From 1 July 2025, significant changes to the Dutch VAT rules for holding companies will come into effect. Two new decrees issued by the Dutch State Secretary for Finance introduce stricter conditions for VAT deduction on expenses and for the inclusion of holding companies in a Dutch VAT group (fiscale eenheid).
These changes may have considerable financial implications, especially for holding companies that do not play an active role within the group or do not provide taxable services.
What will change in the VAT rules?
The new rules will particularly affect the following situations:
- Dutch holding companies that do not receive any remuneration for their activities, such as passive investment holdings;
- Group structures in which a holding company only receives dividends or recharges costs without providing recognisable services;
- Sales of shareholdings involving advisory or transaction-related costs (e.g. due diligence or legal advice);
- Private equity structures that previously benefited from the exception whereby sales proceeds were excluded from the pro rate VAT deduction.
In these cases, VAT deduction may be limited or excluded.
Please note: strict VAT deduction assessment when selling shares
The following points require attention when selling shares:
- VAT on transaction-related costs (e.g. due diligence, legal or tax advice) is only deductible if:
- the participation is actively held (e.g. for management, strategic influence, or trading), and
- the costs are not directly attributable to a VAT-exempt sale;
- Direct costs related to an exempt transaction are, in principle, not deductible, unless the buyer is established outside the EU;
- Previously, occasional VAT-exempt sales were treated as incidental and did not affect the pro rata calculation, meaning general costs (e.g. rent or accounting fees) remained fully deductible. As of 1 July 2025, this will no longer automatically apply;
- The exception for occasional transactions will be narrowed: private equity sales will no longer be considered as ‘incidental’, resulting in a lower pro rata deduction on general costs.
What can you do before 1 July 2025?
If you wish to preserve or secure your right to recover VAT, we recommend considering the following actions:
- Complete share sales before 1 July 2025, while the current rules still apply;
- If the buyer is located outside the EU, VAT on direct transaction costs may still be deductible;
- Ensure your Dutch holding company qualifies as an entrepreneur for VAT purposes, by:
- entering into management or service agreements with group companies,
- actually providing paid services within the group,
- invoicing regularly for these services;
- Review whether your holding continues to meet the conditions for inclusion in a Dutch VAT group;
- If needed, consider restructuring or submitting a new application for Dutch VAT group treatment.
Need Support?
Are you unsure whether your Dutch holding structure still meets the new VAT requirements? Or do you want to avoid losing your right to deduct VAT? NeD Tax supports entrepreneurs, investors and those who support them professionally. If you fill in our contact form, we will contact you at short notice.
