Dutch holding companies: your springboard to Europe
The Netherlands has been one of the centres of global finance and trade activities for many years. The Dutch holding company provides one of the most popular international structures – largely because it offers a tax-efficient exit route for the profits of subsidiaries.
The main benefits of the Dutch holding company are:
- full tax exemption of dividends and capital gains on shares in qualifying subsidiaries (participation exemption)
- tax deduction of qualifying expenses and losses
- tax treaty benefits, specifically the reduction of the withholding taxes on dividends (in many cases to nil) based on the tax treaties concluded by the Netherlands with more than 80 countries worldwide
- the absence of withholding taxes on interest and royalties
- EU tax benefits, specifically the 0% withholding tax rate on dividends and interest and royalties received from qualifying subsidiaries located in other EU member states and the European Entrepreneurial Region
- relatively low incorporation and annual running costs.
The participation exemption generally applies where a subsidiary has capital divided into shares and the Dutch shareholder owns at least 5% of these shares. The expenses of qualifying subsidiaries are usually tax deductible, including interest expenses on funding loans and local running costs, but other provisions may limit the tax deduction on interest expenses.
The Dutch BV is the most commonly used legal entity in the Netherlands, with recent changes to the Dutch civil law making it easier to incorporate a BV. For example, the minimum capital requirement of €18,000 has been abolished, while the bank statement and auditor’s statement for contributions in kind are no longer necessary. It is also possible to transfer the shares of a BV without limitations.
Another advantage of the Dutch holding company is that from a Dutch perspective, there are virtually no substance requirements. The holding does not need to have employees and, in most cases, the foreign-owned holding company is serviced by a trust company providing management and domiciliation.
For more information, contact:
Tel: +31 53 850 49 00