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Belgium as a Holding Jurisdiction in Benelux
How OECD anti-abuse rules influence access to tax treaty benefits in European holding structures.
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Why Belgium is less commonly used compared to the Netherlands and Luxembourg in international corporate structures?
Belgium is part of the Benelux region alongside the Netherlands and Luxembourg, yet it is significantly less used as a jurisdiction for holding companies in international corporate structures. While Belgium offers a developed legal system and access to EU directives, in practice it is rarely selected as the primary location for holding or investment platforms.
This is not due to the absence of legal tools, but due to how those tools operate in practice compared to neighbouring jurisdictions.
This is not due to the absence of legal tools, but due to how those tools operate in practice compared to neighbouring jurisdictions.
Belgium Corporate & Tax Highlights
Position of Belgium in Benelux structures
In international group structures, Belgium is typically not used as a central holding jurisdiction.
The Netherlands is positioned as an operational holding layer, managing subsidiaries and dividend flows. Luxembourg is used as an investment and capital aggregation layer. Belgium, by contrast, is more often used as an operating jurisdiction, rather than a structural one.
This reflects how corporate groups allocate functions across the Benelux region.
The Netherlands is positioned as an operational holding layer, managing subsidiaries and dividend flows. Luxembourg is used as an investment and capital aggregation layer. Belgium, by contrast, is more often used as an operating jurisdiction, rather than a structural one.
This reflects how corporate groups allocate functions across the Benelux region.
Participation exemption and tax environment
Belgium operates a participation exemption regime (DRD – Dividend Received Deduction), but its application differs in practice.
While dividends may be exempt under certain conditions, the regime is generally considered less flexible compared to the Netherlands and Luxembourg. Qualification criteria, interaction with other tax rules and practical implementation may create additional complexity.
Corporate income tax in Belgium is set at 25%, with fewer structural advantages in holding contexts compared to neighbouring jurisdictions.
While dividends may be exempt under certain conditions, the regime is generally considered less flexible compared to the Netherlands and Luxembourg. Qualification criteria, interaction with other tax rules and practical implementation may create additional complexity.
Corporate income tax in Belgium is set at 25%, with fewer structural advantages in holding contexts compared to neighbouring jurisdictions.
Withholding Tax Considerations in Belgium
Belgium applies a 30% standard withholding tax on dividends, which is significantly higher than the Netherlands or Luxembourg.
While reductions may be available under EU directives or tax treaties, access to reduced rates depends on strict conditions. In practice, this makes Belgium less predictable as a jurisdiction for managing dividend flows in cross-border structures.
While reductions may be available under EU directives or tax treaties, access to reduced rates depends on strict conditions. In practice, this makes Belgium less predictable as a jurisdiction for managing dividend flows in cross-border structures.
Substance and administrative complexity
Belgium is often perceived as more formalistic and administratively demanding in corporate and tax matters.
Substance requirements, reporting obligations and interaction with tax authorities may require a higher level of ongoing compliance. Compared to the Netherlands, where governance-driven substance is more clearly structured, Belgium may present less clarity in how structures are assessed in practice.
Substance requirements, reporting obligations and interaction with tax authorities may require a higher level of ongoing compliance. Compared to the Netherlands, where governance-driven substance is more clearly structured, Belgium may present less clarity in how structures are assessed in practice.
Practical Limitations in Holding Structures
In international structures, Belgium presents several practical limitations:
As a result, Belgium is rarely selected as the primary jurisdiction for holding or investment platforms.
- higher baseline withholding tax
- less predictable application of participation exemption
- limited role in standard holding architectures
- fewer precedents in multinational structuring
As a result, Belgium is rarely selected as the primary jurisdiction for holding or investment platforms.
Why choose Belgium for International Setup?
An operating company location
A regional business presence
A jurisdiction for local market activity
Compare
🇳🇱 Netherlands
🇱🇺 Luxembourg
🇧🇪 Belgium
Use in Holding Structure
Use in Holding Structures
Operational holding company
Investment and holding layer
Operating company
Use as holding company
Very common
Very common
Limited use
Participation exemption
≥5% shareholding
≥10% or €1.2m acquisition
DRD regime (conditions apply)
Governance approach
Board-driven, operational
Flexible, investor-oriented
Formal, compliance-driven
Administrative burden
Moderate
Moderate
Higher in practice
Position in Benelux structures
Core holding jurisdiction
Investment hub
Operational jurisdiction
Corporate Taxes
Corporate Income Tax
19% / 25.8%
~24.94% (combined rate)
25%
VAT (Standard Rate)
21%
17%
21%
Dividend Withholding Tax (Non-Resident)
15%
15%
30%
EU Parent–Subsidiary Directive
Fully applicable
Fully applicable
Fully applicable
Shareholders, Directors & Capital Requirements
Minimum Share Capital
€0.01 (flexible B.V.)
