The Netherlands lists amongst the most popular countries for holding and financing companies in the world, due to its favourable tax regime and the conclusion of many bilateral investment treaties. Important tax benefits, such as the participation exemption, the numerous double taxation treaties, and the absence of withholding taxes on interest and royalties are well-known. On top of this, the Dutch tax authorities created the opportunity for Advance Pricing Arrangements (“APA”) and Advanced Tax Rulings (“ATR”), whereby transfer pricing arrangements and tax structures related to cross-border transactions between related (group) companies can be secured in advance.
Furthermore, the Netherlands can be considered as the gateway to continental Europe and it has been a dominant trade nation for over four centuries. It ranks amongst the top nations when it comes to infrastructure, education, and international business orientation.
Companies that wish to benefit from all the advantages the Netherlands has to offer (and in particular those who wish to benefit from the Dutch corporate tax regime), need to set up a base in the Netherlands. In order to benefit from the tax advantages, it is particularly important that a Dutch legal entity is created and is being kept in good standing. Sufficient tax substance is a pursuant requirement. DTM takes all this work out of your hands, as a result of which your international structures will benefit from all applicable Dutch advantages.
The Dutch legal system provides for various legal entities, which have proven their worth within international frameworks. DTM can provide management and domiciliation services to the following entities:
Besloten Vennootschap / Private Limited Liability Company
The Besloten Vennootschap (“BV”) is the most popular legal entity form within the Dutch operational, holding and finance sector.
A BV has one or more shareholders and one or more directors. Its capital is divided into shares and the liability of the shareholder(s) is in principle limited to the amount the shareholder has paid upon the shares in the BV.
There are numerous reasons to incorporate, and make use of, a BV. Some of the most appealing examples include the licence company (for royalty payments) and the finance company (in an international group structure).
Stichting / Foundation
The Stichting is a Dutch “orphan” legal entity, meaning it does not have any shareholders or members. Furthermore it cannot make direct distributions to any directly related persons or entities (such as its directors or founders).
The purpose of a Foundation is to pursue its objective, as it is defined in the Foundation’s articles of association. As a result hereof, the Foundation is extremely suitable for managing a family’s wealth (in which case it is known as a Family Foundation). Another appealing usage of the Foundation is the “STAK”, which stands for Stichting Administratiekantoor; the Administrative Foundation. The object of any STAK should be to acquire and administer assets under the title of administration. In exchange for the contributed assets, the STAK will issue certificates i.a. to the contributors of the assets. While it is most common that shares in a company (e.g.: a BV) are contributed to a STAK, in principle any asset can be contributed to a STAK in exchange for certificates. By means of certification, the legal ownership and the economic ownership are separated.
Commanditaire Vennootschap / Limited Partnership
The Commanditaire Vennootschap (“CV”) is a contract between one or more general partners and one or more limited partners. Dutch law does not provide for any requirements as regards the contents of the CV-agreement, pursuant to the principle of contractual freedom. Also, there are no requirements with regard to the nationality and legal identity of the partners. Hence, resident and non-resident individuals and legal entities can all be partners in a CV.
In international structures, it is common that the CV only has one general partner. This general partner is typically a designated legal entity (often a Stichting), provided and managed by a Dutch corporate service provider (such as DTM). There are two reasons behind this setup: (1) the CV is not a legal entity; it cannot hold legal title to assets. Therefore, legal title to the CV assets is held by the general partner for the risk and account of the CV and (2) the Stichting is a legal entity and hence, liability risks are ruled out as much as possible.
A CV can be the ideal form to serve as a portfolio investment holding company, or as a trading entity.
Other Dutch legal entities include the Naamloze Vennootschap (“NV” – Public Limited Liability Company) and the Coöperatie (Cooperative). DTM will be glad to provide more information regarding these, and also regarding the aforementioned, legal entities.