First Dutch Court of Appeal judgment confirms that the Dutch Supreme Court’s abuse framework is now being applied as a general standard, resulting in Dutch taxation of a EUR 19 million dividend distributed to a Luxembourg holding company.

Court of Appeal ’s-Hertogenbosch, 20 May 2026 (published late June 2026), case 24/320, ECLI:NL:GHSHE:2026:1277

Key takeaways

• The Supreme Court’s abuse framework is now applied as a general standard.
• Luxembourg holding companies are equally within scope.
• Substance alone is no longer sufficient.
• Each intermediary entity requires its own documented business rationale.
• Abuse may exist even without an onward dividend distribution.

The Court of Appeal ’s-Hertogenbosch has issued the first decision in which a Dutch court applies the abuse framework developed by the Dutch Supreme Court in its judgments of 25 April 2025 (the “Curaçao judgments”, ECLI:NL:HR:2025:668 and 669) and 18 July 2025 (the “Belgian cases”, ECLI:NL:HR:2025:1162 and 1163). The Court of Appeal held that a dividend of EUR 19 million distributed in 2014 by a Dutch BV to its Luxembourg parent company is taxable in the Netherlands under the non-resident taxation rules for substantial interests of article 17(3)(b) of the Corporate Income Tax Act 1969 (CITA).

Why this judgement matters

The decision shows that the Supreme Court’s framework is being applied as a general standard: it was developed in cases concerning Belgian and Curaçao personal holding companies but is applied here – without any reservation – to a Luxembourg holding company within an operational real estate group. The focus of the assessment appears to shift to each individual entity in the chain: the question is not whether holding, treasury or financing activities are commercially rational in general, but why the recipient of the dividend is in this particular place in the structure. Generic arguments are not sufficient. An entity-specific business rationale is required, preferably documented at the time.

The facts

The structure dates back to 1998, when a Luxembourg SA (later converted into a BV, the taxpayer in these proceedings) was incorporated as the holding company of a Dutch group active in vacancy and property management. The shares in the Luxembourg holding were held by a Luxembourg SPF (an exempt family wealth entity). The ultimate beneficial owner (UBO) was resident in Belgium. On 6 May 2014, the Dutch operating subsidiary distributed a dividend of EUR 19 million to the Luxembourg holding, which was settled by way of set-off against the purchase price of an intra-group receivable assigned to the holding. The position was taken that no Dutch dividend withholding tax was due on the distribution.

After receiving information in connection with the remigration of the UBO, the tax inspector imposed a corporate income tax assessment for 2014 (EUR 475,000 in tax plus EUR 171,277 in tax interest) on the taxpayer, as legal successor of the Luxembourg holding, treating the dividend as taxable income from a substantial interest under article 17(3)(b) CITA. On 18 January 2024, the District Court Zeeland-West-Brabant found that the taxpayer had rebutted the presumption of abuse. The Court of Appeal disagrees.

The Courts judgment

Applying the Supreme Court’s framework – which explains article 17(3)(b) CITA in line with the EU-law concept of abuse (T Danmark) – the Court of Appeal finds that the inspector has met his initial burden of proof for both cumulative conditions:

Subjective condition (avoidance motive). Under the “look-through” approach (in Dutch: wegdenkgedachte), the interposed Luxembourg entities are disregarded: a direct distribution to the Belgian UBO would have been subject to Dutch dividend withholding tax and substantial interest taxation of, on balance, 15% (the maximum rate under the Netherlands–Belgium tax treaty). With the structure in place, no Dutch tax was due at all. That difference satisfies the inspector’s initial burden.

Objective condition (artificiality). The holding had no employees and no wage costs, its domiciliation agreement covered only the registered address, and its trust directors had a limited mandate with total fees of no more than  EUR 3,000 per year. Its six intra-group loans all carried an identical 3% interest rate, and it acted on the instructions of the UBO and the management of its subsidiaries. Nor was the direct parent saved by the higher tier holding company: an interposed holding company may still reflect economic reality where it performs a linking function for a genuine enterprise higher up in the ownership chain, but here the shares were held by an SPF, which under Luxembourg law is prohibited from carrying out any economic activity. Long-standing intra-group lending since 1998 was insufficient to constitute an active financing function. The holding therefore qualifies as a mere conduit company without a genuine economic function, so that in principle the EU-law purpose requirement is also met.

