Choosing between a branch vs subsidiary

In the Netherlands, the BV as a subsidiary is the most used legal entity by foreign investors to carry out a business, to invest in real estate, as an (intermediate) holding/finance company, for intellectual property et cetera. We refer to our Dutch legal forms section for more on this topic. As an alternative for a legal entity, a foreign corporation (or any other foreign legal entity that carries out a business) may decide to set up a Dutch branch or a representative office.

Typical activities performed through a subsidiary are holding, finance and licensing operations, among other things since subsidiaries are able to benefit from non-double taxation treaties. Operating activities like manufacturing and the rendering of services can be carried out by branches and subsidiaries. In practice, doing business using a permanent establishment often proves to be more difficult than when using a company.

The following are some important attention points when deciding on performing your Dutch business through a branch vs subsidiary:

Incorporation and registration

  • Subsidiary: A notarial deed is required to establish a BV. A BV must have its own articles of association, board of directors, must convene general meetings of shareholders and draw up its own annual accounts. A BV needs to be registered with the Dutch Chamber of Commerce and with the Dutch tax authorities.
  • Branch: Notarial deed is not required, but registration with tax authorities and the Chamber of Commerce is required. A branch needs to be registered with the Dutch Chamber of Commerce. The Dutch Chamber of Commerce may also register the company at the Dutch tax authorities unless the Dutch presence concerns a representative office.


  • Subsidiary: the shareholders of the BV have limited liability, as a result of which a shareholder is liable only to the extent of its capital contribution.
  • Branch: Since a branch as such is not a separate legal entity, the (foreign) company of which the branch forms a part is fully liable for all the obligations of the branch.


  • Subsidiary: A Dutch BV has an excellent and reliable reputation and business image throughout the world
  • Branch: Depends on the country of the foreign entity carrying out the branch.

Tax treaties

  • Subsidiary: Normally, a BV has access to the Dutch network of double taxation treaties.
  • Branch: Normally, a branch has no access to the Dutch network of double taxation treaties, although exceptions exist vis-à-vis tax credits.

Annual maintenance

  • Subsidiary: Annual filing of financial statements with the Dutch Chamber of Commerce and annual filing of corporate income tax returns.
  • Branch: Annual filing of limited information about the foreign company and annual corporate income tax filings.

Corporate income tax

  • Subsidiary: A BV In principle is subject to Dutch corporate income tax for its worldwide profits, although double taxation normally is prevented unilaterally or bilaterally by means of tax treaties.
  • Branch: The branch is not subject to Dutch corporate tax, unless and insofar it conducts entrepreneurial activities through a fixed place of business, whereas only profits allocable to the business of the branch will be taxable.

Dividend withholding tax

  • Subsidiary: Dividend distributions by a BV are subject to Dutch dividend withholding tax at the statutory rate of 15%, unless reduction (to as low as 0%) is provided unilaterally (pursuant to EU directives) or under a non-double taxation treaty.
  • Branch: In principle, a branch is not subject to Dutch dividend withholding tax.


  • Subsidiary: Depends on solvability of BV.
  • Branch: Depends on solvability of the foreign company.

Value added tax

  • Subsidiary: Normally a BV is subject to Dutch VAT, although exceptions exist. The services that a BV provides to its parent company are subject to VAT.
  • Branch: Idem, unless the Dutch presence is a representative office. The services that a branch provides to the foreign company carrying out the branch are neglected for VAT.

Wage tax

  • Subsidiary: A BV has a withholding obligation for wage taxes in relation to its employees. The BV must keep a wage tax administration and should file periodical tax returns.
  • Branch: Idem, unless the presence in the Netherlands is not a branch but a representative office.

Sale of assets

  • Subsidiary: If the business of a branch is sold, all assets and liabilities must be transferred separately.
  • Branch: When selling the activities of a subsidiary, the parent company may also decide to sell the shares or liquidate the subsidiary.

Please contact us if you would like to discuss whether a branch or a subsidiary in the Netherlands suits your business needs best.