The difficulty a Gulf investor meets in Europe is rarely finding the asset or the structure. It is the banking. A European bank asked to open an account for a newly formed holding owned by a GCC family will ask questions that feel intrusive to someone accustomed to a different relationship with financial institutions, and the investor who treats those questions as an insult rather than a process is the investor whose account takes six months to open, or does not open at all.
Source of funds is the whole conversation
European anti money laundering rules require a bank to understand where money came from, not merely who owns it. For a Gulf family whose wealth was built over decades in trading, real estate, contracting or industry, the honest answer is a story, and the story has to be evidenced: company accounts, sale contracts, dividend histories, inheritance documents. A family that can produce this moves quickly. A family that treats the question as a formality to be waved away stalls, because the bank cannot proceed on trust.
The questions are not the bank improvising. The law in force today is Directive (EU) 2015/849 as amended, whose article 13(1) provides that customer due diligence measures comprise identifying the customer and verifying its identity, identifying the beneficial owner and taking reasonable measures to verify that person and, as regards legal persons, to understand the ownership and control structure, assessing and as appropriate obtaining information on the purpose and intended nature of the business relationship, and conducting ongoing monitoring of the relationship including scrutiny of transactions to ensure they are consistent with the bank’s knowledge of the customer, the business and the risk profile, including where necessary the source of funds. Article 3(2) of the Wet ter voorkoming van witwassen en financieren van terrorisme carries the same wording and the same qualifier, and article 1d(1)(a) of that act charges De Nederlandsche Bank with its implementation and enforcement for banks.
Where source of funds stops being a judgement call and becomes a fixed obligation is worth knowing precisely, because that is where a file either clears or sits. Article 20 of the directive requires, for business relationships with politically exposed persons, adequate measures to establish the source of wealth and the source of funds involved. Article 18a(1)(c) requires information on the source of funds and source of wealth of the customer and the beneficial owners wherever a high-risk third country identified under article 9(2) is involved, and article 9(1)(c) of the Wwft repeats that in Dutch law. Article 18(2), transposed in article 8(3) of the Wwft, obliges the bank to examine the background and purpose of any transaction that is complex, unusually large, conducted in an unusual pattern, or without an apparent economic or lawful purpose. A large first inbound payment into a newly formed holding will usually answer to at least one of those descriptions.
The consequence of an unanswered question is written down rather than left to the relationship manager. Article 14(4) of the directive provides that where an obliged entity is unable to comply with the identification, beneficial ownership or purpose limbs of article 13(1), it shall not carry out a transaction through a bank account, establish a business relationship or carry out the transaction, and shall terminate the business relationship and consider making a suspicious transaction report to the financial intelligence unit. Article 5(1) of the Wwft states the same as a prohibition on entering the relationship at all, and article 5(3) obliges the institution to end a relationship it can no longer document. The account that never opens is not a commercial decision the family can appeal.
What the file has to contain before the account opens
Timing is part of the rule. Article 14(1) of the directive requires verification of the identity of the customer and of the beneficial owner before the business relationship is established, and adds that whenever an obliged entity enters into a new relationship with a corporate or other legal entity subject to beneficial ownership registration under article 30 or 31, it shall collect proof of registration or an excerpt of the register. Article 4(1) of the Wwft sets the same sequence, and article 4(4) allows a bank to open an account before verification only where it guarantees that the account cannot be used until verification has taken place.
For the Netherlands the register is named in the statute. Article 4(2) of the Wwft requires the institution, on entering a new relationship, to hold proof of entry in the trade register under article 2 of the Handelsregisterwet 2007 and to establish whether the customer’s beneficial owners are recorded there under article 15a of that act. Article 10c(1) then runs the duty the other way: the institution must report to the Chamber of Commerce every discrepancy it finds between beneficial ownership data obtained from the register and the information on that beneficial owner it holds from another source. A family whose entry in the Dutch UBO register has not caught up with a reorganisation therefore does not merely face a slower onboarding; it generates a filing about itself, made by its own bank.
Who counts as a beneficial owner is defined by the directive rather than settled between the bank and the family. Article 3(6) says the term includes at least, in the case of corporate entities, the natural person who ultimately owns or controls the entity through direct or indirect ownership of a sufficient percentage of the shares, voting rights or ownership interest, or through control via other means, and article 3(6)(a)(i) provides that a shareholding of 25 per cent plus one share or an ownership interest of more than 25 per cent held by a natural person is an indication of direct ownership, that the same holding held by a corporate entity under the control of a natural person, or by several corporate entities under the control of the same natural person, is an indication of indirect ownership, and that member states may decide a lower percentage is an indication of ownership or control.
