A Privatstiftung above a Dutch holding company is a common shape in Austrian family groups, and it is almost never the product of a single decision. The foundation came first, for succession reasons, and the Dutch company arrived later, when the group acquired something outside Austria. The two halves were designed by different advisers in different decades, and they meet once a year, in the dividend resolution.
That meeting is where the file is tested. Austria has moved the interim tax on private foundations with effect from 2026, and the Netherlands has, since 1 January 2025, written down in a published list how it reads foreign legal forms. Neither change was aimed at this structure, and both apply to it.
The Dutch list has already answered one question
The Besluit vergelijking buitenlandse rechtsvormen sets out how a foreign legal form is compared with a Dutch one, and its annex records the results for named forms by qualification year. For Austria the annex records the Aktien Gesellschaft and the Gesellschaft mit beschränkter Haftung as comparable to a Dutch NV or BV, the Kommanditgesellschaft as comparable to a commanditaire vennootschap in qualification year 2024, the Offene Gesellschaft as comparable to a partnership, and the Privatstiftung in the final column, headed “is niet vergelijkbaar met een Nederlandse rechtsvorm”.
That entry is a classification, not a penalty, and its consequences run through the file. A foreign form comparable to nothing Dutch is treated as a body in its own right rather than looked through, which is what article 3 of the Wet op de vennootschapsbelasting 1969 provides for a non-resident body whose legal form is comparable neither to the Dutch bodies it lists nor to a Dutch partnership, and whose assets, debts, income and costs are attributed to the body itself under the tax rules of a state that treats it as resident. The foundation is a taxpayer, not a veil. The listing is a presumption rather than a conclusion, and article 2, third paragraph, of the same Besluit displaces it where the relevant law of the state governing the form has materially changed after the end of the qualification year recorded in the list, which for the Privatstiftung is 2023.
The withholding exemption is a counterfactual, not a formality
Dutch dividend withholding tax is charged at 15 per cent under article 5 of the Wet op de dividendbelasting 1965. Article 4, second paragraph, allows withholding to be omitted where the recipient is a body resident in an EU or EEA state, or in a treaty state whose treaty provides for dividends, and holds an interest in the withholding agent to which the participation exemption or the participation credit would apply if that recipient were established in the Netherlands.
The last clause is the one that matters. The test is counterfactual: place the Austrian foundation in the Netherlands and ask what would follow. Article 2, eighth paragraph, of the Wet op de vennootschapsbelasting 1969 subjects Dutch foundations and associations to corporate income tax only insofar as they carry on an enterprise. A foundation that does nothing but hold and receive is not automatically within the charge, and a relief presupposing the charge does not follow automatically either. That question is answered before the resolution is passed.
Article 4, third paragraph, then denies the exemption in three cases, among them where the interest is held with the main purpose, or one of the main purposes, of avoiding tax at the level of another person and the arrangement is artificial, artificiality meaning that it was not put in place for valid commercial reasons reflecting economic reality. The fourth paragraph of the same article requires the recipient to make it plausible that it is the beneficial owner.
What the safe harbour asks for, and the month that follows
Article 1bis of the Uitvoeringsbeschikking dividendbelasting 1965 sets out when the recipient is presumed, unless the inspector shows otherwise, not to hold the interest for an abusive purpose. At least half of the statutory and decision-making board members must live or be established in the state of residence, those members must have the professional knowledge to perform their tasks, the recipient must have qualified staff to carry out and record its transactions, and the board decisions, the main bank accounts and the bookkeeping must be there. Two conditions are numerical and are the ones a family foundation usually fails: wage costs remunerating the work connected with its interest in the Dutch company of at least 100,000 euro multiplied by the country factor in the annex, which for Austria is 100 per cent, and premises at the foundation’s disposal in that state for at least 24 months, containing an office with the usual facilities in which that work is actually performed.
Failing the safe harbour is not fatal. Under article 4, twelfth paragraph, the recipient or the withholding agent must instead make it plausible that there is no avoidance purpose or that there are valid commercial reasons reflecting economic reality. That is decided on the evidence that existed at the time, which is why the composition of the Stiftungsvorstand and the record of its meetings are documents with a Dutch consequence.
