Dutch substance requirements after the 2024 review — what survived

The Netherlands published a substance-rules consultation paper in 2024 that, after a year of industry response, has settled into three durable changes affecting holding-company structures with a Dutch intermediate layer.

The three durable changes

1. Functional analysis of the holding entity. The decision-making threshold is no longer satisfied by a periodic board meeting in the Netherlands. The local board needs to be the de facto strategic and risk-management decision-maker for the entity, evidenced by the substantive content of board minutes — not just the existence of them. Decision items that are "rubber-stamped" by a Dutch board on matters substantively decided elsewhere no longer count.

2. Operating expenditure floor. The previous fixed-amount floor (EUR 100,000 of qualifying salary cost) has been replaced by a function-based test: the entity needs operating expenditure proportionate to the functions it performs. For a holding entity managing a EUR 500m subsidiary portfolio, the implied operating expenditure is materially higher than the legacy floor, and documenting it requires a defensible cost-allocation method.

3. IP and licensing entities. Substance for IP-holding and licensing entities is now assessed against the OECD DEMPE (development, enhancement, maintenance, protection, exploitation) functions. A licensing entity with no employees performing DEMPE functions in the Netherlands cannot claim Dutch tax residency benefits for the licence income, regardless of board composition.

What it means for existing structures

Holding-only entities with a clean board record continue to work, but the documentation needs an upgrade. Mixed holding-and-licensing entities are the difficult case: many of them were viable under the legacy substance rules but are not under the new test.

What we are recommending

For existing Dutch holding entities:

1. Refresh the board-minutes discipline. The reviewers (Belastingdienst and the auditor) are reading the content, not the existence.
2. Re-baseline the operating-expenditure analysis against the functions performed.
3. Separate IP / licensing functions from pure holding functions where the legacy structure mixed them. The combined entity is the most exposed.

For new structures: the Netherlands remains a reasonable holding jurisdiction for groups with genuine local decision-making capacity. It is not the right choice for groups whose substance argument relies on a director's office at a service provider.