Trust services in the Netherlands
About the Dutch holding company and the favourable tax regime in the Netherlands…
Trust in the Netherlands includes the management and administration of the company by one of the employees of the trust company or its director. The trust team consists of lawyers, accountants, notaries, tax consultants and secretaries.
The trust offices, among other, provides the most suitable solutions for your daily business, domiciliation, directorship, advices on corporate laws and tax benefits, administers daily management of the company, keeps the books, arranges necessary corporate documentation and legalization of such documents. More detailed list of the services offered can be found here.
The Netherlands offers a solid combination of a stable economy, a reliable and favourable tax regime for holding activities and the excellent legal and financial infrastructure.
A holding company is simply a normal company that holds shares on behalf of subsidiaries. The main purpose of an intermediate holding company is to collect dividends, royalties and interest payments from its subsidiaries, and channel the money to be paid out as dividends to a company in a low tax- regime jurisdiction or simply to pay the final beneficiaries.
The main reasons for using the trust services in the Netherlands are:
- Political and economical reasons:
- solid infrastructure;
- the Netherlands has one of the most educated, multilingual and motivated workforce in Europe;
- the Dutch financial and political climate is stable for decades;
- Legal reasons:
- limited liability and protection of your assets from third parties and creditors;
- the Dutch Civil Code and commercial law framework is business-friendly;
- Tax reasons:
- there is no withholding tax on dividends in most cases;
- there is no capital gains on the sale of shares;
- the corporate income tax in the Netherlands for its worldwide profits is at a rate of 20% for taxable profits up to EUR 200,000 and at a rate of 25% for taxable profits exceeding this amount;
- participation exemption regime – under participation exemption rules, income from dividends and capital gains connected with qualified shareholdings is exempt from taxation in the Netherlands;
- as a general rule, dividends distributed by a Dutch limited liability company are subject to withholding tax at a statutory rate of 15%, unless an exemption of tax treaty is available;
- capital gains are not subject to tax in the Netherlands provided the participation exemption rules are satisfied. If not, corporate income tax rates apply.
- double tax treaties (DTTs) –the Netherlands has one of the largest network of DTTs in force, including DTTs with most jurisdiction with high tax rates which secures your investments;
- no foreign currency exchange restrictions.
Dutch minimum substance requirements
In order to be eligible to the favourable tax regime and avoid the improper use of Dutch companies, a set of rules has been developed by the Dutch Government which contains certain minimum substance requirements.
The substance requirements are met when a company established in the Netherlands meets all of the following conditions mentioned below:
- at least half of the directors of the company should be resident of the Netherlands;
- the Dutch resident directors should have the professional knowledge and skills to properly perform their duties. These duties at least include the decision making process regarding the company’s transactions and follow-up;
- the company will have adequate support to run its business;
- the (most important) board decisions of the company are made in the Netherlands;
- the principal bank account of the company is maintained from the Netherlands;
- the bookkeeping of the company must take place in the Netherlands;
- the business address of the company is in the Netherlands;
- the company must comply with all its tax obligations in the Netherlands and is not treated as a tax resident of another country;
- the company runs a real risk with respect to its financing, licensing or leasing activities. The company has an equity at risk that corresponds to the functions performed.