The Dutch BV holding structure can save you money and provide a safer way to do business.
A holding structure consists of at least two companies: the operating company where the business activity takes place and a personal holding company that holds shares in the operating company. From a legal perspective there is only one type of BV. ‘Holding BV’ and ‘Operating BV’ are no legal terms.
How does the setup of a simple holding structure work?
Two Dutch BV Companies are incorporated at the notary. The Operating BV company is used for the company’s operations. The other BV company is a personal holding company with, in most cases, very little activity. The business owner owns the shares of the Holding BV. The Holding BV owns the shares of the Operating BV.
In case not one but two equal shareholders (A & B) starting up one ‘active’ company, the most common scenario is as follows: One operating BV with real business activity is incorporated at the notary. Above the operating company, two Holding BV’s are incorporated. Both holdings own 50% of the Working BV. Holding BV 1 is owned 100% by shareholder A, Holding BV 2 is owned 100% by shareholder B.
Why a Dutch BV holding structure?
There are two main reasons why entrepreneurs choose to structure their business as a Dutch holding structure: less tax and less risk.
First, there can be tax advantages to a holding structure. The most important one is the participation exemption (in Dutch: deelnemingsvrijstelling). For example, profits made from the sale of the company that are transferred to your holding BV will not be subjected to profit tax.
Secondly, you have less risk when you operate from a Dutch holding company structure. The holding company functions as an extra layer between you, personally, and the business’ activity. Your BV’s can be structured in such a way that it will protect the company’s equity. Your can build up pension provisions or profits that will be shielded from your business’ risks.
When is a Dutch BV holding structure suited for my company?
Most Dutch tax advisors will tell you that “one BV is no BV”. In most cases the setting up of a holding structure is more advantageous than a simple bv with the business owner as the personal shareholder. There are certain situations in which we would always recommend a holding structure. For example if you are operating in a more risky industry. A holding bv puts up an extra shield between you personally and the business’ activity. Another good reason to consider a holding structure is when there is a good chance that you will sell your company in the future. The profit you will make from selling your business can be transferred to your holding company tax free. This is called the ‘deelnemingsvrijstelling’ (see below).
Practical advantages of a Dutch holding structure
- You sell (a part of) your shares in the operating bv. The profit you make in this sale will be transferred to your holding bv. A holding bv is exempt from tax on a realized profit on the sale of shares in the operating company. You could use these resources in the holding bv to reinvest in a business or to provide a pension for your old age. If you have not set up a holding structure but you are personally holding shares in the operating company, you will have to pay 20-25% corporate income tax on the profit.
- If your holding BV has a stake in multiple BV companies you do not have to pay out a salary from each of the stakes. This will save you in your income tax and administrative burden and fees.
- In case the holding bv has at least 95% of the shares of the operating bv, these bv companies can apply at the tax authorities to be considered a fiscal unit. This ensures that you can easily settle costs between both companies and thus gain an advantage in your tax return. The holding BV (parent company) and operating company (subsidiary) are then treated as a single taxpayer. So you will only have to do one tax filing for two bv companies.
- By placing profit reserves and shares (and for example: real estate, a company car or pensions savings) in a separate Holding BV, you protect losing your accumulated gains in case of bankruptcy of the operating company.
Deelnemingsvrijstelling (participation exemption)
Both the operating bv and the holding bv have to pay taxes on their income. However, no tax will be charged twice on the same profit. This is due to a measure called the participation exemption: dividends/profits from the operating company can be paid to the holding company without a dividend tax and corporate income tax charge.
The most important condition for making use of this measure is that the holding company holds at least 5% of the shares in the operating company.
Pricing holding bv structure
Please note that all price are exclusive 21% VAT, and that these prices are only applicable when the Holding and Operating BV’s are incorporated simultaneously. If a Holding BV is incorporated after the Operating BV has already been established, the regular price is applicable (€799,00 instead of €599,00).
|Operating BV (1 shareholder)||€799,00|
|Holding BV (1 shareholder)||€599,00|
|Operating BV (1 shareholder) + Holding BV (1 shareholder)||€ 1398,00|
|Operating BV (2 shareholders) + 2 Holding BV’s||€ 2097,00|
|Operating BV (3 shareholders) + 3 Holding BV’s||€ 2796,00|
|Operating BV (4 shareholders) + 4 Holding BV’s||€ 3495,00|
|Operating BV (5 shareholders) + 5 Holding BV’s||€4194,00|
Tax structure advisory and compliance
Setting up tax structure by our tax partner. We recommend this service if you want to be sure that your structure complies with all regulations and makes use of all possible tax benefits.
- Costs: €600,00