New Dutch VAT rules for holding companies and share transactions as of 1 July 2025: five key insights for businesses

1. What is happening?

The Dutch VAT rules for holding companies and share transactions will change, effective 1 July 2025.

This may impact a wide range of businesses with Dutch holding companies or Dutch investment vehicles, including brands and tech companies with IP holding structures, life sciences businesses with R&D subsidiaries, financial institutions with shared service center companies and private equity firms with an investment portfolio.

2. Why is this relevant?

VAT on costs that was previously reclaimable, may now no longer be reclaimable due to the changes. 

This could result in new true tax costs, including 21% Dutch VAT on share transaction costs, such as fees of lawyers, tax advisers, corporate finance advisers, data room providers, escrow agents and specialised consultants. Beyond share transaction costs, this could also impact VAT on recurring costs incurred by a holding company, such as accounting and audit fees.

3. What are the key changes?

The changes involve the withdrawal of two Dutch VAT decrees: the Holding Resolution from 1991 and the Share Sale Decree from 2004.

Holding Resolution 

This decree allowed holding companies to reclaim VAT on their costs under favourable conditions. Instead, the new rules align with more strict EU VAT case-law and define three specific scenarios where holding companies may still reclaim VAT, namely if the holding company:

1. actively manages its subsidiary for consideration, or;
2. holds shares in a subsidiary that is closely connected to its main business activities, or;
3. is engaged in the professional trading of shares and/or other securities.

Furthermore, passive holding companies that make key decisions for the group can still be included in a Dutch VAT group under certain conditions. This VAT grouping option is now explicitly extended to intermediate holding companies (not just top holdings). This is a welcome expansion of the existing policy, as it allows for VAT free transactions within the group and can improve VAT recovery across the group. That said, VAT grouping eligibility for (intermediate) holdings is no longer assumed, but now requires proof of close financial, organizational and economic links. This is not a one-time assessment, but requires ongoing monitoring to be compliant.

Share Sale Decree

This decree allowed a favourable VAT treatment for share transaction costs based on Dutch Supreme Court case-law. Instead, now a new and more strict framework will determine VAT recovery rights when shares are sold. Under the new decree, costs related to share transactions will generally no longer qualify as general costs, but rather as direct costs, making it harder to reclaim VAT compared to the old situation.

Furthermore, proceeds from share sales may be excluded from the pro rata VAT recovery calculations if the sale is a one-off transaction. However, this should not apply to private equity firms, potentially reducing their VAT recovery rights more significantly compared to other businesses.

4. What does not change?

An aspect that remains unchanged is that share transactions themselves continue to be either VAT exempt or outside the scope of VAT. The new rules primarily affect the ability to reclaim VAT on associated costs, not the VAT treatment of the share transactions themselves.

There is unfortunately no further clarity on the “pre pro rata” that determines VAT recovery on costs incurred that relate to both business and non-business activities. This continues to be an area of uncertainty and risk for holding companies.

5. What can you do now?

Businesses should (re)assess the VAT positions and VAT governance of holding companies in their corporate structures and their deal strategies. Consider for example the following steps:

1. Determine if you have (intermediate) holding companies in your corporate structure and evaluate whether they qualify for VAT recovery under any of the three scenarios above.
2. Review the VAT costs incurred by your holding companies and identify whether you need to VAT register to pay VAT or reclaim VAT.
3. Determine if operational companies could or should be included in a Dutch VAT group with your (intermediate) holding companies to improve VAT recovery and secure VAT free transactions within the group.
4. Strategic actions, such as benchmarking deal strategies and timing of deal fees against the new rules, as well as filing formal objections where the new rules interpret VAT principles more restrictively than EU VAT case-law.
5. Assess impact for your EU-wide holding and investment structures, as similar interpretations have been or may be adopted in other EU Member States due to the harmonized nature of EU VAT legislation.

For further discussion on how these VAT changes impact your holding companies and share transactions, please contact Arnoud Knijnenburg (Corporate Tax Partner) or Andy van Esdonk (Head of VAT Netherlands).