For many Latin American families and groups, the hard part of building a European structure is not the structure. It is getting the capital there, cleanly, in a way that a European bank will accept and a future tax authority will not question. Decades of currency volatility, capital controls in some countries, and a regional history of informal wealth movement have created a set of instincts that work against a family precisely when it is trying to do the right thing.
The instinct to route quietly is the expensive one
A family accustomed to moving money in ways that avoided attention at home often carries that instinct into Europe, and it is the single most costly thing it can do. European banking runs on the opposite principle: money that arrives with a clear, evidenced story is welcome, and money that arrives quietly is suspect. The families who struggle in Europe are not the ones with complicated histories, they are the ones who try to simplify those histories by leaving things out. The bank finds the gaps, and a gap reads as concealment even when it is only discretion.
Dutch law puts that principle in writing. Article 8 of the Wet ter voorkoming van witwassen en financieren van terrorisme obliges an institution to investigate the background and purpose of any transaction that is complex, unusually large, follows an unusual pattern or has no evident economic or lawful purpose, and to place the entire business relationship under enhanced monitoring once it does. Nothing in that test turns on wrongdoing. It turns on whether the movement explains itself. A transfer that arrives without a story opens the same file as a transfer that arrives with a bad one, and the file takes longer to close.
Source of funds, for real
A European bank onboarding a Latin American family will want to understand where the wealth came from and how the specific money arriving was generated. For a family whose fortune was built over generations in agriculture, industry, real estate or commerce, that is a documented story: company accounts, sale contracts, dividend records, inheritance papers. The work is in assembling it, and it is worth doing before approaching anyone, as we set out in our note on opening a bank account for a Dutch BV.
Europe does not ask a Latin American family to prove it did nothing wrong. It asks the family to explain what it did. The families who can explain, move fast.
The statute separates two things families tend to merge. Source of wealth is how the fortune as a whole came to exist. Source of funds is how the particular money now moving was generated, and the customer due diligence duty in article 3 requires an investigation into the source of the funds used in the relationship or the transaction itself. Where the family includes a politically exposed person, article 8 raises the standard again: both the source of the wealth and the source of the funds must be established, and a member of senior management has to approve the relationship before it is entered into or continued.
What the bank asks for, and who signs it
The requests are concrete, and each one has an author who is not the family. Filed or audited company accounts, signed by the directors, evidence the trading history behind a dividend. A notarised sale contract and the closing statement evidence a disposal. A deed of inheritance or a probate document evidences a succession. A filed tax return or a payment receipt evidences that the gain was declared where it arose. That authorship is the whole point. A bank gives weight to documents produced by auditors, notaries, courts and tax offices, and gives very little to a narrative produced by the person being reviewed.
Above the documents sits the ownership chain itself. The Dutch UBO register records the natural persons who ultimately own or control a registered entity, and the Chamber of Commerce states plainly that a bank has to know who those persons are before the entity can open an account. The entity, not the register, carries responsibility for the accuracy and completeness of what is filed, a point we develop in our note on the UBO register for foreign shareholders. A chain that is straightforward to file is a chain that is straightforward to bank.
Currency rules at home
Some countries in the region maintain exchange controls, registration requirements for outbound investment, or reporting obligations that attach to moving capital abroad. Complying with these at home is not optional, and a structure that ignores the origin-country rules to satisfy the destination-country ones is a structure with a problem at its root. The sequence matters: the outbound movement should be compliant where it starts, documented as it moves, and clean when it arrives. A family that gets the home-country compliance right also, incidentally, produces exactly the documentation the European bank wants.
In practice the origin-country step produces an artefact, and the artefact is what travels. A registration with the central bank, an authorisation, a filed declaration of outbound investment, a withholding receipt: each is a document dated before the money left and issued by an authority with no interest in helping the family. That is worth more to a European compliance officer than any letter the family can write, which is why the order should never be reversed. One version of this sequence is set out in our note on what the central bank wants to know.
