What is a holding structure, and why would you need it?
When starting a business in the Netherlands, several sorts of business entities are possible. A private company (BV) and a limited company (NV) are examples of this. You might have heard about holdings before, but what is a holding structure, and how could you use it?
The most significant concern within a group of partnerships is called a holding. Holdings are often private companies, and they are part of a holding construction. This construction is a combination of several private companies that have some relationship to each other. It consists of two components: the operating company (in Dutch: werkmaatschappij) and the holding. The operating company is the partnership in which day-to-day and risky activities are being conducted. This is the 'real' venture and is also referred to as the 'dochtermaatschappij' in Dutch. The holding is the partnership in which essential assets are accommodated. It also holds many stocks for the operating company. In Dutch, this holding is also known as the moedermaatschappij (KvK, n.d.).
Having a holding reduces risks. When a private company goes bankrupt, the company itself is liable for its debts. If a private company accommodates its valuable assets in a holding, the day-to-day risks are separated from your valuable assets. The holding will not conduct any activities except for giving the operating company authority to use the assets (Hoenjet, 2021). Because of the participation exemption, holdings can transfer profits from the operating company to the holding, free from tax. Profits are then only taxed in the operating company and not in the holding. Furthermore, in the case of several private companies, using the holding structure is practical (KvK, n.d.).
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As said before, there are many kinds of ways to arrange your business. As many enterprises are different, it is crucial to see what works for your company and to structure it. Holdings could be interesting for many sorts of companies and perhaps also for yours.
Are you thinking of relocating your enterprise to The Netherlands? DMS could be your ideal partner in business. The privately-owned boutique corporate service provider has a highly motivated and educated team of professionals. These dedicated professionals have a great experience with forging longstanding relationships. If you are thinking of starting a holding in Holland, DMS could help you with services such as Domiciliation+, management, administration and, if necessary, liquidation.