Mauritius and the Netherlands are often mentioned in the same breath, usually by someone with a structure to sell. The pairing deserves a colder reading. Each jurisdiction performs a specific function for groups whose operations are genuinely dispersed, and neither performs the function of the other. Where a group has real activity in Africa or Asia and real activity in Europe, a two-platform arrangement can be the accurate legal expression of how the business is already run. Where that underlying activity is absent, the same arrangement has become one of the least durable things a tax director can put a signature to.
Two gateways, two different functions
Mauritius has built its position on a treaty network oriented towards African and, to a lesser degree, Asian counterparties, a company and fund law of English derivation, a familiar regulatory vocabulary and a professional infrastructure that international investors can work with. The Mauritius Revenue Authority’s list of double taxation agreements in force bears the orientation out: of the forty five treaties concluded, the African partners include Botswana, Egypt, Eswatini, Ghana, Lesotho, Madagascar, Mozambique, Namibia, Rwanda, the Seychelles, South Africa, Uganda and Zimbabwe, with India, China, Hong Kong, Singapore, Malaysia, Pakistan and Bangladesh on the Asian side. For a group deploying capital across several African markets, that combination answers practical questions before fiscal ones: which law governs the shareholders’ agreement, which courts resolve a dispute between co-investors, and whether a lender or a development finance institution will accept the vehicle at all.
What Mauritius no longer offers is the arrangement most often described in material written before 2019. The deemed foreign tax credit of 80 percent, available to a company holding a Category 1 Global Business Licence and to banks on Segment B activities, was abolished with effect from 1 January 2019, with grandfathering that expired on 30 June 2021; the Category 2 Global Business licence regime was abolished on the same date. What replaced the credit is a partial exemption of 80 percent, and of 95 percent for interest derived by a collective investment scheme or closed end fund, applying only to the income streams listed in the Second Schedule of the Income Tax Act, among them foreign dividends received by a company, certain interest and the profit attributable to a foreign permanent establishment. The exemption is an exemption of income, not a credit for tax presumed to have been paid abroad, and it is conditional in a way the credit never was. The corporate rate is 15 percent, or 3 percent on the export of goods, and since 1 July 2025 a company whose supplies exceed 24 million rupees, or which is required to register under the Value Added Tax Act, and whose chargeable income exceeds 24 million rupees in an accounting year pays, in addition, a Fair Share Contribution of 5 percent of chargeable income where it is taxed at the 15 percent rate, for income derived up to 30 June 2028. An adviser still working from the old model is describing a regime that ended seven years ago.
The Netherlands answers a different set of questions. It sits inside the European Union and the single market, its corporate income tax under Article 22 of the Corporate Income Tax Act 1969 stands at 25.8% in the upper bracket with a reduced rate of 19% on the first 200,000 euro of taxable profit, and its participation exemption removes qualifying dividends and capital gains from the base at the holding level. Article 13 of the same Act requires a shareholding of at least 5% of the nominal paid up capital and that the participation is not a low-taxed investment holding, a condition tested through the motive test, the reasonable subject-to-tax test or the asset test. It is mandatory and symmetrical: where a gain is exempt, the corresponding loss is not deductible, subject only to the narrow liquidation loss relief in Article 13d. That symmetry is routinely forgotten by groups expecting to exit some holdings below cost.
The two platforms are not substitutes competing on rate. One is a point of access to a set of markets and a legal tradition; the other to the European Union, its directives and a treaty network negotiated over decades. A group that genuinely needs both already operates in both hemispheres.
When the combination has economic logic
The defensible cases share a feature: each platform has something to do that cannot sensibly be done from the other. A group with an operating footprint across several African jurisdictions, managed by people who live and work in the region, and a European distribution or manufacturing business managed from inside the European Union, is not stacking entities. It is reflecting two management realities in two legal containers.
In that configuration the Mauritius vehicle sits closer to the African operations, holding them, receiving the returns, taking the investment decisions and carrying the regional management team. The Dutch vehicle sits closer to the European operations and, depending on the group’s history and its shareholder base, may act as the holding company for third party capital, for co-investors or for an eventual sale. Each has its own board, its own budget, its own bank relationships and its own reason to exist that survives the removal of every tax consideration from the analysis.
The second case is more mundane and more common: the two platforms already exist because the group grew that way. Unwinding a Mauritius layer out of a group with genuine African operations is not automatically the conservative answer, and can trigger consequences that outweigh the tidiness gained.
