Register a Dutch Foundation in 2023
The Netherlands obtain several types of structures, as in other European countries. Eventually, the Netherlands became well-known for its foundation openings, one of them is Dutch foundations, also known as charities or non-governmental organizations, are regulated by both the Civil Code, and not the Company Act.
Foundations & “Stichting” are not able to be compared with other Dutch companies. In some instances, the Dutch Stichting must have a share capital. This allows them to be allowed to undertake commercial ventures. However, profits from these undertakings are subject to restrictions.
Only Dutch Trade Registrar-registered foundations are permitted to carry out commercial activities. In the Netherlands, to register a Dutch foundations either register as holding companies or special purpose enterprises (SPEs).
What is a foundation?
A foundation is an organization that doesn’t aim to make money. A foundation raises money through donations, loans, and legacies. Its primary purpose is to support a non-profit or social cause. You can also own a business but all profits must go to the foundation’s cause.
A foundation may have a board but no members or shareholders. A general meeting of members is therefore not necessary. You must make the statutes clear if you intend to appoint an oversight board. The supervisory board oversees the board.
A foundation’s purpose may differ from a charity’s. A stichting can be used for example by professional football clubs, broadcasting companies, and hospitals.
Things to know while Registering a Dutch Foundation
| Quick Facts | |
|---|---|
| Applicable law | Civil Code |
| Principal uses | - charity, - Special purpose vehicle (SPV), Holding company |
| It can also take forms | - association, - trust, Family foundation - Charitable organization |
| Documents needed for creation | - A civil notary creates an establishment deed. Articles of Association |
| Trade Register incorporation required (YES/NO). | Yes |
| Required share capital (YES/NO). | No |
| Director requirements (YES/NO). | However, the board must be composed of a supervisory and director board. |
| Foreign participation option (YES/NO). | Yes, founders can be foreign nationals or companies |
| To be paid taxes | When you are operating a business, the corporate tax |
| Tax benefits | Gift tax and inheritance exemptions |
Primary Features of Dutch Foundation
- The Dutch Stichting is an entity that was created by the donation of an estate from a person or business to fulfill a specific purpose.
- Stichting may make profits, but not distribute to founders or members of the Foundation Council.
- It does not need to be approved by the government for full legal existence.
- The founder is the legal entity or person who creates the Stitching and donates the property or rights. Also known as the “corpus”,
- Any type of property or right can be included in the corpus. It may also include cash, securities, and other transferable goods.
- Beneficiaries of a Stichting are those for whom it is created.
- The Dutch Foundation Council is responsible for administering a Dutch Stichting. They are responsible for fulfilling the Stichting’s purposes.
- The Foundation Council can be made up of legal entities and natural persons. If the founder so desires, he may also be part of the Foundation Council.
- Dutch Stichting do not have to pay corporate income tax if they are engaged in activities that resemble business enterprises.
- A Stichting can be considered to act as an enterprise if it generates profits of more than EUR 200,000. The Dutch corporate income tax rate is 20% on profits below EUR 200,000.
- Dutch Stichting is primarily used for charitable activities in the Netherlands.
- It is relatively simple to register a Dutch charity foundation. This makes it very cost-effective.
- Charitable Dutch Stichting can be used to transfer assets that have been left behind in wills.
- Dutch Stichting can also be used as the General partner of Dutch CVs. Because a foundation is considered a legal entity, the liability of the General partner can be limited to the assets of the Stichting.
The Dutch Stichting Forms
In the Netherlands, a foundation can take one of the following forms:
- A private foundation in the Netherlands
- Family foundation
- An association
- A charitable organization
- A trust
You should note that an association can be either a full-fledged legal entity or a limited one.
Establishing a foundation in the Netherlands
It is very easy to set up a foundation here in the Netherlands. There are no licenses or approvals required.
Foreigners who wish to establish foundations in the Netherlands will need to prepare a set of documents that must be notarized. These documents are the constitution deed and articles of association.
The deed of the foundation is the memorandum that establishes the organization’s creation. However, the Articles of Association determine the activities and the management of Dutch stich ting. Setting up a foundation in the Netherlands is important.
The following information must be included in the documents that the Dutch foundation registers:
- The foundation’s name
- Information about assets
- The purpose of the foundation
- Information about directors and managers
- The local address of the foundation.
How to establish a family foundation in the Netherlands?
The foundation is not only available for commercial purposes but can also be used for wealth management purposes just like in other countries. High-net-worth individuals who are moving to the Netherlands can use the family foundation to manage their wealth.
The certificate of incorporation must be drafted and signed by a Dutch public notary. The Dutch family foundation is very similar to trusts in other nations. In the case of the Dutch foundation, however, the settlor and beneficiaries are the main participants.
You must know that the assets of a Dutch family foundation cannot be transferred to other legal entities or companies. Instead, they can only be shared among relatives. These foundations may also be used as charities.
Setting up a charity in the Netherlands
Although the foundation may be established as a charity in the Netherlands, it is recommended that such a structure obtain the status of an ANBI which will allow it to enjoy many tax benefits. A foundation must do charity work in a minimum of 90% to qualify for ANBI status.
The foundation will be exempted from inheritance and gift taxes. However, it will also receive refunds for the energy tax.
Many tax benefits can also be available to founders. They can deduct donations from their income or corporate income tax. This Netherlands makes it attractive for foundations for charitable purposes.
Dutch foundations are tax minimization vehicles
Anyone who wants to establish foundations for commercial activities should be aware that they will be subject to corporate tax.
The Dutch foundation can be registered as a holding company if it is created as a special purpose vehicle. The settlers can enjoy greater protection for their investments by doing this.
Foundations can own other companies if they are registered as charitable or non-profit organizations. In this case, corporate tax reductions will be available to the settlers.
Special purpose foundations are permitted to receive funds from third parties, without having to pay any withholding taxes on interest payments.
Dutch foundations that are limited liability companies may also be exempt from corporate tax and withholding tax on dividends.
The Netherlands taxation of private foundations
The tax laws in the Netherlands that apply to Dutch foundations include:
- The State Tax Law
- The Income Tax Law
- The Income Tax, Donations and Public Benefit Organizations Act.
Private foundations established in the Netherlands or the Dutch Antilles are exempted from income and corporate taxes. Foreign citizens who establish private foundations in the Netherlands are exempted from the gift tax.
Conclusion
While registering for the Dutch Foundation, many factors must be considered. A Dutch Foundation is exempt from corporate income tax and VAT when it only maintains a foundation. There are numerous other advantages of registering a Dutch foundation including complete foreign control, as well as asset insurance, estate planning, quick formation, founder control, and the ease with which English is understood by the majority of Dutch people.
Contact our professionals at Odint Consulting if you’d want to register a Dutch Foundation or if you have any questions about it. If you have any questions, our professionals would be happy to help.
FAQ’s
Yes, you can establish foundations in the Netherlands.
To draught a deed stating that you have established a foundation and listing its bylaws, you will require a civil law notary.
You don’t need to move when you open a foundation.
Yes, even though they may be abroad, foreigners can establish a Stichting here. This can be handled by our local specialists.
No, charities in the Netherlands are exempted from taxation
There are a number of resources available online and in libraries that can provide you with more information about opening a Dutch foundation. You can also contact Odint Consulting who specializes in Dutch foundations for more information