Two features of that definition are routinely missed and both matter to a family holding. The first is that it is an indication rather than a threshold, so falling under a quarter settles nothing by itself. The second is the trigger for the fallback: article 3(6)(a)(ii) applies if, after exhausting all possible means and provided there are no grounds for suspicion, no person under point (i) is identified, or if there is any doubt that the persons identified are the beneficial owners. That second limb is the one that bites where shares sit with nominees, because the bank can move to the senior managing official on doubt alone, and it must keep records of the actions taken.
The structure has to help, not hinder
A clean, shallow structure onboards. A chain of five entities across three jurisdictions, assembled over the years for reasons nobody can now fully explain, does not. Before approaching a bank, the ownership chain from the European entity up to the individuals should be mapped, documented and, where it is unnecessarily complex, simplified. The bank is going to reconstruct that chain regardless; the only question is whether the family hands it over clearly or forces the bank to assemble it, which reads as evasion even when it is only untidiness. Our note on opening a bank account for a Dutch BV sets out what to expect.
Untidiness is not merely an impression. Article 8(1)(a) of the Wwft requires enhanced customer due diligence where a business relationship or transaction by its nature carries a higher risk of money laundering or terrorist financing, and article 8(2) requires the institution to take into account at least the risk factors in Annex III to the fourth anti money laundering directive in deciding whether that is so. Annex III describes itself as a non-exhaustive list of factors and types of evidence of potentially higher risk, and among its customer factors are legal persons or arrangements that are personal asset-holding vehicles and an ownership structure that appears unusual or excessively complex given the nature of the company’s business. The chain nobody can explain is a factor the bank is obliged to weigh, which is also why an offshore company applying for a European bank account so often fails on the first reading.
It is worth being exact about what that Annex does not contain, because the point is routinely overstated. Annex III to the directive has no factor for an entity created in a jurisdiction in which it has no real economic activity. That factor exists, at points (1)(h) and (1)(i) of Annex III to Regulation (EU) 2024/1624, which reach a customer created or set up in a jurisdiction where it has no real economic activity, substantial economic presence or apparent economic rationale, and a customer owned directly or indirectly by such an entity. That Regulation does not yet apply. Until it does, absence of activity reaches the file through the open wording of the existing Annex and the bank’s own risk assessment, not through a listed factor a supervisor can point at.
The bank is not deciding whether the family is wealthy. It is deciding whether it can explain, to its own regulator, why it opened the account. Give it the explanation and the account opens.
The route the money takes is examined apart from its origin
Capital that leaves a Gulf bank and arrives in a European one passes through a second set of rules that has nothing to do with the family. Article 19 of the directive provides that, for cross-border correspondent relationships involving the execution of payments with a third-country respondent institution, the European bank must in addition to ordinary due diligence gather sufficient information about the respondent to understand fully the nature of its business and determine from publicly available information its reputation and the quality of its supervision, assess its controls against money laundering and terrorist financing, obtain senior management approval before establishing new correspondent relationships, document the respective responsibilities of each institution, and, for payable-through accounts, be satisfied that the respondent has verified the identity of and performs ongoing due diligence on the customers with direct access. Article 8(4) of the Wwft imposes the same duties on Dutch banks.
Geography then enters through two European lists that are routinely confused, and confusing them gives the wrong answer in both directions. The money laundering list is the one identified by the Commission under article 9(2) of the directive and set out in the Annex to Commission Delegated Regulation (EU) 2016/1675, in the version applicable from 29 January 2026. Its effect is direct: a relationship touching a country on it triggers the mandatory enhanced measures of article 18a of the directive and article 9(1) of the Wwft, including information on the origin of the funds and on the source of the wealth of the customer and of the beneficial owners.
The other list is the EU list of non-cooperative jurisdictions for tax purposes, which the Council revises periodically and publishes as an annex to its conclusions in the C series of the Official Journal, most recently in the conclusions published on 6 March 2026, whose Annex I names ten jurisdictions. Its consequences are tax consequences, and its membership is not the same. Monaco appears on the money laundering list and not on the tax list; Panama appears on the tax list and not on the money laundering list. Neither of those two texts names a GCC state, which means that for a Gulf family the listing question is usually about the intermediate jurisdictions in the chain rather than about the home country.
