Netherlands / Holding company
The Dutch B.V. is the most widely used intermediate holding company in Europe, and the reasons are unglamorous: a 5% participation threshold with no minimum holding period, around 98 treaties, and a company law that lenders and counterparties everywhere already recognise.
One row does most of the work. The 5% threshold with no holding period is why minority positions and short-horizon holdings end up here rather than in Luxembourg.
A holding company owns shares rather than trades. In practice the same B.V. usually performs several of these roles at once.
Top or intermediate owner of operating subsidiaries across several countries, with one governance layer instead of many.
The point where subsidiary dividends are pooled and redistributed on a policy the group controls, rather than country by country.
Buys targets and holds them through to disposal at holding level, where a qualifying gain is exempt.
A jurisdiction neither partner is domiciled in, with flexible share classes to carry the deal terms.
Owns and licenses intellectual property within the group — where the IP is genuinely developed or managed there.
Holds equity and fund interests for institutional or private investors under a single Dutch structure.
Where it applies, dividends from a subsidiary and gains on its sale are exempt from Dutch corporate income tax entirely — not reduced, exempt.
A 5% shareholding in the subsidiary's nominal paid-up capital. Materially lower than Luxembourg's 10%, and the single most common reason a minority position is held through the Netherlands.
No minimum holding period. The exemption applies from acquisition, which matters where a stake may be sold within a year. Luxembourg requires twelve months or a commitment to hold.
The subsidiary must not be a low-taxed portfolio investment. Active subsidiaries generally qualify. Passive ones in low-tax jurisdictions are tested against a motive test, a subject-to-tax test and an asset test — and can fail.
Costs cut both ways. Expenses relating to the acquisition and disposal of an exempt participation are generally not deductible. That symmetry is routinely left out when acquisition costs are modelled.
The conditional withholding tax is the item most often missed. It reaches only related entities — broadly more than 50% control — in jurisdictions with a statutory profit tax below 9% or on the EU non-cooperative list, and abusive situations. Ordinary third-party payments are unaffected, but any structure designed before 2021, or before 2024 for dividends, needs re-checking. The full picture →
Everything above the last row is broadly predictable. The last row is where structures are actually decided.
None of the treatment above is automatic. Under ATAD I and II, the OECD BEPS framework and the Principal Purpose Test, access to the participation exemption, treaty rates and directive benefits depends on the holding having a genuine economic function.
What is actually tested: local directors taking decisions in the Netherlands rather than ratifying decisions taken elsewhere; beneficial ownership of the income received — an entity contractually or practically obliged to pass income straight on is not its beneficial owner; board meetings, minutes and documentation consistent with where management is claimed to sit; an office and operating costs proportionate to the entity's function.
The Dutch substance test has moved from a formal checklist to a functional assessment. A holding used purely as a conduit loses withholding relief and exemptions together — and the loss is usually discovered at a distribution or an exit, which is the worst possible moment. What is tested, in detail →
5% of the subsidiary's nominal paid-up capital. There is no minimum holding period and no acquisition-cost alternative is needed — which is the practical difference from Luxembourg's 10% and twelve months.
The statutory minimum capital is one cent, so the real cost is the notary, registration and advisory work. The recurring cost is driven by the substance the structure needs — directors, office, accounting and filings — not by the incorporation itself.
Execution before the notary takes days once the file is complete. The realistic path to an operational structure is several weeks, determined by KYC and bank onboarding rather than by Dutch company law.
There is no absolute statutory requirement, but Dutch tax residence and treaty access rest on where the company is effectively managed. A board with no Dutch-resident members exercising real authority is difficult to defend.
Yes, for structures with a genuine function. What changed is that conduit arrangements no longer work: the participation exemption, treaty rates and directive benefits are all conditional on substance and beneficial ownership.
As a general domestic rule, yes. The exception is the conditional withholding tax, in force since 2021 and extended to dividends from 1 January 2024: 25.8% on payments to related entities — more than 50% control — in jurisdictions with a statutory profit tax below 9% or on the EU non-cooperative list, and in abusive situations.
Thirty minutes, no charge. We will tell you whether the Netherlands is the right layer, whether Luxembourg is better, and what it takes to build either.
Arrange a conversationThe four rows that decide most cases — including the 0% US dividend rate the Dutch treaty offers and Luxembourg does not.
Notarial deed, KVK registration, UBO filing, bank and directors — with the real timeline.
How the Dutch and Luxembourg regimes compare, and why the thresholds decide more than the rates.