Where the exemption is applied, article 4, eleventh paragraph, obliges the withholding agent, within one month of the moment the dividend is made available, to give the inspector a statement that the conditions of the second, third and fourth paragraphs are met and to file the return prescribed by article 1a of the Uitvoeringsbeschikking, down to the percentage of voting rights the recipient holds. For a group whose Austrian board meets quarterly, that window sets the dividend timetable rather than following it. Where withholding has already happened the alternative is a refund claim, which is slower and places the burden on the recipient. The domestic refund in article 10 of the Wet op de dividendbelasting 1965 extends to a body established in another EU or EEA state only where that body is not subject to a profits tax there and would not be subject to Dutch corporate income tax if it were resident in the Netherlands, which is not the position of a Privatstiftung that pays Austrian corporation tax on the income described below. Where that route is open, article 21c of the Uitvoeringsregeling Algemene wet inzake rijksbelastingen 1994 gives three years from the end of the calendar year in which the proceeds were made available. Otherwise what remains is the claim under the treaty, which sets its own period: item II of the Slotprotocol to the 1970 Netherlands-Austria double tax treaty, headed “Ad Artikelen 10, 11 en 13” and reaching tax levied contrary to those articles, of which article 10 is the dividend article, requires the refund request to be made within three years of the end of the calendar year in which the tax was levied. The two clocks do not start together. The domestic one runs from the year in which the proceeds were made available, the treaty one from the year in which the tax was levied, so a dividend made available in December and withheld in January sits in a different year under each rule.
The interim tax has moved, and it moved upwards
On the Austrian side the foundation is not taxed like a company. Section 13, third paragraph, of the Körperschaftsteuergesetz 1988, which applies to a private foundation that falls neither under section 5, points 6 or 7, nor under section 7, third paragraph, removes certain income from the ordinary base and taxes it separately: income from the letting of capital, realized increases in the value of capital assets, income from derivatives and from crypto assets, in each case where the income is not one of those listed in section 27a, second paragraph, of the Einkommensteuergesetz 1988, and gains from private land sales. Section 22, second paragraph, sets the rate on that income, after the deduction allowed by section 13, first paragraph, point 4, at 23 per cent for 2024 and 2025 and 27.5 per cent for calendar years from 2026. That tax is not a final cost by design: it is creditable in the assessment under section 24, fifth paragraph, on the conditions described below.
The general corporate rate has not followed. Section 22, first paragraph, leaves it at 23 per cent for calendar years from 2024. In 2024 and 2025 the two rates were the same, so the foundation paid on its investment income what an Austrian operating company paid on its profits. From 2026 it pays more.
Dividends from the Dutch subsidiary are a separate matter. Section 10, first paragraph, point 5, exempts profit shares from a participation in a foreign body that meets the conditions of article 2 of the parent-subsidiary directive as set out in Annex 2 to the Einkommensteuergesetz 1988, whose Dutch entries include the besloten vennootschap met beperkte aansprakelijkheid, and section 13, second paragraph, extends that exemption to a private foundation for foreign participation income, subject to the switch-over in section 10a. Such a dividend is in any event not one of the categories the third paragraph taxes separately, so it does not enter the interim tax base. The interim tax bites on the portfolio, not on the group.
Distributions abroad break the credit
The interim tax is designed to be temporary. Section 13, third paragraph, reduces the separately taxed income by the distributions made in the assessment period on which Austrian capital gains tax has been withheld and paid, and section 24, fifth paragraph, credits corporation tax already assessed and paid where the foundation has made distributions on which that tax was remitted, the credit running at 12.5 per cent for years before 2011, 25 per cent for the years 2011 to 2022, 24 per cent for 2023, 23 per cent for 2024 and 2025 and 27.5 per cent from 2026, with the oldest years credited first. The same provision requires the foundation to keep a running account recording what has been paid, what has been credited and what still stands to be credited.
The trap is in the qualification. Both provisions reduce the relieving distributions to the extent that they are not finally burdened with Austrian capital gains tax because a double tax treaty has relieved them, and both treat relief granted after the tax has been remitted as a retroactive event within the meaning of section 295a of the Bundesabgabenordnung, which allows an assessment already issued to be amended. A beneficiary who moves abroad and claims treaty relief does not merely reduce his own tax. He removes the distribution from the mechanism that unlocks the foundation’s credit.