Substance answers the question before it is asked
A Dutch holding with resident directors, real decision-making in the Netherlands and genuine management is not only a tax position, it is a banking position. A bank onboarding a structure with substance is onboarding something it can understand. A bank asked to onboard a shell owned from abroad, with no local presence and no evident purpose beyond holding, is being asked to take on risk it will usually decline. The substance the tax authority expects, set out in our note on Dutch substance requirements, produces much of the evidence the bank wants to see.
Those expectations rest on a written provision rather than on custom, and the provision has a defined perimeter. Article 3a(1) of the Uitvoeringsbesluit internationale bijstandsverlening bij de heffing van belastingen designates the taxpayers concerned, being Dutch corporate income taxpayers whose activities in a year consist mainly of directly or indirectly receiving and paying interest, royalties, rent or lease instalments from or to group bodies not established in the Netherlands, and article 3a(2) leaves activities connected with holding participations out of that measurement.
For those taxpayers, article 3a(7) sets the requirements on presence in the Netherlands: at least half of the total number of statutory and decision-empowered board members live or are actually established in the Netherlands; those Netherlands-resident board members have the professional knowledge to perform their duties properly, which include at least deciding, on the taxpayer’s own responsibility and within the framework of normal group involvement, on the transactions to be concluded and ensuring that concluded transactions are properly handled; the taxpayer has qualified personnel for the adequate execution and recording of those transactions; board decisions are taken in the Netherlands; the taxpayer’s principal bank accounts are held in the Netherlands; the bookkeeping is done in the Netherlands; the taxpayer has wage costs remunerating the activities in question of at least 100,000 euro; the taxpayer has an immovable property or part of one in the Netherlands at its disposal for at least 24 months, containing an office fitted with the usual facilities for those activities, in which they are actually carried out; the taxpayer runs a real risk on the loans or legal relationships concerned within the meaning of article 8c(2) of the corporate income tax act; and the taxpayer has equity appropriate to that required real risk.
The scope of that list matters as much as its content, and it is narrower than its reputation. It is a disclosure standard aimed at conduit companies, not a licence condition that every holding must satisfy, so a bank reading it is reading evidence of presence rather than applying a banking rule. The same distinction between a test and the evidence that serves it runs through economic substance rules compared across six jurisdictions.
Alongside it sits a rule with teeth for a financing holding. Article 8c(1) of the Wet op de vennootschapsbelasting 1969 disregards, in determining profit, interest on connected loans and royalties on connected legal relationships received from and paid to bodies or individuals belonging to the taxpayer’s group, where the taxpayer on balance runs no real risks on them. Article 8c(2) treats the taxpayer as running real risks on connected loans where the equity appropriate to cover those risks is at least the lower of one per cent of the loans outstanding or two million euro, and the taxpayer must make it plausible that this equity is present and would be eroded if the risks materialised. Article 8c(3) still brings into profit an arm’s length remuneration for the functions the taxpayer does perform. A holding with no capital at risk is not left untaxed; it is left taxed on a service fee while its financing flows drop out, which is rarely what the structure was built to do.
UAE corporate tax changed the starting point
The introduction of federal corporate tax in the United Arab Emirates has changed the analysis for GCC groups using European structures. A UAE entity is now a taxpayer, which affects how a Dutch holding above or alongside it should be positioned, how treaty benefits are claimed, and how the group demonstrates that its arrangements have a genuine business purpose rather than a purely fiscal one. The principal purpose test, which we cover in our note on treaty access and beneficial ownership, applies with full force here, and a structure built for a pre-tax UAE may need revisiting.
The mechanics are in the text. Article 11 of Federal Decree-Law No. 47 of 2022 makes a juridical person incorporated or otherwise established or recognised under the legislation of the State a Resident Person, expressly including a Free Zone Person, and also catches a foreign entity effectively managed and controlled in the State. Article 3(1) imposes corporate tax at zero per cent on the portion of taxable income not exceeding an amount set by a Cabinet decision and at nine per cent above it, and article 3(2) taxes a Qualifying Free Zone Person at zero per cent on Qualifying Income and nine per cent on taxable income that is not Qualifying Income. For a group using a Dutch holding above a UAE company, the Emirati layer now has a rate, a return and a file of its own.
The free zone position is conditional and the conditions are cumulative. Article 18(1) provides that a Qualifying Free Zone Person is a Free Zone Person that meets all of the following conditions: it maintains adequate substance in the State, it derives Qualifying Income as specified in a Cabinet decision, it has not elected to be subject to corporate tax under article 19, it complies with articles 34 and 55, and it meets any other conditions the Minister may prescribe. The Minister has prescribed two, in article 5(1) of Ministerial Decision No. 229 of 2025: that non-qualifying revenue does not exceed the de minimis requirements of article 3 of that decision, and that audited financial statements are prepared in accordance with Ministerial Decision No. 84 of 2025.
