For a group whose operating history sits in Africa, the decisive obstacle to a European platform is rarely the tax analysis. The Dutch rules are published and largely mechanical in application; the treatment of a dividend, a disposal or an intercompany loan can be set out before anything is incorporated. What determines whether the platform functions is a different set of questions, asked by people with no particular interest in tax: a bank onboarding officer who must document where the money came from, a registry record that will be compared with what you told that officer, and a counterparty deciding whether your entity is worth contracting with. This note deals with those three, and with the limits of what any structure can do about them.
What the banking file is actually testing
A newly incorporated Dutch entity whose ultimate beneficial owners are resident outside the EEA, and whose operating assets sit in jurisdictions the bank scores as higher risk, is not by operation of law an enhanced due diligence file, but it commonly becomes one. Article 8 of the Wet ter voorkoming van witwassen en financieren van terrorisme requires enhanced customer due diligence at least where the relationship or transaction by its nature carries a higher risk of money laundering or terrorist financing, and where the client is established in a state the European Commission has designated as higher risk; whether the first of those applies is judged against the risk factors in Annex III to the fourth anti-money laundering directive. The classification is procedural rather than a judgement about the group, and it changes what the bank needs from you.
The onboarding officer is not deciding whether the group is legitimate. They are deciding whether they can evidence legitimacy in a file that will be re-read by their second line, by internal audit and possibly by a supervisor years later, without the officer present to explain it. Assurances are worth little; documents a third party can verify are worth a great deal.
The statutory floor is the same for every institution. Article 3 requires customer due diligence that lets the bank identify the client and verify its identity, identify the ultimate beneficial owner and take reasonable measures to verify that identity, take reasonable measures to understand the ownership and control structure where the client is a legal person, establish the purpose and intended nature of the relationship, and monitor it on a continuing basis, investigating where necessary the source of the funds used. What institutions build on top of it is consistent: corporate documentation from the notarial deed and the KVK, a coherent description of the activity, an expected transaction pattern expressed by counterparty, corridor, currency and frequency, and screening outcomes for sanctions, politically exposed persons and adverse media. The origin of the money is where most files stall.
Source of funds and source of wealth
The two are routinely conflated. Source of wealth is how the beneficial owner’s estate was built over the years; source of funds is the origin of the specific money entering the account. A file can be strong on one and empty on the other, and banks read them separately.
The difficulty is usually evidentiary rather than substantive, and it belongs to a type of group rather than to a region. Businesses built on retained earnings over decades, in sectors that are cash intensive or were until recently; family holdings never audited because nobody required it; land, concessions or licences whose title is valid locally but does not present in a form a European compliance officer reads quickly. None of that indicates a problem. All of it lengthens the file.
What travels well: audited or independently reviewed financial statements, tax filings and assessments, dividend resolutions matched to bank credits, sale agreements with proof of payment, historic statements showing accumulation rather than sudden appearance, independent valuations, and correspondence with local regulators. What travels badly: narrative summaries prepared for the occasion, valuations produced in-house, and documents that exist only within the group’s control.
Where the source of wealth cannot be evidenced in full, the workable approach is to say so at the outset and build the record over time, rather than present a version that later has to be revised.
A compliance file that has to be corrected after submission is read as evidence about the client, not about the paperwork.
Coherence between what is declared and what is registered
This is the failure mode easiest to avoid and most often missed. A Dutch platform generates a trail: incorporation before a civil-law notary and registration at the KVK, entry in the UBO register, tax registrations, annual accounts, transfer pricing documentation, and reporting under Council Directive (EU) 2018/822 where one of the hallmarks that directive lists is met. Public access to the register has been restricted since the Court of Justice, in joined cases C-37/20 and C-601/20 of 22 November 2022, declared invalid the amendment made by Directive (EU) 2018/843 that had opened that information to any member of the general public, leaving access by obliged entities and competent authorities untouched. The documentation trail carries its own thresholds: article 8b of the Wet op de vennootschapsbelasting 1969 requires the basis of intercompany pricing to be held in the taxpayer’s own records with no threshold at all, article 29g adds a group file and a local file at fifty million euro of consolidated group revenue, and article 29c switches off the country-by-country report below seven hundred and fifty million.