€12,000 (S.à r.l.)
No fixed minimum (SRL), but adequate capital required
Number of Shareholders
Minimum 1
Minimum 1
Minimum 1
Corporate Shareholders Allowed
Yes
Yes
Yes
Foreign Shareholders
Fully permitted
Fully permitted
Fully permitted
Director Residency Requirement
No formal requirement
No strict requirement
No strict requirement
Minimum Number of Directors
1
1
1
Public Notary Required for Incorporation
Yes
Yes
Yes
Company Name Approval
Checked via KVK
Checked via RCS
Checked via BCE/KBO
What Else Important
Director Social Security
Mandatory registration (often RETA regime)
Managing directors who are economically active in Croatia must be registered with Croatian social security (HZMO / HZZO).
If the director works full-time in the company, contributions are mandatory regardless of profit level.
If the director works full-time in the company, contributions are mandatory regardless of profit level.
1
Special Regional Regime
Innovation box, participation exemption
SOPARFI, fund structures
Innovation income deduction available
Language in Official Communication
Dutch
French / German / Luxembourgish
Dutch / French / German
Electronic Tax Filing
Mandatory
Mandatory
Mandatory
Digital Certificates
Required for corporate filings and tax interaction
Required for corporate filings and tax interaction
Required for corporate filings and tax interaction
E-Invoicing Evolution
Increasing regulatory intensity
Increasing regulatory intensity
Increasing regulatory intensity
Examples of situations where the Principal Purpose Test may deny treaty benefits
In practice, the application of the Principal Purpose Test depends on the specific facts and circumstances of a transaction or corporate structure. Tax authorities typically evaluate whether the structure has a genuine commercial purpose beyond obtaining treaty benefits.
- Conduit holding companiesOne of the most frequently discussed scenarios involves so-called conduit entities. In such structures, a holding company located in a treaty jurisdiction receives income from subsidiaries and quickly transfers that income to another entity in a different jurisdiction.
If the holding company performs no meaningful management, financing or governance functions and merely passes the income onward, tax authorities may conclude that the company acts only as an intermediary.
In these circumstances, treaty benefits may be denied on the basis that the principal purpose of the structure was to obtain a reduced withholding tax rate. - Artificial relocation of holding companiesAnother situation arises when a corporate group relocates a holding company to a jurisdiction primarily to benefit from favourable treaty provisions.
For example, if a newly incorporated holding company in the Netherlands or Luxembourg acquires shares in foreign subsidiaries shortly before a dividend distribution and does not perform ongoing management functions, tax authorities may question whether the entity has a genuine economic role.
Under the Principal Purpose Test, the existence of such timing and structural changes may indicate that obtaining treaty benefits was one of the principal purposes of the arrangement. - Lack of economic substanceStructures where the holding company lacks sufficient economic substance may also be challenged.
Tax authorities often review factors such as:- whether the company has resident directors
- where strategic decisions are taken
- whether the entity maintains a physical office
- whether the company bears economic risk related to the investment
If the holding company cannot demonstrate genuine operational or managerial functions, treaty benefits may be denied even if the legal requirements of the treaty appear to be satisfied. - Circular or artificial financing structuresCertain financing structures may also raise concerns under the Principal Purpose Test. These may include arrangements where funds move through multiple entities within a group without a clear commercial purpose other than obtaining treaty benefits.
In such cases, tax authorities may examine the overall economic effect of the structure and determine whether the transaction reflects genuine financing activity or an artificial arrangement designed primarily to reduce withholding taxes.
Increasing scrutiny by tax authorities
In recent years, tax administrations across Europe have significantly increased scrutiny of cross-border structures relying on treaty benefits. This reflects the broader policy shift following the OECD Base Erosion and Profit Shifting (BEPS) project and the implementation of the Multilateral Instrument (MLI).
As a result, multinational groups increasingly design holding structures that combine treaty access with genuine governance, management and economic functions in the jurisdiction where the holding company is established.
As a result, multinational groups increasingly design holding structures that combine treaty access with genuine governance, management and economic functions in the jurisdiction where the holding company is established.
European Structuring Jurisdictions
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Leading jurisdiction for international holding companies and cross-border corporate ownership structures.
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