HOW TO PROCEED
The Dutch Holding Company is an ordinary company which falls within the scope of general tax law and therefore benefits from the double taxation treaties and the European tax directives. There are no limitations on the activities of the company.
The Dutch holding company may be used to combine various activities such as collecting dividends, interest and royalties from subsidiaries.
As of 1st October 2012 a simplified version of the Dutch BV (The Flex-BV) will be introduced which will apply to all new companies but also for existing companies. Although some of the requirements will be relaxed automatically for existing companies to take full advantage of the Flex-BV Act an amendment of the articles of association will be required.
The changes remove the requirement for a minimum share capital of €18,000 for incorporation of a Private Limited Company (BV). A BV from 1st October can be established with 1 share of 1 cent and the mandatory authorized share capital will become optional.
The Flex-BV removes some of the previous legal requirements making the management of the company easier to set up in accordance with the member’s wishes. The corporate governance changes include:
A Dutch company can be constituted either as a “besloten vennootschap” (private limited company- BV) or a “naamloze vennootschap” (public limited company- NV).
A Public Limited Company (NV) required a minimum share capital of €45.000 and a company incorporated as a “NV2 may have bearer shares.
Corporate Tax Rates are:
A 0,55% capital duty is levied when capital is contributed at the formation of a resident company and on any increase in its capital. However, several exemptions may be applied.
From 1st October 2012 the standard VAT rate will increase from 19% to 21%.
Corporate income tax is charged on worldwide profits of companies resident in the Netherlands. However, the taxable profit is not necessarily calculated on the basis of the annual financial statements.
Expenses incurred in connection with the conduct of a business are, in principle, deductible. If expenses exceed normal arm’s length charges and are incurred directly or indirectly for the benefit of shareholders or related parties, the excess is considered a non-deductible profit distribution and possibly regarded as hidden distribution of dividends.
The costs of running the subsidiary are not deductible from the taxable profits of the parent Dutch company if participation exemption is applied. However the Dutch holding company is able to receive tax free dividends and capital gains from its subsidiary and is allowed to deduct expenses, including interest on loans.
Exemption from Dutch corporate tax is allowed on:
In October 2011 the Dutch State Secretary announced a Research and Development allowance relating to non-wage costs and investment related to the development of new products and services. Companies will benefit from a deduction from profits of 40% in 2012.
The general rule is that all dividends paid by a subsidiary to a Dutch parent company are subject to corporate income tax.
Under the EU Parent-subsidiary Directive, if a Dutch company holds at least 25% of the shares of another EU company no tax will be imposed on dividends.
Where a Dutch holding company comes within the “participation exemption rules” all income received from the subsidiary whether by way of dividends or otherwise is tax free if the following conditions are met:
No distinction is made between capital gains and other income. All income is taxed at the corporate tax rate. However, under the participation exemption, all capital gains on the sale of shares of a subsidiary are tax free in the Netherlands irrespective of whether the subsidiary is resident or non-resident.
See income above.
Besides the common advantages of a holding company, the Dutch company may also enjoy from the following:
Dividends paid by a Dutch company to an entity in another EU Member state are exempt from withholding tax if the following provisions are met:
The 15% dividend withholding tax rate may be reduced under a tax treaty concluded by the Netherlands.
Under Dutch domestic law, interest and royalties paid by a Dutch company are not subject to withholding taxes.
Double Tax Treaties
2If conditions are met.
A bespoke 'offshore' solution can be complex and requires careful planning and execution. We
therefore encourage our clients to contact us directly, without obligation.
While all of our consultants in our offices provide a Free Initial Consultation, the office and consultant listed below have particular expertise in this area and will gladly assist with advice on how to approach your unique challenge.
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