Tax at origin, and the file that is already open
Families still plan as though the European account will be the home tax administration’s first sight of the money. Where the country of residence takes part in the automatic exchange, and more than a hundred countries do, it will not be. The Belastingdienst states the condition and the sequence together: the Common Reporting Standard took effect in the Netherlands on 1 January 2016 through the Wet op de internationale bijstandsverlening bij de heffing van belastingen, the holder gives the institution a declaration of tax residence, and where that country participates the institution reports the account to the Belastingdienst, which passes it to that administration. Sometimes the ultimate beneficial owners behind the account are reported too, as we explain in our note on what the Common Reporting Standard actually reports.
The result is a matching problem rather than a secrecy problem. The home administration will then at some point hold a description of the European account, and what it holds should agree with what the family has declared there. Where the capital left after tax and the declared position reflects it, the exchange corroborates the story at no cost. Where it did not, the exchange supplies the discrepancy, years after the structure was built and long after the fee for building it was paid. Settling the position at origin first is cheaper than defending it later, and it is considerably faster.
The structure should be shallow and explicable
The temptation, for a family that has used intermediary jurisdictions in the past, is to build a European structure with the same layered complexity. That complexity is now a liability. A Dutch holding directly above the European assets, owned in a chain that can be explained in a paragraph, onboards and defends far better than a structure routed through three intermediary entities whose purpose nobody can now articulate. Where an existing structure is already complex, simplifying it before entering Europe is usually worth the cost.
The reason is mechanical as much as presentational. Every entity in the chain is separately onboarded, separately registered, separately filed and separately reviewed, and each one needs a reason to exist that can be stated in ordinary commercial language. A layer that cannot answer what it does will be asked, by a bank at renewal, by an accountant at signing, or by an administration on enquiry. Complexity that once bought discretion now buys recurring cost and recurring questions, and it buys them in every year of the structure’s life rather than once at the start.
Where a structure built only to move the money breaks
Dutch law tests purpose directly. Under article 17 of the Wet op de vennootschapsbelasting 1969, a foreign holder of a substantial interest in a Dutch company is brought into the Dutch corporate income tax net where the interest is held with the avoidance of another person’s tax as its main purpose or one of its main purposes, and where the arrangement is artificial. The statute defines artificial by exclusion: an arrangement is artificial to the extent that it is not put in place for valid commercial reasons which reflect economic reality. A structure assembled purely to relocate capital has to answer that sentence, and usually cannot.
The same logic governs what comes back out. The Wet bronbelasting 2021 charges a withholding tax on dividends, interest and royalties flowing to a body established in a low-taxed jurisdiction, and equally where a recipient in an ordinary jurisdiction is interposed with an avoidance main purpose in an artificial arrangement, at the highest corporate income tax percentage. What a genuine holding relies on instead is the participation exemption, which exists to prevent profits already taxed in the subsidiary being taxed again in the parent. Five per cent of the paid-up nominal capital is the condition of entry rather than the whole test: paragraph 9 of article 13 disapplies the exemption for a participation held as an investment unless it is a qualifying one, the paragraph a family placing passive assets under a holding has to read first.
Substance closes the loop
A holding with genuine substance, resident directors and real decision-making in the Netherlands, as set out in our note on Dutch substance requirements, is the final piece that makes the capital movement defensible. It answers the question a bank and a tax authority both ask, which is why the money is here and what the structure is for. A family that can point to real substance has an answer. A family that built a shell has only an assertion, and assertions are what scrutiny is designed to test.
Substance is also what keeps the answer available later. Board minutes recording decisions actually taken in the Netherlands, directors who are reachable and who understand the business, accounts prepared and filed on time, and a registered office that is more than an address are what turn an assertion into evidence. They accumulate year by year and cannot be manufactured retrospectively on the day a question arrives. A family that starts producing them when the holding is incorporated is building the defence file and the structure at the same time.
Montclare runs a dedicated Latin American 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.