Each of those records says something, and so does the bank questionnaire. Divergences between them attract attention: a board described in onboarding that differs from the board on file; an activity described to the bank that is broader than the corporate objects and unsupported by the accounts; a management fee presented as the entity’s income stream but never documented in an intercompany agreement or priced on arm’s length terms, which is what the article 8b documentation obligation exists to test; a beneficial owner declared to the bank who does not match the UBO entry.
The VAT position is an underrated part of the same problem. As the Court of Justice restated in case C-98/21 of 8 September 2022, the mere acquisition and holding of shares is not in itself an economic activity conferring the status of taxable person, so a pure holding company does not recover input VAT; an entity providing management services for consideration stands differently. If the bank has been told the Dutch company earns management fees, the VAT treatment, the invoices and the intercompany agreements should reflect that; if it does not earn them, the description should never have been given.
Substance as evidence rather than decoration
Substance is tested in three registers at once, usually treated as separate exercises when they rest on the same facts. Treaty and directive access is subject to anti-abuse conditions; the 15% dividend withholding rate in article 5 of the Wet op de dividendbelasting 1965, the treaty reductions and the exemptions available within the EU all sit behind them, as does the conditional withholding tax that the Wet bronbelasting 2021 levies, under its article 3.1, on interest, royalties and dividends. Article 2.1, paragraph 1, of that Act makes the recipient liable in five distinct cases. Only the first turns on the recipient being established in a low-taxed jurisdiction, and those are the states designated in article 2a of the Regeling laagbelastende staten en niet-coöperatieve rechtsgebieden voor belastingdoeleinden, which in the version in force for 2026 names no African state. The third case turns on nothing of the kind: it reaches a recipient established in any state other than the Netherlands or a low-taxed jurisdiction where one of the main purposes is to avoid the levy falling on another person and the arrangement or transaction is artificial, meaning not put in place on valid commercial reasons that reflect economic reality. Reading that designation as the list of countries the charge can touch is therefore the wrong reading. The ruling policy in force since 1 July 2019, amended since, requires real operational activity in the Netherlands with sufficient relevant personnel here, and withholds advance certainty where saving Dutch or foreign tax is the sole or decisive motive, or where the certainty sought concerns direct transactions with entities in those same states. And the bank forms its own view of whether the entity is real, using largely the same indicators.
The facts are familiar: where board decisions are genuinely taken, by whom, on what information, with what authority and competence; what costs the Dutch entity bears; whether personnel and premises are proportionate to the functions claimed. These are set out in our note on Dutch substance requirements.
The specific issue for a founder-led group is that decision-making tends to remain where the founder is, and no amount of drafting relocates it. Minutes recording decisions plainly taken elsewhere are not a structuring weakness so much as an evidentiary one, and the weakness surfaces in withholding tax, in exemption claims and in banking review at once. If the board is to sit in the Netherlands, it should sit there in fact; if it is not going to, the structure should be designed on that basis rather than papered against it. Governance design is the instrument for that, and it is worth settling before the first bank conversation.
Where the decisions are taken, read from both ends
That point has a legal edge, and it cuts in two directions. Article 4 of the Algemene wet inzake rijksbelastingen fixes where a body is established by reference to the circumstances rather than to the register, and article 2, paragraph 5, of the Wet op de vennootschapsbelasting 1969 adds that a body incorporated under Dutch law is always deemed established here for the purposes of that Act, save for the articles that paragraph excepts. That is the Dutch end of the question. The other end is the home jurisdiction, and it is there that a statement about the continent would be worthless, because each state answers with its own rule and the rules move. Nigeria has just rewritten its own. The Nigeria Tax Act 2025, gazetted in Federal Republic of Nigeria Official Gazette No. 117, Volume 112, repeals by its section 195, among others, the Companies Income Tax Act, the Personal Income Tax Act, the Capital Gains Tax Act, the Value Added Tax Act and the Stamp Duties Act, commences on 1 January 2026, and defines a Nigerian company to include one whose effective place of management or control is Nigeria. A board that meets in Lagos in substance while minuting Amsterdam is answering two residence tests, and answering both badly.
