Luxembourg and the Netherlands are the two main holding countries in Europe. Both have a participation exemption, so dividends and gains within the structure are tax-free. Both also have many tax treaties and experienced advisors. Your choice depends on the business below the holding.
Investment funds and other regulated investment vehicles usually choose Luxembourg. Holdings above operating businesses are often Dutch. These are companies that trade, employ staff, import and sell. The holding and the operating business are then in the same country and use the same advisors.
The participation exemption in both countries
Both countries exempt qualifying dividends and capital gains at the level of the holding. Luxembourg also has the largest investment fund industry in Europe. It is the usual choice for regulated funds, private equity platforms and securitisation. The Netherlands has its own participation exemption. It also has a large operating economy, with the port, the payments sector and the labour market. For you as the founder, there is the combination of salary, the timing of dividends in Box 2 and the €500,000 loan rule.
What tax authorities check at a holding
Tax authorities check more and more what a holding does in practice. A Dutch holding above a Dutch operating BV has management, staff and activity at the same address. The headline rates are around 24% in Luxembourg City and 19%/25.8% in the Netherlands. For the tax authorities, the real activity of the structure (substance) is the main point. A holding in the country of the operating business already has this substance.
Which country for which structure
Luxembourg suits regulated funds, platforms with many investors and structured finance. The Netherlands suits holdings above real businesses, founder-owned groups and joint ventures with commercial activity. It also suits every structure where the owner lives, works or hires staff in Europe. You can set up a Dutch BV from abroad, in English, with very little capital. See how to set up a Dutch BV.
Frequently asked questions
Do both countries exempt holding income?
Yes. Both countries have a participation exemption for qualifying dividends and capital gains. In the Netherlands, the minimum stake is 5%. The effect of the two exemptions is similar. Your choice therefore usually depends on the business below the holding.
When is Luxembourg the better choice?
For regulated investment funds, multi-investor platforms and structured finance, Luxembourg's network of administrators, depositaries and fund counsel is the deepest in Europe.
When is the Netherlands the better choice?
The Netherlands works better when the holding owns an operating business with trade, staff, imports or licences. The holding and the operating business are then in the same country. This helps with substance, and you deal with one country for banking and payroll. As the founder, you can also use the combination of salary, the timing of Box 2 and the €500,000 loan rule.
How do costs compare?
You can set up a Dutch BV from abroad with a minimum capital of €0.01. Registration with the Dutch Chamber of Commerce (KVK) costs €85.15. The yearly costs depend on your activity. Luxembourg structures usually have more administration, with prices set for investment funds.
Design the holding around the business
We set up Dutch holdings and BVs for founders and groups with real business in Europe. You first get a written analysis. We then set up the structure.
Start your Dutch BVSources
- Belastingdienst, Dutch corporate income tax and participation exemption.
- Government of the Netherlands, Tax treaty countries.
Last reviewed 13 August 2026. The rates and rules are based on the published law on that date. The law in both countries changes over time. Base your decision on a written analysis of your own numbers.