The family conglomerates of Southeast Asia, the diversified groups that dominate the economies of Indonesia, Thailand, the Philippines and Malaysia, are among the most sophisticated family enterprises in the world, and their move into Europe is usually driven by two motives at once: commercial opportunity and the diversification of a concentrated, home-market balance sheet. Both point toward a European structure, and the design has to serve both.
Diversification as the underlying motive
A conglomerate whose wealth is concentrated in a single country and often a handful of sectors has a concentration risk that grows with its success. European investment, in real estate, operating businesses or financial assets, is a way of diversifying that risk into a stable jurisdiction and a hard currency. A Dutch holding provides the vehicle for that diversification, consolidating European assets under the participation exemption we describe in our note on the participation exemption, and giving the family a European balance sheet distinct from its home-market one.
That diversification argument is only as strong as the tax result underneath it, and the tax result turns on a provision that is narrower than its reputation. Article 13 of the Wet op de vennootschapsbelasting 1969 keeps the benefits arising from a participation out of the taxable profit of the Dutch company, together with the costs of acquiring or disposing of that participation, and the second paragraph treats the taxpayer as holding a participation where it is the shareholder of at least five per cent of the nominal paid-up capital of a company whose capital is divided wholly or partly into shares. A group building its European portfolio out of majority stakes in operating companies clears that threshold without effort. A group building one out of small minority positions may not, and the test has to be run position by position rather than assumed across a portfolio.
What the participation exemption does not cover
The ninth paragraph of article 13 is where a diversification vehicle meets its first real obstacle. The exemption does not apply to the benefits arising from a participation held as an investment, a beleggingsdeelneming, nor to the costs of acquiring or disposing of it, unless the participation is a qualifying investment participation. That final clause carries the whole question, because a holding assembled to spread a family balance sheet across asset classes is, by its own description, closer to investment than to trade, and the exemption has to be earned rather than presumed.
The eleventh paragraph sets out the tests by which a participation is nonetheless treated as a qualifying investment participation. Subparagraph (a) asks whether the company is subject to a tax on profits that results in a levy that is real by Dutch standards. Subparagraph (b) asks whether the assets of the company consist, directly or indirectly, usually for less than half, of low-taxed free investments, with a proviso that such investments are not counted as such where the assets of the company holding them usually consist for the most part of assets other than low-taxed free investments. The twelfth paragraph then defines free investments to include investments other than those reasonably necessary within the business activities of the company that holds them, and it carves out investments in immovable property, including rights relating directly or indirectly to immovable property, that are not held by a company treated as an investment institution or an exempt investment institution. A family group whose European diversification runs through property needs that carve-out read carefully rather than quoted loosely.
Screening on the way in
The second obstacle is not fiscal. Regulation (EU) 2019/452 establishes a framework for the screening by Member States of foreign direct investments into the Union on the grounds of security or public order, together with a cooperation mechanism between Member States and the Commission. It prohibits nothing by itself: article 1(3) states that nothing in the Regulation limits the right of each Member State to decide whether or not to screen a particular investment, and article 3(1) leaves Member States free to maintain, amend or adopt their own mechanisms. What it does do is open the file to everyone. Under article 6, a Member State screening an investment notifies the Commission and the other Member States, those recipients have fifteen calendar days to signal an intention to comment, and comments or opinions follow no later than thirty-five calendar days after receipt of the information, except that where additional information was requested they follow no later than twenty calendar days after that information arrives, with a further five calendar days for the Commission where its opinion follows comments from other Member States. Article 4(1) lists the factors that may be considered, introduced by the words inter alia, so the list is open, and article 4(2)(a) asks squarely whether the foreign investor is directly or indirectly controlled by the government of a third country, including through ownership structure or significant funding. For a conglomerate whose home-market register includes a state fund or a state bank, that question will be asked, and the answer is better documented before it is.
