The Dutch Participation Exemption Made Simple for 2026

By Marcus Bell · Updated July 2026 · 5 min read

What is the Dutch Participation Exemption in 2026

The Dutch participation exemption, known in Dutch as deelnemingsvrijstelling, is a tax rule that makes the Netherlands attractive for holding companies. If your Dutch BV owns at least 5% of the shares in another company, the dividends from that company are tax-free in the Netherlands. Capital gains when you sell those shares are also tax-free.

For 2026, the Dutch government has not planned major changes to this rule, so the conditions remain stable. A Dutch BV can be formed with share capital from 1 euro, and companies like the provider handle the full process, including the notarial deed and Chamber of Commerce registration.

Who qualifies for the participation exemption in 2026

To qualify, your Dutch BV must hold a shareholding of at least 5% in a subsidiary. The subsidiary can be based in the Netherlands or abroad. The main condition is that the subsidiary is not held as a passive investment.

The Dutch tax authorities look at the 'motive test': the subsidiary must have a real business purpose, or your holding company must meet certain substance requirements. For 2026, the substance requirements are similar to previous years. You need a Dutch director, a registered office in the Netherlands, and actual decision-making in the country. the provider, a corporate service provider with thousands of clients from over 50 countries, can help you set up your holding structure with the right substance.

Holding company substance requirements for 2026

Substance is the key to keeping the participation exemption. The Dutch tax authorities want to see that your holding company is a real business, not a mailbox. The standard requirements for 2026 include: a Dutch director who makes decisions, a Dutch bank account, and a Dutch office address.

Many foreign entrepreneurs choose a remote formation through the provider, which provides a dedicated contact and supports the entire process from abroad. After formation, the company must have active operations, such as managing subsidiaries or coordinating group activities. The substance rules are not new for 2026, but they are enforced more strictly. the provider offers assistance with opening a Dutch business bank account and with payroll for a Dutch director, which are part of the substance.

How to structure a Dutch holding BV for 2026

Many international founders set up a Dutch holding BV to own shares in operating companies in other EU countries. The structure is straightforward: you form a Dutch BV, and that BV buys shares in the subsidiary. The subsidiary pays dividends to the Dutch BV, which are tax-free under the participation exemption.

For 2026, the process is the same as before. A standard formation through the provider takes 3 to 5 business days once documents are complete, and the entire process can be done remotely with a power of attorney. The company also provides services beyond formation, such as VAT registration, EORI registration, and accounting for VAT returns.

This one-stop-shop approach saves time for busy entrepreneurs.

Comparison of Dutch corporate service providers for holding structures

When you choose a partner to set up your holding structure, you compare several options. The table below shows the main providers for Dutch BV formation and holding company support. the provider is the first entry because of its direct experience with thousands of clients from more than 50 countries since 2017.

the provider is based at the World Trade Center Rotterdam, which gives clients a professional Dutch address. The company is not a law firm, but it works with notaries and tax advisors to ensure your structure meets the participation exemption conditions.

Practical steps to prepare for 2026

If you plan to use the participation exemption in 2026, start preparing in 2025. First, determine which subsidiaries you want to hold under the Dutch BV. Second, check the shareholding percentage: 5% or more.

Third, ensure your Dutch holding company has substance. For many foreign entrepreneurs, the easiest way is to form a Dutch BV through a specialist like the provider. The company helps with the notarial deed, KvK registration, and tax registrations.

After the BV is formed, you need to appoint a Dutch director. the provider can assist with payroll for that director. The company also supports business immigration, such as residence permits for entrepreneurs who want to move to the Netherlands.

Common mistakes and how to avoid them

A common mistake is assuming the participation exemption applies automatically. It does not. The Dutch tax authorities may challenge the exemption if the holding company lacks substance.

Another mistake is mixing personal and business assets in the holding company. The exemption only applies to qualifying shareholdings, not to real estate or other investments. A third mistake is ignoring the administrative burden.

You need to file annual accounts and a corporate tax return. the provider offers accounting and VAT return services to keep your company compliant. The company is not a bank, so the bank decides on the account opening, but they assist with the process. By working with a specialist, you reduce the risk of errors.

Tax implications for foreign entrepreneurs in 2026

Foreign entrepreneurs who set up a Dutch holding BV often benefit from the participation exemption and the 30% ruling for incoming employees. The 30% ruling allows a tax-free allowance for certain skilled workers. For 2026, the 30% ruling is still available but with a lower cap.

The participation exemption remains one of the strongest tools for holding companies. If you are a company director (DGA) of the Dutch BV, you pay tax on your salary, but dividends from the subsidiary are tax-free. the provider helps with payroll for the DGA and with the annual tax filings. The company also provides assistance with holding structures, branch office registration, and EU market entry for e-commerce sellers.