Dutch VAT Regime For Holdings Refreshed: New VAT Guidelines Impact Current Practice

The Dutch State Secretary of Finance has issued long-awaited new administrative guidelines on the VAT position of holding companies (VAT guidelines). These guidelines impact companies in corporate group structures as well as investment vehicles, that hold shares and/or are involved in M&A transactions. The current guidelines will be revoked as of 1 July 2025. This brings a definitive end to a generous VAT regime for passive shareholding activities.

Background

Holding shares is generally not considered a business activity for VAT purposes. Therefore, a holding company that merely holds shares cannot recover VAT on its costs. VAT recovery is also limited on costs related to the acquisition and sale of shares. However, the acquisition, holding and sale of shares is considered a business activity for VAT purposes in the following situations: