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Dutch Holding Company

Updated on Wednesday 08th November 2017

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The Netherlands is a favorable jurisdiction for holding company incorporation and management because of its favorable legal framework for these types of companies. Holding companies in the Netherlands are regulated by the Dutch Company Act and can be registered as:
 
limited liability companies,
partnerships,
cooperatives.
 
Each type of company has its own tax benefits and can be an excellent tax planning solution. The main activities Dutch holding companies engage in are the collection of dividends and interests from different subsidiaries, however, these companies can engage in a number of other activities and they can also perform activities specific to Financial Services Companies.
 

What are the advantages of Dutch holding companies?

 
A holding company incorporated as a Dutch limited liability company is currently the most popular holding regime in the country. There are several reasons for the Dutch holding company’s popularity:
 
- low taxation,
- low cost of incorporation,
- low yearly maintenance.
 
Additionally, Holland provides an excellent legal framework for holding companies. Also, Dutch cooperatives are considered zero tax holding companies as they are eligible for the participation exemption. Cooperatives may qualify under the Parent-Subsidiary Directive which will automatically trigger the exemption from taxation of dividends. Holding companies are not subject to foreign currency exchange regulations and they may obtain an advance tax ruling. Companies can deduct certain expenses and losses that qualify and they benefit from low or zero tax burden for profit repatriation.
 
Dutch holding companies will also benefit from Holland’s extended network of double taxation treaties. For holding activities, the Netherlands provides the following benefits under its double taxation agreements:
 
avoidance of the capital gains tax and withholding tax on dividends,
avoidance of double residency and permanent establishment matters,
reduced taxes on interest and royalties incomes.
 
Additionally, Dutch holding companies are not required to hire employees because, in most cases, they are serviced by trusts.
 

Simpler incorporation procedures for Dutch holding companies

 
 
The incorporation procedure for limited liability companies, therefore for holding companies too, has been simplified.  The most significant changes include:
 
no minimum capital requirements for setting up Dutch BV,
no audit requirement for contributions in kind or acquisition of assets,
no more financial assistance regulations.
 
The Dutch regime for holding companies remains the most favorable in Europe. The country has a comprehensive regime that includes a complete dividend withholding tax exemption for the Dutch cooperative: a company that has a flexible legal form and no minimum capital requirements. 
 
The participation exemption in the Netherlands is another example of a beneficial tax exemption that can be available when holding shares in subsidiaries that qualify for this purpose. In order for this exemption to apply, the Dutch company must own at least 5% of the nominal share capital of the subsidiary and the activities of the latter must qualify as passive investment activities. Special circumstances are also taken into consideration and foreign companies can qualify as portfolio investment companies.
You can also watch the video below for more information on Dutch holding companies:
 
For information about the benefits of holding companies you may rely on our  company formation agents in the Netherlands. You may also contact us if you need help with the registration procedure or information about how to start a company in the Netherlands

 

 

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