In the Netherlands the mechanism is the Wet veiligheidstoets investeringen, fusies en overnames. Its article 2 applies to acquisition activities concerning a target undertaking that is a vital provider, a manager of a business campus, or an undertaking active in the field of sensitive technology, and the list of activities runs from investments leading to control through mergers, joint ventures, demergers and the acquisition of assets essential to the target’s function. Nothing in that article turns on the nationality of the acquirer, so incorporating a Dutch holding first does not move a transaction outside the regime. Article 10(1) is the standstill, and it carries an express exception: an acquisition activity other than one within article 2(g) or article 3(d) does not take place before the Minister has notified the party under the duty to report that no review decision is required, or a review decision has been taken. Those two lettered cases are acquisitions of goods under universal title within the meaning of article 80(2) of Book 3 of the Civil Code, other than a merger or a demerger, and the modes of acquisition that provision lists include succession on death and the merging of estates. For them article 11(6) reverses the order, providing that the acquirer notifies the Minister within two weeks after the acquisition has taken place, so a family that takes a holding in a target undertaking by inheritance is not waiting for clearance, it is running a two week clock from the moment the estate passes. For everything else article 11(1) puts the duty in plain terms, every intention to carry out an acquisition activity is notified to the Minister, and article 58 gave the Minister a reach backwards, allowing him to order a notification within eight months of the Act entering into force in respect of acquisition activities that took place after 8 September 2020.
The perimeter of sensitive technology is where descriptions of this regime most often go wrong, in both directions. Article 8(1) opens with the words tenzij anders bepaald op grond van het tweede of derde lid, unless otherwise provided under the second or third paragraph, and then defines sensitive technology as dual use items whose export is subject to authorisation under article 3(1) of Regulation (EU) 2021/821 together with military goods within article 2 of the Uitvoeringsregeling strategische goederen 2012. The Besluit toepassingsbereik sensitieve technologie then moves that boundary both ways: its article 2 excepts from sensitive technology the dual use items referred to by reference code in Annex 1, and its article 3 adds, on top of what article 2 has not excepted, the technologies described in Annex 2. The influence thresholds move as well. Article 4(1) sets out five cases of significant influence, at one tenth, one fifth and one quarter of the votes in the general meeting, plus an undertaking given to a third party to promote the appointment or dismissal of directors it nominates, and an agreement between shareholders that one of them acquires or increases influence through one of the first three. Article 4(4) then provides that where an order in council under article 4(3) exists, significant influence in a sensitive technology target arises uitsluitend, exclusively, where one of the cases declared applicable to the designated category is met, and article 4 of the Besluit designates undertakings active in highly sensitive technology, identified by reference code in Annex 3, declaring cases (a) to (e) applicable to them.
The family governance dimension
These are family enterprises, often across several generations, and the European structure is usually built with succession in mind as much as investment. The separation of ownership, control and economic benefit that a Dutch holding with a stichting above it allows is directly relevant to families thinking about how the next generation will hold and govern the European wealth. We deal with this in our note on how family offices use Dutch BVs and stichtingen. For a conglomerate family, the European structure is often the first part of the estate governed by rules written in advance rather than by custom.
For these families the European structure is two things at once: a diversification of the balance sheet and a rehearsal of how the next generation will govern wealth. It has to be designed for both.
Existing complexity, handled first
Southeast Asian conglomerates typically already hold assets through layered structures, frequently involving Singapore or other regional hubs. A Dutch holding for European assets should be integrated with, not simply bolted onto, that existing architecture, and where the existing structure is more complex than its current purpose requires, simplification pays. The families who do best treat the European entry as an occasion to rationalize, not merely to add.
Getting the profits back out
The Dutch holding is a conduit for distributions as well as a container for assets, and the outbound leg has its own rules. Article 5 of the Wet op de dividendbelasting 1965 sets the dividend withholding tax at 15 per cent of the proceeds. Article 4(2) disapplies the withholding where the recipient is a body resident, under the tax law of the state concerned, in another Member State of the European Union or in a state party to the EEA Agreement, or in a state with which the Netherlands has concluded a double taxation convention providing for a dividend regime, and where that recipient holds the required interest in the withholding agent. Whether a particular family holding company benefits therefore turns on the instrument in force between its home state and the Netherlands and on what that instrument says about dividends, which is a question about a treaty text rather than about a region.
