NETHERLANDS Law and Practice Contributed by: Willemijn van Duren and Rowena Zee, Arcagna
up” non-qualifying assets) and can also lead to post- poning a transfer to reduce the risk of losing the relief. A second key driver is valuation, because the tax outcome is highly sensitive to the value allocated to the business. In practice, the Dutch tax authorities often expect the “real value” to be supported using a discounted cash flow (DCF) approach, which affects documentation and negotiation strategy. While a dis- count for limited marketability may be arguable in specific cases, the room for applying such discounts is typically limited and can be a discussion point with the tax authorities. Finally, recent and upcoming limitations around real estate-related activities can materially affect succes- sion strategies. Where third-party leasing of business real estate is now excluded from the business suc- cession facilities (eg, effective as of 1 January 2025), this may lead to significant cash tax costs on death (income tax and inheritance tax), making liquidity planning (including partial insurance solutions) more relevant. If an alternative route is to transfer (part of) the business during life, the plan must be co-ordinated carefully because Dutch real estate transfer tax can become a key friction cost, and civil law constraints can also matter. 9. Trusts, Foundations and Related Entities 9.1 Choice of Planning Vehicle The Netherlands is a civil law jurisdiction. For that rea- son, estate and wealth planning commonly relies on Dutch civil law instruments (in particular foundations ( stichtingen ) and contract-based arrangements) rather than common law trust concepts. A Dutch foundation is a legal entity with legal person- ality and no members or shareholders, and its gov- ernance can be tailored to a significant extent in its articles of association. Foundations are used both for charitable purposes and for family/fiduciary structur- ing, within the boundaries of Dutch rules on distribu- tions (while allowing contractual payment obligations where relevant).
A widely used Dutch planning vehicle is the foundation used as a fiduciary administrator ( stichting adminis- tratiekantoor , STAK). In a typical STAK structure, the STAK becomes the legal owner of assets (most com- monly shares) and issues depositary receipts (certifi- cates) to family members; these receipts represent the economic entitlement (eg, dividends and value growth) while voting control is exercised by the STAK board. This is particularly attractive where a family wishes to transfer economic interests while retaining (or staging) control and professionalising governance during an intergenerational transition. The rights of depositary receipt holders are largely determined in the trust con- ditions ( administratievoorwaarden ); as a rule, holders cannot force the STAK to resolve on distributions, and the STAK (as shareholder) exercises voting rights and decides on dividend distributions at shareholder level (including in a Dutch limited liability company). A trust cannot generally be created under Dutch law as a domestic legal form. However, in cross-border situations, foreign trusts are frequently encountered and Dutch advice then focuses on their interaction with Dutch civil law and (where relevant) Dutch tax classification. Where trust-like results are desired within Dutch law, families may use: • a foundation structured as a civil law trust (assets are donated to a foundation subject to an obliga- tion to distribute income and/or capital to speci- fied (classes of) beneficiaries, with the practical enforceability depending on the wording of the deed and governance set-up); and/or • a mutual fund ( fonds voor gemene rekening , FGR) or limited partnership ( commanditaire vennootsc- hap , CV), both being a flexible contractual pooled investment arrangement in which legal title to the assets is held by an administrator for the risk and account of the participants. In succession planning, transfers of participations are usually restricted in the fund conditions. An FGR and a CV are generally treated as transparent for Dutch corporate income tax and dividend withholding tax purposes.
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