Many Belgian, Polish, and German entrepreneurs structure their Dutch operations through a holding or management company in their country of residence. There may be sound business reasons for this, such as investment planning, risk diversification, financing, or the management of international operations. Nevertheless, it is precisely these types of crossborder structures that are increasingly coming under scrutiny by the Dutch Tax Authorities.
Cross-border structures
Recent case law shows that the focus is no longer solely on formal requirements or the presence of sufficient substance. Increasingly, the central question is whether the structure actually has economic significance and whether there are business reasons for the chosen setup.
Although the Dutch Tax Authorities appear to feel supported by recent case law in conducting a stricter review of international structures, there are also important European limits. The mere fact that a Dutch subsidiary is held through a foreign holding company does not automatically constitute abuse.
The importance of proper documentation in international structures
For entrepreneurs with cross-border activities, this is a key consideration. Proper documentation of the business motives, the actual decisionmaking process, and the economic activities of the holding company may become increasingly important in the assessment of dividend distributions and the application of the withholding tax exemption.
Legal advice on cross-border structures
Now more than ever, it is wise to periodically review existing structures and assess whether the tax rationale still aligns with economic reality.
Do you have a foreign holding company with a Dutch operating BV and want to know if your structure still aligns with the latest developments? Feel free to contact us. We are happy to assist you in evaluating the tax and legal position of your international corporate structure.
