Setting up a top holding company in the Netherlands can be very profitable for international companies solely listed outside the Netherlands. But many of these companies do not fully benefit from Dutch tax regulations. On top of that, they are insufficiently informed about Dutch law and regulations in general. This causes serious (personal) risks of legal prosecution for being less than fully compliant with Dutch law. Do you take maximum advantage of all the benefits of setting up your top holding company in the Netherlands? And are you minimising compliance risks?
The Netherlands has an attractive tax environment to offer. Yet, many groups with Dutch headquarters do not take full advantage of this tax regime. Some pay 33% tax whereas the nominal tax rate is only 25.5%. Others are even faced with extra tax costs. These are some of the outcomes of a recent PwC benchmark study of 70 Dutch-headed group holdings. This benchmark study shows significant opportunities for a reduction in your overall tax burden.
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Dutch tax resident
You can only make full use of the tax benefits when your listed top holding company is regarded as a Dutch tax resident from the viewpoint of both the Dutch and foreign authorities. This can be challenging especially when the majority of your board consists of non-Dutch-resident Board members. Managing your tax residency position unsuccessfully may have unfavourable financial consequences. You do not only run the risk of missing the intended tax benefits, but you could also be faced with additional tax costs.
Insufficient compliance can become a personal risk
Many Dutch-headed groups have difficulties complying fully with Dutch law and regulation. What are the requirements for these companies?
- They have to comply with the Dutch Governance Code ('Code-Tabaksblat'), a code of conduct to which all companies based in the Netherlands should refer in their annual report.
- They are supposed to comply with Dutch accounting standards. This means they should apply both IRFS and Dutch accounting standards (Dutch GAAP) in their annual reports.
- They have a legal obligation to file financial statements at the Chamber of Commerce within 13 months after balance sheet date.
What are the consequences for you as an executive of a Dutch company?
Under Dutch law, members of the Board can be held personally liable when a company fails to comply. Non-compliance can result in serious fines for both the executive and company.
Choose the right corporate structure
Foreign companies are accustomed to the 'one tier-model' for their corporate structure. This means that the executive directors and supervisory directors collectively form the Board. Dutch companies, however, use the 'two-tier'-model: the Board of Directors and the Supervisory Board are separate bodies. Are you fully aware of the differences in corporate structures? And have you set up the right structure for your company?
What can PricewaterhouseCoopers offer you?
PwC offers integrated tax, compliance and audit services. We can help you safeguard your tax residency position and optimise your effective tax rate. We can advise and assist you in meeting your compliance requirements with respect to the Dutch corporate governance environment. For example, compliance with the Code Tabaksblat, regulatory audit and fillings. Besides, we can advise you on the corporate structure that suits your company best. This way you can benefit most from the decision to register your holding company in the tax-friendly business climate of the Netherlands.
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