When it has none, and why that now matters
The case that no longer works is the one that was sold most often. Placing an intermediate company between an operating jurisdiction and an ultimate shareholder, with no function beyond receiving and passing on income, in order to improve the withholding outcome on a dividend, an interest payment or a royalty, is precisely the behaviour that the last decade of legislation and case law was built to stop.
The instruments are cumulative rather than alternative. The principal purpose test in the treaty network denies benefits where obtaining them was a principal purpose of an arrangement, and it now reaches almost the whole Mauritian network: the Revenue Authority records that the multilateral instrument entered into force for Mauritius on 1 February 2020 and that 44 of its treaties were listed as covered tax agreements, with the principal purpose test as the main anti-abuse provision. The beneficial ownership concept, as developed by the European courts and applied by national administrations, looks past the recipient of record to whoever actually has the right to use and enjoy the income; in the T Danmark judgment the Court of Justice held that a Member State must refuse the benefit of the Parent-Subsidiary Directive in cases of abuse even where its domestic law contains no provision to that effect. Domestic anti-abuse conditions govern the treaty reductions and EU exemptions available against the general 15% Dutch dividend withholding tax: the withholding exemption in Article 4 of the Dividend Withholding Tax Act 1965 is disapplied where the recipient holds the interest with the avoidance of tax at another person’s level as a main purpose and the arrangement is artificial, meaning not put in place for valid commercial reasons reflecting economic reality, and the recipient must in any event show that it is the beneficial owner of the income.
The Dutch conditional withholding tax has applied since 2021 to interest and royalties, and since 2024 to dividends as well, paid to affiliated recipients in low-taxed or listed jurisdictions, removing the historic assumption that outbound interest and royalties leave the Netherlands untaxed. It is not a token charge: Article 4.1 of the Withholding Tax Act 2021 sets the rate at the highest corporate income tax rate, so 25.8% for 2026. A jurisdiction falls within it under Article 1.2 if it has no profits tax or a rate below 9%, or if it appears on the EU list of non-cooperative jurisdictions, in either case once designated by ministerial regulation. Earnings stripping under the anti-tax-avoidance directive, implemented in Article 15b of the Corporate Income Tax Act 1969, caps the net interest deduction at the higher of 24.5% of fiscal EBITDA and one million euro, so the leverage that once justified an intermediate financing layer no longer produces the deduction it was built for.
A jurisdiction added to a group without work to do is no longer a neutral cost; it is a documented statement that the group expected a result it could not otherwise obtain.
On the listing question the current position favours Mauritius, and that is worth stating precisely rather than assuming in either direction. Mauritius appears on neither annex of the EU list as revised on 17 February 2026, whose Annex I comprises American Samoa, Anguilla, Guam, Palau, Panama, the Russian Federation, the Turks and Caicos Islands, the US Virgin Islands, Vanuatu and Viet Nam. Nor is it designated in the Dutch regulation on low-taxed and non-cooperative jurisdictions in force for 2026. Both instruments are revised periodically, the Dutch one by ministerial regulation each year, so the position has to be checked against the version in force when a payment is made rather than carried forward from a memorandum.
Dutch ruling policy makes the same point administratively. Under the decree on advance rulings with an international character, introduced in 2019 and now in the version in force since 22 December 2023, advance certainty is available only where the requesting company belongs to a group carrying on real operational activities in the Netherlands with sufficient relevant personnel, and is refused where saving Dutch or foreign tax is the sole or decisive motive for the transaction, and refused again where the certainty sought concerns direct transactions with entities established in a designated jurisdiction. A group that cannot obtain a ruling because it cannot show nexus should treat that outcome as information about the structure, not as a procedural obstacle to be worked around.
What a structure now has to carry
Two things hold a cross-border platform together, and both are unglamorous. The first is substance in each layer. The second is a business narrative that a reader outside the group would accept with the tax analysis removed.
