A Gulf family office buying European real estate is rarely buying a single building. It is placing part of a multi-generational balance sheet into a jurisdiction it does not live in, under a legal system it did not grow up with, and it wants the ownership to be as durable as the asset. The question is almost never which property. It is how to hold it so that the structure still makes sense when the person who built the family fortune is no longer the one making decisions.
Why the holding sits in the Netherlands rather than at the asset
Owning a French, Spanish or German building directly, in a personal name or through a company in the country where the building stands, ties the family to that country’s rules for every purpose: acquisition, income, refinancing, sale and succession. A Dutch holding above the local property companies consolidates ownership, financing and reporting in one predictable place, with access to the European Union’s directives and a deep treaty network. The mechanism that makes this coherent is the participation exemption, which we explain in our note on the participation exemption in the Netherlands: qualifying gains and dividends from the property companies can reach the holding without a second layer of Dutch tax.
The statute behind it is short. Article 13(1) of the Wet op de vennootschapsbelasting 1969 keeps the benefits from a participation, and the costs of acquiring or disposing of it, out of the taxable profit, and article 13(2)(a) sets the entry point at holding at least 5 per cent of the nominal paid-up capital of a company whose capital is wholly or partly divided into shares. The qualification that matters for property sits further down. Article 13(9) switches the exemption off for a participation held as a portfolio investment unless that participation qualifies, and article 13(11) offers two alternative ways to qualify, of which the one in point (b) turns on whether the subsidiary’s assets consist, directly or indirectly, usually for less than half of low-taxed free investments. Article 13(12)(a) then takes immovable property, including rights that directly or indirectly relate to it, out of the definition of a free investment, provided the property is not held by a body classified as an investment institution or an exempt investment institution.
What the exemption does not reach
The exemption operates on the participation, not on the building. The conventions with Germany, France and Spain each say the same thing in their article 6: income from immovable property situated in the other state may be taxed in that other state, and the expression immovable property takes the meaning it has under the law of the state where the property lies. Where the Dutch company owns foreign property directly rather than through a local company, the relief is not article 13 but the object exemption of article 15e(1), which under article 15e(2)(a) reaches income from immovable property situated in the other state, less the costs connected with it, to the extent the treaty obliges the Netherlands to grant an exemption.
The clause that decides a sale of the shares
Selling the shares in the local property company rather than the property itself does not by itself settle whether the country where the building stands may tax the gain; that is decided by the convention between that country and the Netherlands. The three texts differ on their face. Article 13(2) of the convention with Germany lets Germany tax a gain on shares or comparable interests that are not quoted on a recognised stock exchange where, at any time during the 365 days preceding the alienation, more than 75 per cent of their value was determined directly or indirectly by immovable property situated there, leaving aside property in which that body or the holders of those interests carry on their business; and it returns the gain to exclusive taxation in the seller’s state where the seller held less than 50 per cent of the shares before the first alienation, or where the gain arises from a business reorganisation, merger, division or similar transaction. Germany did not list that treaty among its covered agreements, so the bilateral text stands on its own.
The convention with France carries no percentage at all. Its article 13(1) lets France tax gains on corporate rights or similar rights in a body whose assets consist principally of immovable property, and the time test is imported, because both states notified that provision under article 9(7) of the Multilateral Convention, so its article 9(1) reads into that provision a 365 day window and an extension to comparable interests such as interests in a partnership or trust. The convention with Spain has no such clause anywhere: a gain on shares falls into the residual rule of its article 14(4) and is taxable only in the seller’s state, subject to article 14(5), which addresses individuals and carries its own conditions. The Multilateral Convention does not reach that treaty either, because the Netherlands did not list it. A share deal therefore produces three different rules depending on where the building is.
Confidentiality within the rules, not around them
Gulf families value discretion, and it is worth being precise about what is and is not available. The ultimate beneficial owner of a Dutch entity is recorded in the UBO register, access to which is now restricted by statute rather than open to the general public, a position we set out in our note on the Dutch UBO register for foreign shareholders. What a well-designed structure provides is not secrecy, which is neither available nor advisable, but a clean separation between the family’s identity and the operational face of the asset, and a governance layer that does not put personal names on every contract.
That restriction came from one judgment, and its scope is narrower than it is usually reported to be. On 22 November 2022 the Court of Justice, sitting as the Grand Chamber in Joined Cases C-37/20 and C-601/20, held that article 1(15)(c) of Directive (EU) 2018/843 is invalid in so far as it amended point (c) of the first subparagraph of article 30(5) of Directive (EU) 2015/849 in such a way that member states must ensure that beneficial ownership information is accessible in all cases to any member of the general public. Nothing else in that paragraph fell with it: access for competent authorities and financial intelligence units without any restriction, and for obliged entities within the framework of customer due diligence, stood then and stands now.
