESAP-XBRL-slide-pack-1.pdf

Customer Due Diligence and Know your Customer requirements in The Netherlands

05 Jul 2022
Actual
,

 

When it comes to knowing your customer, two laws play an important role: The Financial Supervision Act (Wet financieel toezicht), hereinafter Wft and Wet ter voorkoming van witwassen en financieren van terrorisme the Wwft.

The supervision of the entire financial system by the Dutch authorities is regulated by the Wft. The Wwft was introduced to prevent and reduce illegal financial activities, including money laundering, fraud and terrorist financing.

Certain institutions and industries are legally obliged to process your data for Know Your Customer purposes. Therefore, this is allowed under the Privacy Act, the General Data Protection Regulation (AVG). We ask you to inform us of any changes in your personal and financial situation.

The purpose is to identify the representatives of the organization. Are there any individuals within the organization with a direct or indirect holding of 25% or more in the organization? They are then registered as ultimately interested parties (UBO). As from March 2022 it is mandatory for most companies to register the UBO’s in the UBO register at the Chamber of Commerce. This amplifies transparency and contributes to the fight against fraud, money laundering and terrorist financing. Check with the Chamber of Commerce whether this is necessary for your company to complete the UBO register. The main source of revenue has to be determined. Having a clear picture of the organization’s structure and business activities aids this process.

Section 1(a) of the Wwft outlines who the legislation applies to: i. Banks; ii. other financial institutions, and iii. designated natural persons, legal persons or companies acting in the exercise of their professional activities. Pursuant to Section 3(2d) of the Wwft, the service provider should be able to monitor the business relationships and the transactions effected during their existence based on its Customer Due Diligence “CDD”. This allows for an investigation into the origin of the funds used in those business relations or transactions.

The Nederlandsche Bank (DNB) id the supervisor of compliance with the Wwft. Among other things, it checks whether the policies and procedures for KYC and CDD of the financial institution comply with the Wwft. DNB also checks whether the institution complies with its own policies and procedures. The Wwft is based on the European Anti-Money Laundering Directive (AMLD). The amended AMDL-4 directive allows the use of electronic ID’s for identity verifications.

The Wwft enforces The Sanctions Act. This Act defines sanctions against certain states, territories or persons, such as the freezing of assets. You can read more on the National Government’s website (Dutch) and in the attachment Law and Regulations Wft, Wwft, and CDD process ING (Dutch).

 

Sources:

https://www.betaalvereniging.nl/en/know-your-customer-in-brief/

https://www.dnb.nl/en/sector-information/supervision-sectors/crypto-service-providers/integrity-supervision-of-crypto-service-providers/wwft-crypto/customer-due-diligence/investigating-the-origin-of-a-customer-s-funds/

https://www.dnb.nl/media/i1xjqk52/dnb-guidance-anti-money-laundering-and-anti-terrorist-financing-act-and-the-sanctions-act-december-2019.pdf

https://www.icpac.org.cy/zePortal/WebFiles/SELK/WebDocuments/Members/General%20Circulars/

2018/4%202018/AML%20Guidance%20on%20establishing%20Source%20of%20Funds%20and%20Source%20of%20Wealth.pdf

Opportunities in the Kazakh Greenhouse Industry

28 Jun 2022
Actual, Kazakhstan
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The Dutch greenhouse industry sets the example for many regions around the world. With the leading position in the agricultural sector, Dutch expertise can be used to enhance greenhouse practices in the agricultural areas in Kazakhstan. In the regions of Nur Sultan and Almaty, hyper-modern greenhouses have been realised with sustainable growing methods and sustainability as a key aspect. However, the construction of Kazakh greenhouses surges and diffuses to less-developed parts of the country. Do you know how to use your expertise and management skills to capitalize on these new opportunities?

 

Introduction

The 1970s mark the era of the first development of greenhouses in the Republic of Kazakhstan. With (winter) greenhouses realised in the 1970s and 1980, the collapse of the soviet union halted these developments. The economic crisis decreased local and foreign investment, and by 1994 the production of greenhouse vegetables declined by more than 200%. The surge in greenhouse development in the 1970s covers the unique selling point of low energy prices. While the company had profitability of +70%-200%, the 1990’s increase in energy prices, abolishing subsidies, and the development of high-yielding crops led to a decrease in the initial 560 hectares of protected ground.

