The Dutch Participation Exemption: 0% on Dividends and Capital Gains

What the exemption does

Dutch corporate tax is designed around a single principle: business profit is taxed once. The operating company pays corporate tax on its results — 19% up to €200,000 of profit and 25.8% above that in 2026. When those after-tax profits are distributed to a corporate shareholder with a qualifying stake, the participation exemption steps in: the dividend arrives at the holding free of further corporate tax. The same applies to capital gains — when the holding sells the shares of a subsidiary, the gain is exempt. One layer of tax below, 0% on the way up.

When a shareholding qualifies

The threshold is a stake of at least 5% of the nominal paid-up capital. From there, the law asks that the participation is held as a genuine business interest rather than as a passive portfolio investment — in practice satisfied when the holding is actively involved in the group, or when the subsidiary itself runs a real enterprise. Additional tests exist for low-taxed, passive subsidiaries, designed to keep the exemption pointed at genuine business structures. For the classic founder setup — a holding above an active operating BV (besloten vennootschap, the Dutch private limited company) — qualification is the normal state of affairs, and it applies from the first day of ownership.

Why founders build around it

Three practical consequences. Compounding: profit distributed to the holding has carried corporate tax once and can be reinvested in full — new ventures, property, investments — while personal taxation in box 2 waits until the owner chooses to pay out. The clean exit: when the business is sold, the holding sells the shares and receives the full proceeds at 0%; the founder then decides the pace and timing of private payouts. The five routes are set out in Exit options for Dutch business owners, and the SaaS-specific case in selling a SaaS under the participation exemption. Structure freedom: subsidiaries can be added, merged or sold under one holding, with profit moving between them within the exemption's reach.

The international dimension

The exemption applies to foreign subsidiaries on the same footing as Dutch ones: a Dutch holding above a German GmbH, a US LLC taxed as a corporation, or an operating company anywhere else can receive dividends and realise gains under the same 0% treatment, provided the stake qualifies. Combined with the broad Dutch tax-treaty network and the EU parent-subsidiary framework, this is what makes the Dutch holding a natural European platform for international founders. What a holding is and how the two-tier setup works: What is a holding company; the structure page itself: the Dutch holding structure.

The regime, complete

The exemption is symmetrical by design. Exempt gains stand opposite exempt losses — a drop in the value of a qualifying participation stays outside the tax result as well, with one deliberate exception: when a subsidiary is liquidated, a specific facility allows the liquidation loss to be taken. Costs of acquiring or selling a participation follow their own rules. Precision here is where structuring earns its keep, and it is exactly the terrain a written consultation maps out — rates, tests and timing included. The current figures live on our Netherlands tax rates page; the incorporation route on setting up a BV.