The same reading applies to the intermediate holding jurisdictions that investment into and out of Africa has historically used. Mauritius no longer offers a rate detached from activity: the OECD Forum on Harmful Tax Practices records the Global Business Licence 1 and Global Business Licence 2 regimes as abolished, grandfathering ended on 30 June 2021, and the partial exemption of 80% or 95% the Revenue Authority now publishes is available only subject to conditions, which regulation 23D of the Income Tax Regulations 1996 sets out under the heading conditions for eligibility to exemption. Above both sits the multilateral layer. The principal purpose test that the OECD and G20 base erosion and profit shifting package brought into tax treaties, and that article 7 of the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting inserts into covered agreements, denies a benefit where it is reasonable to conclude that obtaining it was one of the principal purposes of the arrangement, unless granting it would accord with the object and purpose of the relevant provisions. Which agreements that convention modifies, and how, turns on what each party notified and reserved, so the question is answered treaty by treaty.
Credibility with European counterparties
Banks are the gate; counterparties are the market, and they run versions of the same checks with less patience. Lenders, insurers, industrial buyers, distributors and joint venture partners all have compliance functions, and those functions look at the age of the entity, whether accounts have been filed on time, who sits on the board, whether the ownership chain can be understood quickly, and whether the public record is internally consistent.
Credibility, in practice, is largely a function of legibility and elapsed time. An entity incorporated recently, with a board of unfamiliar service providers and no filing history, communicates something regardless of the intention behind it. That is not an argument for elaborate structures; it is an argument for starting earlier than the first transaction requires. A BV, a cooperatie and a stichting administratiekantoor separating economic from voting rights are all well understood in the Netherlands, but a foreign counterparty may not read them the same way, and the choice should be explained deliberately rather than discovered during diligence.
What a well built structure does not solve
It does not relocate value creation. It does not convert local operating risk into European risk, and it does not improve a weak title, a missing licence or an unaudited subsidiary. It does not remove exchange control constraints on dividends leaving the operating jurisdiction, currency inconvertibility or political risk. It cannot manufacture a source of wealth record that was never created at the time.
Nor does it produce a low tax outcome in itself. Article 22 of the Wet op de vennootschapsbelasting 1969 sets the rate at 19% on the first two hundred thousand euro of taxable profit and 25.8% above it. The participation exemption in article 13 of the Wet op de vennootschapsbelasting 1969 is not elective, and paragraph 2(a) of that article attaches it to a holding of at least 5% of the nominal paid-up capital, so a shareholding built below that line sits outside it; membership of a cooperatie is a participation under paragraph 2(c) with no percentage at all, which is one of the reasons the vehicle question and the exemption question are not separable. Where the participation is held as a portfolio investment the exemption falls away unless it qualifies under paragraph 11 of that article, which is where the subject to tax test and the asset composition test are set. The earnings stripping rule in article 15b of the Wet op de vennootschapsbelasting 1969 disallows the net interest balance to the extent it exceeds the higher of 24.5% of the adjusted profit and one million euro, and those parameters have changed more than once. Council Directive (EU) 2022/2523 applies its 15% minimum from seven hundred and fifty million euro of consolidated revenue in at least two of the four preceding fiscal years. A structure whose only rationale is access to a rate meets anti-abuse provisions at several points, and increasingly meets them at the banking stage first.
Sequencing
The order of the work matters more than most groups expect. Vehicle and governance decisions come before banking conversations, because the bank asks about both and inconsistent answers are expensive to unwind. The source of wealth file is assembled before the account application rather than in response to questions, because a file produced under time pressure looks like one. Register entries, corporate documents and onboarding descriptions are aligned at the outset, since they will be compared. And the first years of filings belong to the credibility build rather than to compliance overhead, because that is what counterparties will read.
Timelines depend on the institution’s risk appetite, the corridor involved and the completeness of the documentation, not on the elegance of the structure. That is the honest summary of the exercise: the structuring is the tractable part, and the evidence is the work.
Montclare structures and operates Dutch and cross-border platforms for international groups. Our services are set out on our services page.
This article is informational and does not constitute tax, legal or investment advice. Each engagement is subject to scope and applicable regulation.