Since 2003, Kazakhstan sees a positive trend in the development, construction, and reconstruction of greenhouses. However, only in the last ten years has the greenhouse industry fully developed. From only 108 greenhouses with a total area of 59 hectares in 2008 to a total greenhouse area of almost 1.200 hectares in 2018. In 2018, the largest areas of greenhouses are concentrated on family farms (618 hectares – 53%). Agricultural enterprises have 180 hectares of area, whereas private farms are in the middle with 366 hectares.

 

Structure of production and yield

According to the market research by Ministerie van Landbouw, Natuur en Voedselkwaliteit, the structure of production can be categorised in three categories. Greenhouses mainly produce cucumbers (49%) and tomatoes (47%). Other vegetables (4%) include aubergine and types of salad. While there is no official data on the yield of vegetables, the calculated data for agricultural enterprises is 26kg/m2 for tomatoes and 23kg/m2 for cucumbers. For greenhouses owned by family farms, the yield is 50% of the agricultural enterprises.

Since Kazakhstan mainly produces tomatoes and cucumbers, other vegetables need to be imported from the bordering countries (e.g. China, Uzbekistan). Sweet pepper and tomatoes are the highest-demand vegetables (12.8 and 38.3 million euro), but also cucumbers (5.9mln. euro) and aubergine (3.5mln euro) are noteworthy import vegetables.

Government support

The Association of Greenhouses of Kazakhstan and the Ministry of Agriculture of the Republic of Kazakhstan developed rules for subsidizing greenhouse construction. Whereas funds initially were allocated per 1 hectare (3.500 euro) to compensate for the costs of greenhouses, nowadays this hectare subsidy is abolished. The producers of greenhouse vegetables have equal rights to government support with producers of other crops. These benefits include loans, subsidies for mineral fertilizer and herbicides, subsidizing the water cost for irrigation, reimbursement of (a part of) the cost for the expansion of greenhouse complexes and implementation of projects, and participating in leasing programs. In practice, only industrial greenhouses can apply for these subsidies. This entails that additional lighting systems and heating systems should be present and that the yield is comparably high.

 

Opportunities

State support including a preferential tax regime in the agricultural business is the main incentive for investment in the Kazakh greenhouse industry. Further, the export channel to Russia can be realised and is sustainable. The development of import substitutes (mainly bell peppers; aubergines; tomatoes) can be an opportunity to enter the local market. The export goods of tomatoes and cucumbers are also gaining foot in other markets such as the Middle East. Moreover, the rapid growth of the greenhouse sector in Kazakhstan (mostly in the south and the northwest of the country) includes the need for experts to lead the project. The Dutch knowledge is therefore required to share knowledge and supervise projects. Besides new greenhouses, reconstructing (older) models can be done to increase yield and apply sustainability principles. Moreover, with 14% of the Kazakh inhabitants working in the agricultural business, potential employees are abundant.

Dalsem argues that these hyper-modern greenhouses have risen in a relatively short period. In the case study of vegetable greenhouse BRBAPK LLP (2022) in Almaty (Kazakhstan) it is noticeable that Dutch knowledge and level of expertise are required. In this new greenhouse, the development of Dutch horticulture showcases a process in the form of “a step of 30 years”. On par, the openness for knowledge and the drive to learn are what make Kazakhs unique and “enables them to take fast steps”. With mutual respect, the Kazakhs learn from the Dutch and cooperate into making this a successful business.

The developments the Dutch can implement and bring to Kazakhstan are aspects such as optimizing production and quality, implementing process computers, and realizing the optimal greenhouse climate. This process computer is the competitive advantage in the Kazakh market. Utilizing the iSii computer, parameters such as the heating, humidification, screens, irrigation and lighting can be controlled and adjusted. With the competitive advantage, the Dutch knowledge goes hand in hand with the Kazakh mentality.

 

Conclusion

As this case study shows, the opportunities in Kazakhstan are evident in the constantly developing greenhouse sector and the aim to maintain expanding the agricultural business. Building these greenhouses is now only done in a couple of main areas (Almaty; Nur Sultan), but can be expanded to other locations. With the production of vegetables such as aubergine and bell peppers, you can enter the local market and fill the current import gap of these vegetables. that Dutch expertise and management can create a top competitor in the Kazakh market, this opportunity is one to keep in mind.

 

Sources

https://www.freshplaza.com/article/9437889/when-investing-in-a-kazakhstan-greenhouse-also-consider-the-most-advantageous-exchange-rate/

https://www.dalsem.com/en/Largest-Kazakh-glass-greenhouse-works-with-Dutch-knowledge-and-technology

https://www.agroberichtenbuitenland.nl/actueel/nieuws/2020/06/19/market-study-on-greenhouse-industry-in-kazakhstan

Market research on RF & KZ Greenhouse Growing

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