The various options of the Dutch Corporate Law with regards to Holding Structures. Reflecting on: Dutch Participation (Deelnemingsvrijstelling) Holding Subsidiaries Tax Treaty Network EU Withholding Tax Exemption Dutch Finance Company (DFC) Dutch Cooperative (DCOOP) Stichting & STAK Hybrid Holding

1. Dutch Holding Structures
Phillip Kraeter
Chief Strategy Officer (The Hague)
March 2021

2. Introducing
MCI CLT
• MCI CLT is an international
Law, Tax, Compliance & Management Corporation,
established as Intelligent Corporate Service Provider
(Counselling, Treasury, Banking & Finance, CFO),
Asset Manager, Custodian and Facilitator.
• Our focus is on Intelligent Corporate Services, Custody,
Assets & Holdings Management tailored to our Client’s
individual Taxation and Legislation Requirements and
Matters.
• MCI CLT Netherlands is highly specialized Holistic Partner
related to the domestic and international utilization of
Netherland’s Entity, Holding and Foundation Legislation.
Who are we?
Advisory & Service
Portfolio
MCI CLT Netherlands,
The Hague

3. Introduction
to Holdings
• Purposes & Motivation for a Holding:
Ownership Bundling, Risk Optimization,
Capital Protection, Tax Planning, Structuring,
Exit Route for Profits, . . .
• Classic Jurisdictions:
Seychelles, Mauritius, Cyprus,
Hong Kong, United Arab Emirates
What is a Holding?
Which Jurisdictions
are in demand?

4. Dutch Holding
Introduction
• Developed Infrastructure for
Stability & Longevity
• The Dutch Corporate & Tax Laws
are historically flexible
• Less than common Complications elsewhere
• Low Cost of Incorporation &
Annual Maintenance (Structural Cost)
• Straightforward Procedures
• Rich Tax Network as part of the EU:
90+ Double Taxation Avoidance Treaties
What is attractive about it?
How is it possible?

5. Substance
Requirements
• Almost no Substance Requirements
• Management Services 
• Registered Office / Address 
• Does not need Employees
• Can be serviced by a Trust Company
What are the present
Substance Requirements
for a DH?

6. Dutch
Participation
Exemption I
• Tax Exemption on Revenues / Earnings
from Dividends, Capital Gains and
Royalties if they arise from a (qualified)
Subsidiary
• Holding (parent) Requirements to qualify:
• Assets in DH cannot exceed 50% of Passive
Assets – Asset Base must always be enriched
with Active Assets
• DH must generate higher ROI than Profits
from Passive Asset Management
What is the Dutch
Deelnemingsvrijstelling?
Which conditions must be
met for it to activate?

7. Dutch
Participation
Exemption II
• If the DH qualifies, the DH Subsidiary must further
qualify, by meeting the Criteria:
• Being owned by a Dutch Taxpayer (like the DH)
at least by 5% of paid-in Nominal Shares
• If Activities of Subsidiary classify as ‘Passive Investment
Activities’, 10% Profits Tax applies
• Cannot be a ‘Fiscal Investment Fund’
• If all above holds true, DH enjoys Tax Exemption
for the aforementioned Income Streams
• Corporate Taxation of regular Profits remains 25%,
if Profits exceed EUR 245,000 (15% if below)
• DH represents a layer of Protection between the
Individual and the Business Activity (Limited Liability)
Restrictions applicable
to Subsidiaries

8. Activities &
Benefits
of a DH I
• Wide Variety of Activities possible
• May act as Regional HQ, allowing for
Collection of Dividends,
Receiving Interest or Royalties from
Subsidiaries (in one company)
• Can act as Financial Service Company
• Multitude of Benefits beyond previously
mentioned Tax Exemption
• A clear seperation between legal and tax
related advantages exists
Possible Business Activites
of a DH
Benefits of a DH

9. 1 Excellent infrastructure
2 Little Substance requirements
3 No foreign currency exchange restriction
4 Flexible corporate law
5 Advance tax ruling
6 5.0% withholding tax rate on dividends, interests, royalties
7 Tax treaty benefits with over 90 countries
8 Low incorporation costs & running costs
Benefits of DH I

10. Activities & Benefits of a DH II
Legal Advantages include:
• Activities & Assets kept separate,
improving Liability Situation
• Provides Flexibility upon Sale of
Assets
• Operating Companies kept light
weight for Liability Reasons
(distribution not taxed)
Tax Advantages include:
• Significantly lower Tax Burden,
down to 5% effective Rate
• Enables Reinvestment of Profits
into Corporate Structure(s)

11. Tax Treaty
Network
• Tax Treaties with more than 90 Countries,
exceeding European Borders
• Helps to avoid Issues to do with Dual-
Residency, Permanent Establishment,
Double Taxation or others
• Allows for Reduction of Withholding Tax
with Dividend Payments to
Investor’s Home Country
How extensive is NL’s
Tax Treaty Network?
Which Benefits does
this entail?

