The Netherlands – Private Foundation (Stichting)
There are several types of structures which can be opened in the Netherlands, just like in all other European countries. However, the Netherlands is known for the advantages offered to those who open foundations here. Also, known as charitable organizations or non-governmental organizations, Dutch foundations are regulated by the Civil Code and not by the Company Act.
The Dutch Stichting is required to have a share capital in certain circumstances, case in which they are allowed to carry out commercial undertakings, however, the profits resulted from these undertakings have restrictions when it comes to their use. Only foundations registered with the Trade Registrar in the Netherlands are allowed to conduct commercial activities.
Foundations can also be registered as special purpose enterprises (SPEs) or holding companies in the Netherlands.
Our Dutch company formation consultants can offer more information on the legislation applicable to foundations. You can also rely on us if you need company registration services in the Netherlands, no matter the industry you are interested in operating.
Main features
The Dutch Stichting is a legal entity born from the donation of an estate of a person or company to realize a specific purpose.
With certain restrictions, Stichting are allowed to make profits but may not make distributions to founders or those that are part of the Foundation Council or other unless the latter have a charitable or social purpose.
Stichting may own property or assets, open bank accounts and have their own debts and obligations, the overall purpose is of private interest.
No approval from governmental authorities is required for it to acquire full legal existence through its sole creation by means of its notarized deed (or Will).
The Founder is the person or legal entity constituting the Stitching, and donating the property or rights to it, also referred to as the “corpus”.
The corpus can be any type of property or rights, and may include cash, securities, and other such transferrable goods.
A Stichting’s beneficiaries are the people for whose benefit it is created.
A Stichting is administered by a group of people referred to as the Foundation Council. They are in charge of fulfilling the purposes of the Stichting, as per its articles of association (Charter).
The Foundation Council may be composed of natural persons and/or legal entities, and the Founder, if he so wishes may be a part of the Foundation Council.
The Foundation Charter is the document equivalent to the Certificate of Incorporation and Articles of Association that are created for the incorporation of companies and must be executed by means of a Notary. Foundations are registered with the local Chamber of Commerce in the Netherlands. The deed of establishing of the foundation and the bylaws are kept at the register as well as the names and the addresses of the foundation itself, members of the board with powers of representation, representatives of the foundation and its founders. A Dutch attorney can investigate the foundation’s registration, the registered board members and it’s annual accounts.
Dutch Stichtings are only subject to corporate income tax if their activities resemble those of a business enterprise.
Where a Stichting is considered to act as a business, the Dutch corporate income tax rate on profits generated by the enterprise is 20% for profits up to EUR 200,000 and 25% for profits above EUR 200,000.
A main use of Dutch Stichtings is carrying out charitable activities, whether within or outside of, the Netherlands.
It is possible to request the Dutch tax authorities, a formal certification whereby the Stichting is considered to be a charitable institution (named “ANBI”).
This ANBI benefits from the following deductions/exemptions:
- Any gifts donated to the charitable institution are deductible for Dutch income and corporate income tax purposes, although certain conditions apply;
- Any gifts donated to the charitable institution, or made by the charitable institution, are not subject to Dutch gift tax;
- Any inheritance received by the charitable institution, are not subject to Dutch inheritance tax;
- The charitable institution is not subject to Dutch corporate income tax on any income it realizes.
Any non-Dutch charitable entities are able to benefit from these deductions/exemptions, as long as they are established within the EU, the Netherlands Antilles, Aruba or any other jurisdiction with which the Netherlands holds a Tax Information Exchange Agreement.
The conditions to be considered as a Dutch charitable foundation are relatively easy to fulfill, thus making the registration of a charitable Dutch Stichting, very cost-efficient.
Charitable Stichtings are frequently used as the destination of assets set aside, in wills, for donation.
Dutch Stichtings are also used to serve as the General Partner of Dutch CVs, since Dutch Law recognizes that a foundation is a legal entity the liability of the General Partner can be limited to the assets of the Stichting.
Another use of Dutch Stichting is to act as a Stichting Administration Office. By that the Stichting AK receives the legal ownership of certain assets in return for the issuance of corresponding depository receipts. The holder of such receipts is entitled to all proceeds received by the Stichting AK. Since the engagement between the contributor of assets and the issuance of receipts by the Stichting AK is based on a contractual arrangement it can serve to avoid the disclosure of the beneficiary. It can also be used as an estate planning mechanism or to avoid hostile takeover situations.
Profits received by a Stichting serving as a General Partner, are generally subject to corporate income tax, since said profits are considered, from a Dutch fiscal standpoint, to represent remuneration stemming from business activities unless the total income is limited to EUR 10,000.
Minimum capital is not required for the establishment or operation of a foundation.
Open a Dutch foundation
There are several types of structures which can be opened in the Netherlands, just like in all other European countries. However, the Netherlands is known for the advantages offered to those who open foundations here. Also, known as charitable organizations or non-governmental organizations, Dutch foundations are regulated by the Civil Code and not by the Company Act.
Even if the resemblance with other types of Dutch companies is important, foundations or “Stichting” have no members.
The Dutch Stichting is required to have a share capital in certain circumstances, case in which they are allowed to carry out commercial undertakings, however, the profits resulted from these undertakings have restrictions when it comes to their use. Only foundations registered with the Trade Registrar in the Netherlands are allowed to conduct commercial activities.
Foundations can also be registered as special purpose enterprises (SPEs) or holding companies in the Netherlands.
Our Dutch company formation consultants can offer more information on the legislation applicable to foundations. You can also rely on us if you need company registration services in the Netherlands, no matter the industry you are interested in operating.
Forms of the Dutch Stichting
A foundation can take the following forms in the Netherlands:
- of a private foundation;
- of family foundation;
- of an association;
- of a charitable organization;
- of a trust.
It should be noted that the association can take the form of an association with full legal capacity or that of an association with a limited capacity.
Our company formation consultants in the Netherlands can explain the forms of the foundation.
Dutch foundations as tax minimization vehicles
When created as a special purpose vehicle, the Dutch foundation can be registered as a holding company. This way the settlors will benefit from enhanced protection when it comes to their investments.
When registered as non-profit or charitable organizations, foundations may own other companies, case in which corporate tax reductions are available for the settlors.
Foundations created as special purpose vehicles are allowed to receive funds from third parties without paying any withholding taxes on interest payments.
Dutch foundations registered as limited liability companies can further benefit from exemptions from the corporate tax and the withholding tax on dividends.
Taxation of private foundations in the Netherlands
Dutch foundations are covered by several tax laws applicable in this country. Among these are:
- the State Tax Law;
- the Income Tax Law;
- the Income Tax, Donations and Public Benefit Organizations Act.
The private foundation created in the Netherlands or in the Dutch Antilles is exempt from paying the income and corporate tax. Also, foreign citizens establishing private foundations in the Netherlands will be exempt from paying the gift tax.
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