Substance is not a checklist satisfied by a registered address, a mailbox, a resident director attending a handful of meetings a year or a service agreement with a local provider. What sustains a holding or investment platform is people who genuinely take the decisions attributed to the entity, in the place where the entity is said to be managed, with the authority, the information and the budget to take them differently. Minutes record decisions; they do not create them. The Dutch substance requirements are a floor below which an arrangement is indefensible, not a specification of what an adequate presence looks like. The Mauritian rules now say something close to the same thing in statutory form. Access to the partial exemption depends on conditions of substance prescribed by Regulation 23D of the Income Tax Regulations 1996, under which a company must carry out its core income generating activities in Mauritius, must employ directly or indirectly an adequate number of suitably qualified persons to conduct them, and must incur a minimum expenditure proportionate to its level of activity. Those are thresholds rather than a description of a real presence, and the same discipline applies above them: an investment committee that meets where its members actually are, and that can and does decline transactions, is worth more in a dispute than any quantity of formal indicia.
The narrative requirement is separate. A group should be able to explain, in commercial terms, why each entity exists, what it does that no other group entity does, and what would break if it were removed. Where the honest answer to the last question is that a withholding rate would rise, the structure has already failed the test that matters.
Pricing, documentation and reporting
The transfer pricing overlay applies from the first euro. Article 8b of the Corporate Income Tax Act 1969 imposes the arm’s length standard and, in its third paragraph, a duty to keep in the accounts the material showing how transfer prices were arrived at, with no threshold at all, so a Dutch entity in a two-platform group must be able to show that management, financing and licensing flows between the platforms are priced as unrelated parties would price them. That obligation hardens into master file and local file requirements for groups with consolidated revenue of at least 50 million euro in the preceding year, country by country reporting applies above 750 million euro, and the Minimum Tax Act 2024 brings a minimum rate of 15% to groups reaching the same 750 million threshold in at least two of the four preceding reporting years.
The consequence for the pairing is direct. For larger groups a low headline rate somewhere in the chain is no longer the end of the calculation; it is the beginning of a top-up computation and a reporting exercise. The interaction is more particular than it first looks, and in one respect it runs the other way. Article 6.2 of the Minimum Tax Act 2024 strips excluded dividends out of qualifying income, and defines them as distributions on any interest other than a portfolio holding of less than 10% owned for under a year, so the dividends flowing up from the African subsidiaries fall outside the GloBE base altogether. On that stream the Mauritian partial exemption does not depress the effective rate and produces no top-up. What the computation does reach is everything else the platform earns, and what the reporting reaches is the group as a whole. If the reasons to hold a Mauritius platform are market access, governance, investor familiarity and regulatory fit, those reasons survive Pillar Two. A rate-driven reason does not.
A worked example
Consider a family controlled industrial group with manufacturing in East Africa, sourcing in South Asia and a European sales and service business. The African operating companies are held by a Mauritius company whose board includes the regional chief executive and independent directors resident there, which employs the regional finance and investment team, which negotiates with development finance lenders and which has declined at least one acquisition on its own authority. The European businesses are held by a Dutch BV whose directors run the European operations, with the participation exemption applying to dividends and gains on those subsidiaries.
Above them sits the family holding. The question that determines whether the structure holds is not which platform sits on top. It is whether whichever entity does sit on top has a function beyond sitting there. If the Dutch BV is the group holding company because the institutional lenders, the non-family shareholders and the eventual buyers are European, and if it employs the group finance, treasury and legal functions, the position is coherent. One point of fact deserves emphasis here, because it quietly disposes of the commonest reason given for putting the two jurisdictions together: the Mauritius Revenue Authority’s list of treaties in force contains no agreement with the Netherlands. Whatever the axis between the two platforms is for, it cannot be a treaty rate between them. Distributions from Mauritius to the Netherlands are examined on their own facts under each country’s domestic law, and the group must expect the recipient’s entitlement to be tested rather than assumed; the withholding treatment of the payment follows the substance, not the chart.
Change one fact and the analysis inverts. If the Dutch BV has no employees, no European operations and no function beyond receiving African income and paying it onward, the same chart describes a conduit. Nothing about the drawing changes. Everything about its treatment does.
The practical conclusion
Mauritius and the Netherlands are complementary where a group’s operations are genuinely complementary, and only there. The workable sequence is to establish where the people, the decisions and the risks actually sit, place the legal containers around that reality, then price and document the flows between them. Structures built in that order tend to survive examination. Structures built in reverse, with the entities chosen first and the activity retrofitted afterwards, are now examined by every authority in the chain at once, and the retrofit is usually visible.
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This article is informational and does not constitute tax advice. Each engagement is subject to scope and applicable regulation.