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Tax substance requirements | 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;

> the parent company incurs minimal wage costs related to holding activities in an amount of EUR 100,000 (the country of living index is multiplied by the minimal required wage costs. Thus making the costs for example EUR 90,000 for Cyprus and EUR 100,000 for Luxembourg);

> the parent company has at its country of residence an equipped office to its disposal which is also actually used for holding/financing purposes.

In case any loans flow through the company there is an additional criterium:

> the Dutch company's minimum equity is adequate in relation to the functions performed (taking into account the risks assumed and assets used). It is advised to have an equity of at least 1% of the loan amount with a maximum of EUR 2,000,000. 

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