The Dutch holding regime is worldwide renowned and probably still the most popular holding regime there is. It is widely used due to its flexibility in Dutch corporate law but of course also due to the excellent Dutch fiscal infrastructure, which includes the Dutch participation exemption regime and the extensive Dutch tax treaty network. We have vast experience with setting up and implementing Dutch holding companies (see our sections company formation and tax structuring for more on how we can help structure your business in or via the Netherlands).
The Dutch holding regime is perfectly suited to lower the overall tax burden and to make more profit available for reinvestment. The actual benefit depends on the following:
– Difference in applicable withholding tax rates from third countries to the country of origin vs to the Netherlands;
– Whether dividends are reinvested or repatriated to the country of origin;
– Capital gains protection under the relevant tax treaties;
– The percentage of shares held in the Dutch company;
– Any applicable CFC legislation, substance-over-form concept and substantial interest rules in the country of origin
The following graphic provides an illustration on how the Dutch holding regime can lower the total effective tax burden (click to enlarge):
The most widely used legal entity as a Dutch holding company is the BV (which is a limited liability company), although any Dutch tax resident legal entity that is subject to Dutch corporate income tax is eligible, which also could be an NV, cooperative, UK Ltd (!) to name a view, see our legal forms section for more on these.
In case you are interested in how a Dutch holding company can be of use for your business, please feel free to contact us.