Netherlands is currently one of the most modern and dynamic center for trade and industry to a growing market that is presented in a competitive way with many opportunities for all sectors especially small and medium business companies. All this is because they have a vision with international perspectives and future economic climate that is presented as one of the most accessible in the world. A Netherland holding company may be used to combine different type of activities such as collecting dividends, interest and royalties from subsidiaries.
Netherland is synonymous of opportunity and there are few barriers to start business activities in theyâre territory, have a sophisticated legal and financial system that adapts to the needs of people with many incentives.
There are two types of ways that companies can be created either as a private limited company-BV or also as a public limited company-NV.
Private limited company-BV requirements:
To be duly constituted, a B.V. needs at least
- one (1) administrator (director) who needs to be a natural person and must be resident in the country.
- A minimum of one (1) shareholder
- The Social capital to establish it is 18,000 â¬.
The information of both, manager and shareholders appear on the public record. This company can not issue bearer shares, only registered. Nor can transfer shares freely.
Public limited company-NV requirements:
- needs at least one (1) administrator (director) who must be a natural person and it needs to be resident in the country.
- A minimum of one (1) shareholder.
- For constituting the social capital 45,000 â¬.
Both the data of the manager and shareholders appear on the public record. This company may issue bearer shares and can transfer shares freely.
The annual report and accounts of the foreign legal entity must report to the Dutch trade register office and the branches of foreign banks and insurance companies are subject to the obligation to publish, regardless of national legislation for the formation of the foreign legal person.
The Netherlands is a civil law country. Laws are written down, the application of customary law is the exception and the role of case law is small.
Holland has a privilege of affiliation. This tax advantage to holding companies is simply nothing that is not taxed; pay nothing for dividends and profits that they report to their subsidiaries. (Provided they have a stake in the subsidiary minimum 5%).
The other attraction of multinationals that use tax is very similar to the privilege of parenthood, but applies to any business without the need to be a holding company. In addition, Holland is the largest number of treaties to avoid double taxation of corporate profits. Under a treaty of this kind, companies with operations in a foreign country escape paying taxes twice (when declared by the benefits of its subsidiary, and by consolidating the gain in the accounts of the womb), as in most countries.
Double Tax Treaties
The purpose of the treaties is look for more ambitious targets that double taxation, reaching forms of cooperation between tax administrations. Establishing the possibility of occurrence of exchange of information between the signatory States for the proper implementation of the Convention and prevent fraud and tax evasion. Netherlands have treats with:
Argentina, Armenia, Aruba, Australia, Austria, Bangladesh, Belarus, Belgium, Brazil, Bulgaria, Canada, China, Croatia, Czech Republic, Denmark, Egypt, Estonia, Finland, France, Georgia, Germany, Greece, Hungary, Iceland, India, Indonesia, Ireland, Israel, Italy, Japan, Kazakhstan, Korea, Kuwait, Latvia, Lithuania, Luxembourg, Macedonia, Malawi, Malaysia, Malta, Mexico, Moldova, Mongolia, Morocco, Netherlands Antille, New Zealanda, Nigeria, Norway, Pakistan, Philippines, Poland, Portugal, Romania, Russian Federation, Singapure, Slovak Republic, South Africa, Spain, Sri Lanka, Suriname, Sweden, Switzerland, Taiwan, Thailand, Tunisia, Turkey, Ukraine, UK, US, USSR, Uzbekistan, Venezuela, Vietnam, Yugoslavia, Zambia, Zimbabwe.
Example of the double taxation agreements: Between Spain and the Netherlands:
- In general: 15%
- If the company receiving the dividends owns 50% or more of the subsidiary or has the 25% or more of the capital and there is at least one Dutch company that owns also that 25% or more: 10%
- If the company receiving the dividends owns 50% and was not required Corporate Tax in the Netherlands for the same dividends (application of "Participation Exemption"): 5%
- Holland does not require any license to sell or buy products in the country and 77% of the population dominates a language other than their own, and 44% speak three languages.
- Incoming Dividends: are exempt from or subject to low withholding tax rates in the subsidiary's jurisdiction.
- Dividend Income Received: are exempt from or subject to low corporate income tax rates in the holding company's jurisdiction.
- Capital Gains Tax on Sale of Shares: All the profits from the sale of shares are subject to pay low tax rates or exempt of.
- Outgoing Dividends: are exempt from or subject to low withholding tax rates in the holding company's jurisdiction.
- Relief from double taxation on capital gains from the sale of shares in other companies.
Foundations in Netherlands
The foundation is a legal entity that is born from the donation of an estate of a person or company for specific purposes, which are set out in its founding charter. It is a legal concept similar to the trust or the trust, but while the former are essentially contracts governed by law, the private foundation is an entity with legal personality, usually idealistic or social objective. A foundation is allowed to make profits, but there are restrictions on how profits may be assigned.
In principle, foundations manager are not liable for the obligations. However, if the foundation is a business, managers can be held liable in certain circumstances. Foundations can therefore own property or assets, open bank accounts and have their own debts and obligations. The private foundation is different from other foundations in that its purpose is not public interest, but that is made for purposes of private interest, which is permitted only in a few countries have specific legislation in this regard.
Compared with a commercial company, the private foundation has no partners or shareholders and can not engage in business or for profit, unless these are produced unusual and generally serve their purposes.
Is permitted the sale of real property held by the foundation, but could not engage in the business of buying and selling property.
- The founder
Is the person or entity (can be a company) donated the property or rights.
Also called the "corpus" (body). Can be of any nature, including property, cash, securities, and others. The most common is established for an initial contribution of money, which may coincide with the minimum capital required for training and then gradually transferring other property or assets thereafter.
They are the people for whose benefit purposes are made of the private foundation. The founder himself also has the option to establish himself as beneficiary. For example you can set as the recipient of the benefits of the foundation until his death and then move on to other beneficiaries.
- The foundation council
The persons are responsible for administering and carrying out the purposes of the foundation. Normally it up several persons named by the founder. Can be both natural and legal persons (companies). The founder himself, if desired, may be part of the foundation council.
- The foundation charter
Is equivalent to the certificate of incorporation or articles of association of companies and therefore the most important document. Is usually required to be registered in a public record and contains all relevant data on the foundation. Describes its purpose, identifies the founding board members and sets out how to designate beneficiaries. These, however do not have to be identified in the minutes themselves, but can be set by a supplementary document and private, which the jurisdiction has different names. It can be called rules, bylaws or by Supplementary Laws. As in the trusts, the settlor can usually include a clause for review or revocation.
- The regulation or complementary.
The document is very similar to the call letter of wishes, used in the trusts. As explained earlier, it identifies the beneficiaries and establishing the conditions under which they will receive the benefits or income of the foundation. Private foundations also offer many options for the protection of privacy. So the founder can remain anonymous by using a founder and founding board ratings.
Click here to contact us for more information