The taxpayer’s rebuttal fails. The arguments brought forward did not address the reasons for interposing this particular company. At the hearing, the reason for setting up the structure could not be properly explained, and the double tier Luxembourg structure remained unexplained. Notably, the Court of Appeal holds that the absence of a (swift) on-distribution does not rule out a wholly artificial arrangement: the SPF itself could invoke neither the Parent-Subsidiary Directive nor the tax treaty, and the holding appeared to have been interposed precisely to claim those benefits. Finally, the Court rejects the formal defences: the inspector had a new fact justifying reassessment (he may in principle rely on his own file, and no file existed for the Luxembourg company until July 2018), the reassessment was timely, and the legitimate-expectations defence fails.

Our observations

Three elements stand out. First, the framework is applied to a materially different fact pattern without any adjustment. Second, the decision underlines the shift towards a mere per-entity assessment: substance and a clear reason for the existence of every link in the chain seem decisive, and the taxpayer’s inability to explain the historic structure proved fatal. Third, a classic dividend flow-through is not a precondition for abuse.

The facts also invite two questions. First, no management fee appears to have been charged by the Luxembourg holding to the operating companies; the UBO effectively managed the group but was not remunerated for this through the holding. The work was done, so to speak, wearing the wrong hat. Whether a formalised flow of management fees, with the holding charging an arm’s-length fee for a genuine management role would have changed the outcome, is a question worth raising. Second, the UBO donated his shares to his minor children shortly before the remigration, giving them a tax-free step-up in the Netherlands – an element that will not have made the structure more sympathetic in the eyes of the court.

A further difference with the Belgian cases lies in the shareholding and the treaty position: here the holding held a 100% interest in an operating entity, and the assessment remained capped at the 2.5% rate of the (pre-MLI) Netherlands–Luxembourg tax treaty. One may wonder whether, had the MLI and its principal purpose test already applied in 2014, that 2.5% would have become 15%.

There is also a timing dimension. The structure dates from 1998 and the distribution from 2014, when arrangements like these were common practice and the abuse-of-law doctrine – including the reading of the Parent-Subsidiary Directive – looked very different. Judged through a 2026 lens, structures of that era risk becoming abusive with hindsight, as the law and public perception evolve. That sits uneasily with legal certainty, and it is a reminder that today’s advice will one day be read through the lens of the future.

Equally noteworthy is what the decision does not contain. The Court does not separately engage with the CJEU’s Nordcurrent judgment (C-228/24; see our earlier newsflash), and it came only days before Advocate General Kokott delivered her opinion in Neo Group (C-203/25). The A-G takes a more restrained approach: the mere presence of an intermediate (conduit) company is not sufficient to assume abuse, and the source state may invoke the anti-abuse rule of the Parent-Subsidiary Directive only in exceptional cases. Commentators have furthermore pointed out that the current Dutch approach may result in economic double taxation in commonplace structures. An appeal in cassation is expected, and the CJEU’s judgment in Neo Group may put further pressure on the Dutch line. This debate is far from settled.

Practical implications

Foreign holding structures above Dutch companies deserve renewed attention, in particular where the ultimate shareholders are resident in a jurisdiction other than that of the holding company. We recommend reviewing existing structures against this framework: assess the substance and the actual functions of each entity and document the entity-specific business rationale for every link in the structure – from the outset and on an ongoing basis, as an originally sound structure may become artificial when circumstances change. Where dividend distributions are envisaged, we recommend preparing a supporting file in advance. We will continue to monitor developments, including the cassation proceedings and the CJEU’s judgment in Neo Group, and will keep you informed.

Questions?

Should you have any questions about the potential impact of this decision on your structure, please contact Ivo Kuipers or Lennart Wilming.