Article 4(3) disapplies that relief in three cases, and article 4(4) then adds a condition on top of all three. Under article 4(3)(a) the relief falls away where the recipient is, under a convention concluded between its state of establishment and another state, deemed to be resident in a state with which the Netherlands has no double taxation convention providing for a dividend regime and which is neither a Member State of the European Union nor a party to the EEA Agreement. Under article 4(3)(b) it falls away where the recipient performs a function comparable to that of an investment institution within article 6a or article 28 of the Wet op de vennootschapsbelasting 1969, which is the limb a holding assembled to carry a diversified portfolio should test before the others. Under article 4(3)(c) it falls away where the recipient holds the interest with, as its main purpose or one of its main purposes, the avoidance of the levying of tax from another person, and where there is an artificial arrangement or transaction, or series of them, an arrangement being regarded as artificial to the extent that it is not put in place for valid commercial reasons reflecting economic reality. Those are two cumulative elements, not one test expressed twice, and an arrangement with a commercial rationale survives the second even if a tax advantage is among its purposes. Article 4(4) provides that the first and second paragraphs apply only to proceeds in respect of which the recipient makes it plausible that it is the beneficial owner. That is a burden on the family holding company, not on the Dutch payer, and it is discharged with documents rather than assertions.
Above the dividend withholding tax sits the conditional withholding tax. Article 3.1 of the Wet bronbelasting 2021 charges interest, royalties and dividends, so the instrument is no longer confined to interest and royalties as it was when it was introduced. Article 4.1 sets the rate at the highest percentage referred to in article 22 of the Wet op de vennootschapsbelasting 1969, and the article 22 table in force from 1 January 2026 runs at 19 per cent up to a taxable amount of 200,000 euro and at 25.8 per cent above it, so the conditional charge is 25.8 per cent. Article 1.2(1)(e) defines a low-taxed jurisdiction as a state designated by ministerial regulation which either does not subject bodies to a tax on profits, or does so at a rate below 9 per cent, measured on 1 October of the calendar year preceding the relevant period, or which appears on the EU list of non-cooperative jurisdictions in force in that preceding calendar year. The designation is what matters, and it is refreshed every year: the version of the Regeling laagbelastende staten en niet-cooperatieve rechtsgebieden voor belastingdoeleinden in force from 1 January 2026 designates twelve jurisdictions under the low rate limb and eleven under the EU list limb, and no Southeast Asian jurisdiction appears in either. The charge is therefore not a regional problem. It becomes a problem when a dormant island company survives in the chain, or when article 2.1(1)(c) catches an interposition whose main purpose is to avoid the levying of tax from another person and which is artificial in the sense the provision defines.
Substance and the home-country rules
The substance requirement in the Netherlands, set out in our note on Dutch substance requirements, has to be met genuinely, and the home-country tax rules, which vary considerably across the region and increasingly include controlled foreign company provisions, have to be respected. A Dutch holding does not remove home-country tax and should never be presented as though it does. It provides an efficient, stable and defensible European layer that sits within the home-country rules, which for a sophisticated conglomerate family is exactly the right expectation.
It is worth being exact about whose substance the Dutch rules measure, because the point is regularly inverted. For the anti-abuse condition in article 4(3)(c) of the Wet op de dividendbelasting 1965, article 1bis of the Uitvoeringsbeschikking dividendbelasting 1965 looks at the recipient of the dividend, that is at the family holding company abroad, and not at the Dutch entity paying it. Unless the inspector makes the contrary plausible, that recipient is deemed not to hold its interest with avoidance as a main purpose, and valid commercial reasons reflecting economic reality are deemed present, where eight conditions are met together: at least half of the total number of statutory directors with decision-making power reside or are established in the state where the recipient is established; those directors have the professional knowledge needed to perform their duties properly, which include deciding on the transactions the recipient concludes and ensuring those transactions are properly settled; the recipient has qualified staff for the adequate execution and recording of those transactions; its board decisions are taken in that state; its principal bank accounts are held there; its bookkeeping is done there; its wage costs are at least 100,000 euro multiplied by the country factor set out in the annex for the state in which it is established; and it has had premises at its disposal in that state for at least 24 months, containing an office with the usual facilities, in which the work is actually carried out.
The Singapore comparison
Families who already use Singapore as their international hub often ask why they need a European layer at all. The answer is that Singapore and the Netherlands do different jobs: Singapore is an excellent Asian and international hub, while the Netherlands is built for owning European assets inside the single market. We set out the complementarity in our note on Singapore holding structures and Dutch BVs. For a conglomerate with genuine European assets, the two are partners rather than alternatives.
Montclare runs a dedicated Asia 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.