What follows a failure is longer than it looks. Article 18(2) of the Decree-Law provides that a person failing any of those conditions at any particular time during a tax period ceases to be a Qualifying Free Zone Person from the beginning of that period, and article 18(3) lets the Minister prescribe otherwise. He has, and it hardens rather than softens: article 5(2) of the 2025 decision, in the same terms as article 5(2) of the 2023 decision it replaces, provides that the person ceases to be a Qualifying Free Zone Person from the beginning of the relevant tax period and for the subsequent four tax periods. Five periods outside the regime, not one, is the number a group should be planning against.
Qualifying Income itself is determined elsewhere, and this is where groups most often read the regime as narrower than it is. Article 3(1) of Cabinet Decision No. 100 of 2023 provides that the Qualifying Income of a Qualifying Free Zone Person includes income derived from transactions with a Free Zone Person, except income derived from Excluded Activities; income derived from transactions with a Non-Free Zone Person, but only in respect of Qualifying Activities that are not Excluded Activities; income from the ownership or exploitation of Qualifying Intellectual Property under article 7(1) of that decision; and any other income where the person satisfies the de minimis requirements of its article 4. All of those are subject to the same opening proviso, that the income is not attributable to a domestic or foreign permanent establishment under article 5, not derived from the ownership or exploitation of immovable property under article 6, and not treated as taxable income under article 7(2).
The list of Qualifying Activities in article 2(1) of Ministerial Decision No. 229 of 2025, which by its article 6 repeals Ministerial Decision No. 265 of 2023, therefore governs the second of those categories rather than all of them. Income from a transaction with another Free Zone Person that is the beneficial recipient falls in the first category without the activity appearing on that list at all, provided it is not an excluded activity, and banking activities are excluded under article 2(2)(b). Trading of qualifying commodities was already point (c) of the equivalent list in the 2023 decision, so the 2025 decision did not introduce it; the changes it made to the definition include dropping the requirement that the commodities be traded in raw form, bringing in industrial chemicals, associated by-products and environmental commodities, excluding products packaged for retail sale, and requiring that a quoted price for them exist.
What is law today and what is law from 2027
A good deal of commentary describes the coming European regime as though it were already in force, and a family planning around it can end up applying a test that does not yet exist while missing the one that does. Article 90 of Regulation (EU) 2024/1624 settles the question: the Regulation entered into force on the twentieth day following its publication in the Official Journal, but it applies from 10 July 2027, except in relation to the obliged entities referred to in article 3, points (3)(n) and (o), to which it applies from 10 July 2029. Until those dates the directive and its national transpositions, the Wwft in the Netherlands, are the law a bank is answering to.
One provision of the Regulation is worth reading now precisely because it is so often quoted in half. Article 34(5) applies where a business relationship that has been identified as having a higher risk involves the handling of assets with a value of at least five million euro, or the equivalent, through personalised services, for a customer holding total assets with a value of at least fifty million euro, or the equivalent, whether in financial, investable or real estate assets or a combination of them, excluding that customer’s private residence. All of that has to be true at once. A reader who sees only the five million figure will conclude that an ordinary property purchase brings the regime down on them, and a reader who sees only the fifty million will forget that the trigger also needs personalised services and an existing higher-risk classification.
Where the test is met, article 34(5) adds three measures to whatever enhanced due diligence already applies: specific measures including procedures to mitigate the risks associated with personalised services and products offered to that customer, additional information on that customer’s source of funds, and the prevention and management of conflicts of interest between the customer and the senior management or compliance staff dealing with the account. The obligation falls on credit institutions, financial institutions and trust or company service providers, not on every obliged entity. Read together with the new Annex III factors on entities without real economic activity, the direction of travel is that from 2027 the questions described here get asked earlier and recorded more fully, and a family whose file is already built to answer them will notice the change least.
Scrutiny is the price of access, and it is worth paying
The instinct to route around scrutiny, through jurisdictions that ask fewer questions, is the most expensive instinct available to a Gulf investor entering Europe. Money that arrives through an opaque route arrives under suspicion, and suspicion is far more costly than the diligence that would have avoided it. The families who do best in Europe are the ones who accept, from the first meeting, that access to European banking, European assets and European treaty benefits is granted in exchange for transparency, and who build the structure so that transparency is easy to provide. That is not a constraint on the strategy. It is the strategy.
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.