Written by FirmEU
Have you ever heard of a Dutch Holding BV? When setting up a company in the Netherlands, you can choose between a standard BV, a holding BV, or a holding BV structure – where the parent company holds shares of another regular BV. Whatever your choice may be, it is worth learning about their differences for better decision-making!
A Dutch Holding BV is a company that has a statutory goal to perform passive holding activities, such as collecting dividends, license fees, and rent, on the assets it holds. The main difference between a holding BV and an “operating BV” is that the holding BV is not commercially active, meaning they do not engage in transactions with third parties beyond affiliated companies within their group. As a result of not being commercially active, the Netherlands Tax Authorities usually do not grant them a VAT number which generally works in their favor since it means no VAT returns or administration must be done. However, it also means that any business expenses billed to the holding BV cannot have VAT claimed or repaid.
A Holding BV Netherlands is a specialized type of company, often used by large corporations for financial structuring and tax planning. However, it has also gained popularity among small and medium enterprises (SMEs) in the Netherlands as well. With its flexible and customizable nature, the Holding BV Netherlands has become an essential tool for SMEs looking to optimize their finances.
Setting up a Dutch Holding company or private holding company is a common structure used by two founders to protect their respective shareholdings in the operating BV (Dutch BV 1). This type of arrangement creates liability protection by keeping valuable assets, such as real estate or IP, separate from the business operations of the operating BV. The Dutch holding company can then provide access to those assets to Dutch BV 1 through licensing and leasing agreements, with the ability to collect fees or rent in return.
The Dutch Holding BV is a legal entity for tax purposes which can be highly beneficial for businesses since it offers major tax advantages. For example, profits from shares held by the holding BV are eligible for the participation exemption (“Deelnemingsvrijstelling”), as long as the holding BV holds an interest of at least 5% and meets one of two specific criteria.
1) A Dutch Holding BV is a company with its parent company incorporated in the Netherlands. It tends to have consolidated assets of less than 50 percent passive investments or low-taxed free investments, such as shares and bonds. This structure can help companies minimize the amount of taxes they owe and protect their assets against potential creditors.
2) Establishing a subsidiary company in the form of a Dutch Holding BV offers profitable alternatives for investing capital. The aim for investors using this financial vehicle is to earn returns that exceed that which can be acquired through conventional asset management.
Are you setting up a new company in the Netherlands? If so, you might want to consider organizing a BV + holding structure. A holding BV is beneficial for most individuals and businesses due to the additional tax and legal benefits; however, this might not be the case for contractors and freelancers. Another advantage of setting up a Dutch holding BV or an associated structure immediately is that it saves time and money if changes are needed.
To learn more about setting up a Dutch holding BV or related Dutch or international tax-optimized structure, feel free to contact us.
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