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There are several types of structures which can be opened in the Netherlands, just like in all other European countries. However, the Netherlands is known for the advantages offered to those who open foundations here. Also, known as charitable organizations or non-governmental organizations, Dutch foundations are regulated by the Civil Code and not by the Company Act.
Even if the resemblance with other types of Dutch companies is important, foundations or “stichting” have no members.
The Dutch stichting is required to have a share capital in certain circumstances, case in which they are allowed to carry out commercial undertakings, however, the profits resulted from these undertakings have restrictions when it comes to their use. Only foundations registered with the Trade Registrar in the Netherlands are allowed to conduct commercial activities.
Foundations can also be registered as special purpose enterprises (SPEs) or holding companies in the Netherlands.
The main features of foundations in the Netherlands
Dutch foundations are often compared to private limited liability companies (BVs), especially when set up for tax minimization reasons. Even if they can be created as special purpose vehicles or holding companies, there are significant differences between foundations and BV companies created for the same reason.
When opening a Dutch foundation, one should know that:
- not having any shareholders, the foundation cannot have shares either, therefore it cannot distribute profits;
- even if it can be used for various purposes, there is one type of foundation which can be created;
- a Dutch foundation can have a board of directors, but the board cannot be made of members who also work at the foundation;
- it can be established by natural persons, but also by other companies, including other Dutch BVs;
- there are no minimum share capital requirements for creating a foundation in the Netherlands.
Foundations can hold shares in other Dutch companies, therefore can act as shareholders in other business entities. Moreover, the Dutch foundation can hold shares in foreign companies.
Our company registration advisors in the Netherlands can offer more information on the characteristics of foundations.
Forms of the Dutch stichting
A foundation can take the following forms in the Netherlands:
Setting up a foundation in the Netherlands is quite simple, considering no special approvals or licenses are required.
Foreigners who want to create foundations in the Netherlands must prepare a set of documents which must be notarized. These are the formation deed and the articles of association.
While the deed of formation represents the memorandum and establishes the creation of the organization, the Articles of Association will determine the activities and the management of the Dutch stichting. An important aspect to keep in mind is that the Articles of Association must be in Dutch.
The documents through which the Dutch foundation is registered must contain the following information:
- the name of the foundation;
- information about the assets;
- the purpose of the foundation;
- information about the managers or directors;
- the local address of the foundation.
How to create a family foundation in the Netherlands
Even if it can be used for commercial purposes, the foundation can also be created for wealth management purposes as in other countries. The family foundation is the most appropriate wealth management solution for high net worth individuals relocating to the Netherlands.
One needs to have the deed of incorporation drafted and notarized by a Dutch public notary. The family foundation in the Netherlands is similar to trusts in other countries. However, in the case of a Dutch foundation, a settlor and the beneficiaries are the main participants.
It is important to know that in the case of a family foundation, the assets cannot be distributed to companies or other legal entities, but only among family members. These types of foundations can also be created as charities.
Setting up a charity in the Netherlands
The foundation can be created as a charity in the Netherlands, however, it is advised for such a structure to take the status of an ANBI or Algemeen Nut Beogende Instelling which will enable it to benefit from many tax advantages. In order to obtain the ANBI status, a foundation must perform charity works in a percentage of 90.
For this, the foundation will benefit from exemptions from the inheritance and gift taxes, but also from refunds on the energy tax.
Several tax benefits are also available for the founders of the charity, meaning they can deduct donations from the personal income or corporate income tax. This makes the Netherlands very appealing for creating foundations for charitable purposes.
You can rely on us if you plan on setting up such a foundation in the Netherlands. We also offer a wide range of accounting services to those interested in minimizing the taxed paid in this country.
We also invite you to read about the creation of Dutch foundations in the scheme below:
How to create a foundation as an SPV in the Netherlands
Another use of the Dutch foundation is that of a special purpose vehicle or SPV. Under the Dutch legislation, a foundation can undertake certain activities under which they can earn profits, however, the money can be spent on specific activities, such as employment and to cover other costs generated by the foundation.
Those who want to open foundations with the purpose of carrying out a commercial activity should know that the entity will be subject to the corporate tax.
When created as a special purpose vehicle, the Dutch foundation can be registered as a holding company. This way the settlors will benefit from enhanced protection when it comes to their investments.
When registered as non-profit or charitable organizations, foundations may own other companies, case in which corporate tax reductions are available for the settlors.
Foundations created as special purpose vehicles are allowed to receive funds from third parties without paying any withholding taxes on interest payments.
Dutch foundations registered as limited liability companies can further benefit from exemptions from the corporate tax and the withholding tax on dividends.
Taxation of private foundations in the Netherlands
Dutch foundations are covered by several tax laws applicable in this country. Among these are:
- the State Tax Law;
- the Income Tax Law;
- the Income Tax, Donations and Public Benefit Organizations Act.
The private foundation created in the Netherlands or in the Dutch Antilles is exempt from paying the income and corporate tax. Also, foreign citizens establishing private foundations in the Netherlands will be exempt from paying the gift tax.
FAQ on Dutch foundations
The Dutch legislation is quite extensive; however, this country attracts many individuals and companies interested in setting up foundations. The options under which a foundation can be created raise a lot of questions among those interested in them and our local consultants have answered some of these questions below:
1. Can I open a foundation in the Netherland if I am a foreigner?
Yes, foreign citizens can set up foundations in the Netherlands.
2.Do I need to relocate to the Netherlands in order to set up a foundation here?
No, there is no need for you to move here when opening a foundation.
3.Can I set up a Dutch foundation remotely?
Yes, foreign citizens can create foundations even if they are abroad. Our local specialists can handle this procedure on their behalf.
4. If I set up a foundation as a charity, do I pay any taxes?
No, charities are exempt from taxation in the Netherlands.
You can also find out from the video below how a Dutch foundation can be created:
Our company registration advisors in the Netherlands can assist with the registration of a foundation with the authorities. For information about other tax optimization solutions, please contact our Dutch company formation agents. You can rely on us for fullcompany registration services in the Netherlands.