Austrian capital gains tax on distributions runs at the special rate in section 27a, first paragraph, of the Einkommensteuergesetz 1988, which is 25 per cent for deposits and unsecuritised money claims held with credit institutions and 27.5 per cent in every other case, the second of which is where a distribution from a private foundation falls.
What the deed has to survive
The Privatstiftungsgesetz imposes conditions that read as company law and function as tax evidence. Section 4 requires the foundation to be endowed with assets worth at least 70,000 euro. Section 1 requires it to have its seat in Austria and forbids it to carry on a commercial activity going beyond a mere ancillary one, to take over the management of a commercial company, or to be an unlimitedly liable partner in a registered partnership.
The board is where the constraints bite. Section 15 requires at least three members, of whom two must have their habitual residence in an EU member state or a contracting state of the EEA agreement. A beneficiary, his spouse or partner, and persons related to him in the direct line or up to the third degree of the collateral line cannot be board members, and neither can legal persons or anyone instructed by those persons to represent their interests on the board.
Read that against the Dutch safe harbour and the tension is plain. The Dutch rule wants decision-makers with professional knowledge who actually decide in the state of residence. The Austrian rule keeps the family off the board. Both are satisfiable at once, but only by appointing a board that is genuinely independent and resident, and by minuting deliberation rather than ratification.
Entry tax, and the price of an incomplete file
Contributions carry their own charge. Section 1 of the Stiftungseingangssteuergesetz subjects gratuitous contributions to a private law foundation to the tax where either the contributor or the foundation has a residence, habitual abode, seat or place of management in Austria, and it reaches later endowments as much as the original settlement, subject to the exemptions in its sixth paragraph, among them contributions of land, which are taxed under the Grunderwerbsteuergesetz instead. Under section 2 in the version in force from 1 January 2026 the rate is 3.5 per cent, where the version that applied until 31 December 2025 set it at 2.5 per cent.
The same provision sets a rate of 25 per cent in five situations, and in those five only. The higher rate applies where the foundation or comparable body of assets is not comparable to a Privatstiftung under the Privatstiftungsgesetz or to a foundation within section 5, point 6, of the Körperschaftsteuergesetz 1988, where all the documents in their current version governing its internal organization, the administration of its assets or the use of its assets have not been disclosed to the Finanzamt für Großbetriebe by the time the entry tax falls due, where it is not subject to a statutory obligation corresponding to section 5 of the Privatstiftungsgesetz to notify the beneficiaries, where it is not entered in the Firmenbuch or a comparable foreign public register on production of its statute, or where there is no comprehensive administrative and enforcement assistance with its state of residence.
For an Austrian Privatstiftung the comparability test, the notification obligation and the register entry follow from the Privatstiftungsgesetz itself. The disclosure of the deed and of any supplementary deeds is the one that has to be done rather than assumed, and it is live every time assets move. The test matters beyond the Austrian case because it applies in the same terms to foreign foundations receiving contributions that have an Austrian side.
The two halves have to be reconciled once a year
None of this makes the structure unworkable. It makes it one that has to be maintained in two places on a single timetable: the Dutch questions at the dividend, answered within a month, the Austrian questions at the year end, in the running account and the entry tax file.
The Dutch corporate rate, which article 22 of the Wet op de vennootschapsbelasting 1969 sets as a bracket of 19 per cent on the first 200,000 euro and 38,000 euro plus 25.8 per cent above it, together with the 15 per cent withholding rate and the Austrian 27.5 per cent, are the visible numbers, and they decide the least. What decides the outcome is whether the foundation can show that its board decided, in Austria, on its own responsibility, about a holding it owns, and whether the running account survives a beneficiary’s change of residence. A company that exists only to receive and pay on is exposed on both sides of this file. One that owns something, decides about it and can show the decisions is not.
This article is informational and does not constitute tax or legal advice. The treatment of any structure depends on its facts and on the law of each jurisdiction involved. Each engagement is subject to scope and applicable regulation.