What took its place in the Netherlands is article 22a of the Handelsregisterwet 2007. Institutions subject to the anti money laundering statute may consult the data listed in article 15a(2)(c) and (e) for the customer due diligence that statute or the Wet toezicht trustkantoren 2018 requires of them, as may the institutions listed in article 10(2) of the Sanctiewet 1977, among them banks, insurers and trust offices, for complying with their obligations under that act concerning financial transactions, and beyond those the data may be consulted on request by categories of persons designated by decree, so far as they have a demonstrable legitimate interest connected with preventing or combating money laundering, its predicate offences or terrorist financing. Where such a request is granted, the Chamber of Commerce must tell the beneficial owner that it was granted and what purpose it serves. Article 21, the provision that opens the commercial register to anyone, does not extend to that data. Article 12 of Directive (EU) 2024/1640 now names the categories deemed to have that interest, and its article 78 required member states to have those rules in force by 10 July 2026.
Financing a purchase that could be made in cash
Many Gulf families can buy without debt and still choose to finance, because leverage against a European asset frees capital for other uses and, correctly structured, the interest is deductible against rental income. The financing has to be coherent with the holding: the borrower must be the entity that owns the asset, guarantees must come from entities with substance, and intragroup lending must be priced at arm’s length. Where a Sharia-compatible structure is required, the financing is arranged on that basis, and the ownership layer is designed to accommodate it from the start rather than as an exception.
The family is not buying a building. It is deciding how that building will be owned by people who have not yet been born, and the structure is the only part of the transaction that has to last that long.
Succession decided in advance
This is where a Dutch structure earns its place for a Gulf family. Succession under the family’s home rules and succession of a European asset are two different systems, and the point of friction is real: forced heirship, the treatment of a foundation, and the recognition of the family’s own arrangements all differ across the jurisdictions involved. A Dutch holding, often with a stichting above it, allows the family to write governance and succession rules in advance, in a form that European counterparties and courts understand, rather than leaving the outcome to be discovered at the worst possible moment. We deal with the vehicles in our note on how family offices use Dutch BVs and stichtingen.
Getting proceeds home
A structure that is easy to enter and hard to exit is a bad structure. The path for rental income and eventual sale proceeds to move from the asset, through the holding, and back to the family has to be mapped before the first purchase, including the Dutch dividend withholding position and the interaction with any treaty between the Netherlands and the family’s country of residence. Our note on Dutch withholding tax sets out the tests. Done properly, the Dutch layer improves the path of cash rather than complicating it, which is the entire point of interposing it.
Substance is not optional
A holding that exists only on paper does not survive contact with a modern tax authority, and the family that treats substance as a formality is buying a future dispute. The current expectations are set out in our note on Dutch substance requirements, and a serious family holding meets them with resident directors, decisions genuinely taken in the Netherlands, and the capacity to manage its own affairs. This is not a cost to be minimized. It is the thing that makes everything else defensible.
One list of them is written down, and its perimeter is the part that is usually missed. Article 3a(7) of the Uitvoeringsbesluit internationale bijstandsverlening bij de heffing van belastingen sets ten presence requirements, running from where the directors live and where board decisions are taken, through wage costs of at least one hundred thousand euro and an office in the Netherlands available for at least twenty four months and actually used, to bearing real risk on the underlying transactions and holding equity adequate to that risk. But article 3a(1) designates taxpayers whose activities in a year consist mainly of receiving and paying interest, royalties, rent or lease instalments from and to group bodies not established in the Netherlands, and article 3a(2) leaves activities connected with holding participations out of that measurement. What follows from missing a requirement is not a penalty but a disclosure: where in that year the taxpayer has invoked, or could invoke, a tax treaty, Directive 2003/49/EC on interest and royalties or a national provision implementing it, it says so in its corporate income tax return and provides, no later than with that return, the further information that article 3a(4) requires. Article 8(5) of the Wet op de internationale bijstandsverlening bij de heffing van belastingen requires that information with a view to mutual assistance between tax authorities, and the same act has the Netherlands share foreseeably relevant information with another state’s competent authority on request and, in the cases designated for it, without one. Towards another member state of the European Union the Netherlands must provide information of its own motion in the cases listed in article 7(1), among them where it is suspected that relief from tax would wrongly be granted in that state. What article 11(1) of that act exposes to an administrative fine is a failure to provide the information, or its late, incomplete or incorrect provision, where that is due to intent or gross negligence, not missing the requirement.
Montclare runs a dedicated Middle East desk, structuring the corporate, tax and holding architecture for groups and families entering Europe through the Netherlands. Our services are set out on our services page.
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.