Many entrepreneurs own a BV in the Netherlands, but later on decide to transfer ownership of the BV to a foreign company. For example when headquarters is moved to another country but the Dutch operation needs to continue.
Another example is when the main shareholder moves from the Netherlands to a new country. This can be the case when the shareholder moves personally to another country and it makes more sense to hold the shares in a new holding company in that new country of residence.
When you own the shares in a Dutch BV and you want to transfer ownership to a foreign entity, here is an example that might be helpful.
Transfer ownership of BV to a foreign entity
In our example the shares of a BV in the Netherlands are held 100 percent by a natural person, a Dutch resident with an EU/EEA-passport. He is also the managing director in this BV and has a fulltime employment contract with his own BV.
This person decides to move to Norway long term. For that reason it makes sense to receive a salary in Norway and use the social services there. In order to achieve that he needs to establish an AS (the Norwegian equivalent of a BV) in Norway and sell the shares of the Dutch BV to that entity.
Before we get into that we will need to determine both the tax consequences of emigration and opportunities to circumvent possible (future) Dutch tax levies. Below we will split the findings per tax type: personal income tax, corporate tax and dividend tax.
Personal income tax (Inkomstenbelasting, IB)
Once you have set up your company abroad and started employment for your own company there, you will stop paying personal income tax to the Netherlands. Instead, you will pay income tax and social security contributions in your new country.
The main fiscal rule for emigration is that the Tax Authorities can impose a so-called protective assessment (Dutch: conserverende aanslag). Meaning that the Dutch tax authorities can have a claim on some of your personal income. This applies also to those with a substantial interest (over 5%) shareholding in a company in the Netherlands. In practice it often does not mean that you will pay extra, but you need to pay attention to this rule at emigration from the Netherlands. If you are not personally migrating from the Netherlands but moving ownership of your Dutch company abroad, the protective assessment does not apply.
One extra thing you should look into is your health insurance. The moment you stop taxing to the Netherlands and start your employment abroad you normally also stop paying health insurance premiums in the Netherlands. Depending on the system of your specific country, you should arrange this yourself. In our Norwegian example, your health insurance is included in the social security premiums you pay on top of your personal income tax. Other than the Dutch system, health insurance is built into this and you do not pay additional premiums to a private insurer.
|Personal income tax||Taxable income||Tax rate|
|22% municipal and national tax, plus:||1. Income up to NOK 180 800||0|
|2. Income between NOK 180,800 – 254,500||1.9%|
|3. Income between NOK NOK 254,500 – 639,750||4.2%|
|4. Income between NOK 639,750 – 999,550||13.2% (residents of Finnmark and Nord-Troms 11.2%)|
|5. Income over NOK 999,550||16.2%|
Corporate Tax (Vennootschapsbelasting, Vpb)
The Dutch BV is incorporated under Dutch law and is therefore subject to Dutch corporate income tax, regardless of where the actual management is located. So even if the main shareholder moves abroad and/or the BV will be owned by a foreign entity, the basic principle is that Dutch corporate tax is owed to the Dutch tax authorities.
Transferring profits from a daughter company to a mother company within the EU, normally means that you will only pay profit tax once (see also: participation exemption). In practice this usually means that you will pay profit tax on the profits in the Netherlands.
Norway is formally not a member of the EU and the EU Parent-Subsidiary Directive with regard to participation profits does not apply, but the relevant arrangement has been extended to Norway (and Iceland) by convention.
Paying corporate tax in the Netherlands is usually more beneficial than paying it in other countries.
|16,5% (profits up to €200.000)||15% (profits up to €245.000)||15% (up to €395.000)|
|25% (profits exceeding €200.000)||25% (profits exceeding €245.000)||25% (profits exceeding €395.000)|
Compare that with corporate tax in other countries:
|Country||Corporate Income Tax Rate|
|Netherlands||15 - 25%|
|United Kingdom||19 - 20%|
Dividend tax (Dividendbelasting)
The goal is to transfer profits in the Netherlands to the new parent company. These kinds of profit distributions from the Dutch company to the shareholder (the foreign company) are called dividends. Dividends can be subject to taxation. Many countries have set up tax treaties to avoid major shareholders from having to pay these kinds of profit distributions which have already been taxed with corporate tax. The general rule within the EU is that a dividend paid from a BV to a shareholder that owns 10 percent or more is exempt from dividend tax.
To determine whether dividend tax is due we should always check any tax treaty. In our example we take a look at the Dutch-Norwegian tax treaty. Under the Netherlands-Norway tax treaty, distribution of dividend by a Dutch company to a company established in Norway is exempt from withholding dividend tax if the Norwegian company owns at least 10% of the share capital in the Dutch company.
In our example the Norwegian AS will own 100 percent of the shares. In other words: no dividend tax is due on dividends paid from the Dutch BV to the Norwegian AS.
Setting up the structure
Once you have established the tax implications of your emigration, you can start setting up the structure.
Start by setting up the foreign entity. This different per country. You can find a comprehensive guide for starting a company in Norway here. If you are setting up an entity in the Netherlands, find a step-by-step guide here. At the same time, visit the notary in the Netherlands to sell/transfer the shares from the Dutch BV to the foreign entity.
The standard structure most clients in the Netherlands work with is a so-called holding structure, consisting of a Holding BV and an Operating BV. The Operating BV is where the actual company activity takes place whereas the holding BV serves as the private investment/savings vehicle for the owner.
Taxation in the new structure
In the example where ownership of the Dutch structure is moved abroad, the new structure would look something like the below:
As explained, the goal is to “move profits up” the structure.
The Dutch Holding BV sends the Operating BV (where the “real” business activity takes place) management invoices. These management fees are seen as costs in the Operating BV and thereby decrease the amount taxable profit in the Operating BV. The management fees are taxable income in the Holding BV. Any profits in the Operating or Holding BV are subject to corporate tax in the Netherlands.
Alternatively you can send all profit generated in the Operating BV to the Holding BV in the form of dividends (profit distribution). Note: This is usually not possible if you have another shareholder in the Operating BV. In that case both shareholders in the Operating BV will send management invoices from their respective holding BV’s. The Dutch tax authorities expect you to pay out a minimum salary of +/- €47.000. Amounts exceeding that number can distributed as dividend.
At this point you have accumulated earnings in the Holding BV through management fees and/or dividend distributions. You can for example choose to reinvest it into the Operating BV, if that company needs extra cash. However, you will most likely want to send most of the profits in the Holding BV to the foreign mother entity. In our case this is a Norwegian AS owning all shares in the Dutch Holding BV.
Because of tax treaties and EU directive, you are able to send profits from the Dutch Holding BV tax free to the Norwegian AS in the form of dividend. One of the main advantages of this setup is that all profits are taxed with Dutch corporate tax. If you send management invoices from the Norwegian AS to one of the Dutch BV’s, you will pay the substantially higher Norwegian corporate tax.
Get custom advice
Every situation is unique, but many cases have similar features. If you have any questions about the above, please do not hesitate to contact us using the contact form below.