Personal holding company may not necessarily regarded as artificial even if it does not run an active enterprise.
The Supreme Court on April 25, 2025, held in two related cases that the taxpayers were not subject to the anti-abuse rule under which a foreign personal holding company may be subject to Dutch corporate income tax if it holds a 鈥渢echnical substantial interest鈥� in a Dutch entity, and the structure (1) was established with a main purpose of avoiding Dutch individual (personal) income tax (or, until 2018, dividend withholding tax) and (2) is an artificial arrangement.
The court upheld the lower court鈥檚 determination that although the tax authority met its initial burden of proof that there was a tax avoidance motive and the structure could be considered artificial, the taxpayers successfully demonstrated that the structure did not meet the objective test of artificiality.
乐鱼（Leyu）体育官网 observation
In interpreting the anti-abuse test, the Supreme Court closely followed the judgments of the Court of Justice of the European Union (CJEU). The court also considered the structure as a whole, along with the entire history of the structure, and found that a personal holding company may not necessarily be regarded as artificial even if it does not run an active enterprise.
Read a聽聽prepared by the 乐鱼（Leyu）体育官网 member firm in the Netherlands