12. EU
Withholding
Tax Exemption
• A 0% withholding Tax Rate for any qualifying
Corporate Dividends paid within EU exists if:
• Shareholder is a Corporation, qualifying as Tax Resident
of other EU or EER States*
• Shareholder (corporate) would also qualify
for Dutch Participation Exemption
• Shareholder is not a Tax-Exempt Portfolio Investment Fund
• Shareholder has no Dual Residency Status in
Countries outside of EU/EER
• Qualifies as beneficial owner of shares
• No Tax Treaty with Anti-Abuse Clause present
• Possible Double Layer Holding Structures attractive,
even for non-EU resident Investors
• E.g. Double-Irish with a Dutch Sandwich (Google)
What is the EU Withholding
Tax Exemption?
What is needed
for it to apply?
*Not Liechtenstein

13. Dutch Finance
Company:
Alternative I
• Main type of DFC: Dutch Group Finance Company, DGFC
• Must own an Office and own Bank Account with an equity at risk of
at least 1% of outstanding Loans (or exced EUR 2 Million, if less than
1%)
• Resistant to foreign Anti-Abuse Provisions
• May provide Loans to Subsidiaries, Shareholders and Group
Companies
• May function as Holding or even Operating Firm
• 75-80% of Net Interest Income is excluded from Taxation Base
• Must comply with Dutch Tax Filing and Registration Requirements
• Increased scrutiny:
Means DFC must file Annual Corporate Income Tax Return,
obtain Tax Residency Status, manage VAT Returns
and manage Dividend Withholding Tax
What is a DFC?
Why is DFC an attractive
alternative Holding
Structure?
What are some Drawbacks?

14. Dutch
Cooperative:
Alternative II
• DC can receive Dividends without incurring Dividend Withholding
Tax
in the origin Country of the Subsidiary
• May be eligible for DPE, despite being subject to
Dutch Corporate Income Tax
• Uses ‘Members’, not ‘Shareholders’
– DC must have at least 2 Members at Time of Incorporation
• Limited Liability: Members can be treated like Shareholders,
entitled to Profits of DC, but no Capital Dividend in Shares
means: No Minimum Capital
• Not a standard Legal Form, therefore maybe scrutinized by
Authorities
• To avoid this, a B.V. company could be the Intermediary between
DC and Foreign Payment Company, making it
a viable Option for Foreign Investors
What makes a DC
different?
How does it fare against
other types of
Dutch Holding Structures?

15. Dutch
Stichting:
Alternative III
• Simply take a Foundation – comparable
to a Traditional Trust, but:
• No Shareholders / Members
• Legally seen as its own Entity (Rights & Rules)
• Used to separate and protect Private Assets
• Stichting is its own UBO!
• Distribution of Funds to be altruistic
• Typically exempt from Corporate Income Tax
• Must register with Trade Register & file
Annual Reports (if active, passive = exempt)
What is a Stichting?
What is the Legal Status
of a Stichting?
What can it be useful for?

16. Dutch
STAK:
Alternative IV
• Foundation with add-on of Depositary Receipts (DR),
adding an Administrative Element
• Happens by interlodging a holding beneath it (in most cases a B.V.)
• Voting and Economic Rights are seperated
• Allows Asset Protection
• Allows Takeover Protection
• Voting held by STAK, Beneficial Ownership
is held by Shareholders which hold the DRs
• Typically, not subject to Dutch Corporate Income Tax
and Withholding Taxes as it is not an ‘Acting Business'
• Taxed at level of Participants, in Country of Residence
• STAK must also be registered with Trade Register
and prepare Annual Returns (may not need to show)
What is the Administrative
add-on of the STAK?
Why can it be a
Viable Solution?

17. Solution Model: Hybrid Holding
• On a B.V. (or N.V.) as Holding for the Business Operations,
a Foundation with STAK Feature will be “topped up” as its Owner
• The STAK Administration issues the DR’s to the UBOs
• UBOs:
• Individuals if DTTA Status is green
• IBC if DTTA Status is orange or red
• The Withdrawal Taxation Scenario can always differ between:
• NL and the Jurisdiction of the Individual UBO
• NL and the Jurisdiction of the IBC
• IBC Jurisdiction and the Jurisdiction of the IBC Individual UBO
• These three Constellations always require case by case assessment
under the related DTTA's (bi-lateral, tri-lateral, multi-lateral)

18. MCI CLT:
Where
to find us
MCI CLT (Asia) Limited
恆信法律稅務顧問(亞洲)有限公司
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Phone: +852 3652 7648 ● Fax: +852 3583 4834
E-Mail: hk@mciclt.asia ● Web: www.mciclt.com
MCI CLT (China) RO
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518031 Shenzhen ● Guangdong ● P.R.C.
Phone: +86 755 8252 2443 ● Fax: +852 3583 4834
E-Mail: sz@mciclt.asia ● Web: www.mciclt.com
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恆信法律稅務顧問(亞洲)有限公司
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MCI CLT (ME) DWC-LLC
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1
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P.O. Box 712570 ● Dubai South, Dubai ● U.A.E.
Phone: +971 4 557 13 73 ● Fax: +971 4 432 84 48
E-Mail: dxb@mciclt.me ● Web: www.mciclt.com
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