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Many companies use the Netherlands as gateway / hub for EMEA markets (Europe / Middle East / Africa) US / Asia markets. They do this by setting up a holding company in the Netherlands. The legal entity which can be used does not matter. It can be a BV (like a Ltd.), NV, or a Dutch Cooperative (with members and no shareholders). In order to set up this Dutch company you need to have sufficient substance in the Netherlands. Below we will discuss some important points about substance requirements in the Netherlands.
For actual presence (tax substance) in the Netherlands it is important that the directorship will be provided by Dutch residents. The Dutch minimum tax substance requirements for holding and financing companies read as follows:
- at least 50% of the members of the board of directors, with a right to make decisions, lives or is factually residing in the Netherlands;
- the directors residing in the Netherlands have sufficient knowledge to perform their activities in their capacity as a director of the Dutch company. The company has adequate personnel (either of its own or from third parties) for the adequate execution and registration of the transactions;
- the (most important) board decisions are made in the Netherlands;
- the (main) bank account of the Dutch company is controlled from within the Netherlands;
- the bookkeeping of the Dutch company takes place in the Netherlands;
- the Dutch company complies with all its tax obligations;
- the Dutch company has its registered address in the Netherlands, while the company is, according to its best knowledge, not (also) a resident of another jurisdiction for tax purposes.
If a (foreign) shareholder (individual or business) want to set up a Dutch BV because of the favorable aspects of the various elements of the Dutch tax regime, such as the participation exemption, extensive tax treaty network, or concluding tax rulings with the Dutch tax authorities), the following steps must be taken to set up the company:
Register the Dutch bv at a notary
register the dutch BV at the chamber of commerce
register the dutch BV at the dutch tax authority
receiving fiscal numbers (CIT/VAT/Wage tax)
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