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Demystifying the Dutch Foundation/ Stichting

Almost every M&A and internationalising transaction that I deal with, involves the establishment or restructuring of efficient shareholding and wealth protection structures. Complex tax structures situated in exotic jurisdictions are losing popularity and are under increasing scrutiny by tax authorities. My approach to structures has always been to aim for simplicity and predictability whilst remaining efficient and compliant. The Dutch Private Foundation, also known as a Stichting, presents an appealing option for establishing enduring asset protection strategies, offering an alternative to conventional common-law trusts. It facilitates the effective management and preservation of wealth, bypassing the intricate fiduciary, regulatory and tax complexities associated with common-law trust frameworks.

Organizational Structure

A Dutch foundation stands as an autonomous corporate entity without members/ shareholders, functioning as a purposeful fund governed by a board of directors in accordance with stipulated objectives outlined in its Articles of Association. Notably, its primary purpose doesn't revolve around allotting benefits to designated beneficiaries and is structured not to create an alter ego of the founders or beneficiaries. Instead, it focuses on securing wealth for specific social and altruistic objectives, which may include making investments and sustaining family members or individuals requiring assistance. The Foundation's legal structure is designed to operate independently from the founder or beneficiaries with the structural benefit of delinking the founder and beneficiaries from the assets. The Dutch foundation model stands out in Europe due to its unique feature of operating independently within the private realm, exempt from oversight by state authorities. This distinctive characteristic positions Dutch foundations as robust instruments for preserving long-term wealth. In a more focused context, private foundations emerge as an ideal choice and are commonly used for the shareholding structure of prominent family-owned European enterprises.

Asset Transfer Mechanism

Transferring assets from a donor to a foundation follows a meticulously drafted bilateral gift agreement, grounded in contract law principles. This approach contrasts starkly with the less enforceable letters of wishes commonly employed in the realm of

common-law trusts. This gift transaction can be accompanied by conditions, specifications, reservations, and even the provision to retract the gift. Acting as the contracting party in this gift agreement, the foundation acknowledges and accepts the terms outlined within the gift. If any stipulations or conditions are established for the benefit of third parties (such as family members or descendants), these are typically framed as encumbrances linked to the gift.

Governance Framework

The operational authority exercised by the board of the independent private foundation is subject to checks and balances through a supervisory board, functioning as a governing body with oversight powers. This two-tier structural approach adheres to established corporate norms, providing the Supervisory Board with influential control. However, this control is consistently characterized by a degree of detachment. The powers vested in the Supervisory Board exhibit adaptability, ranging from granting prior authorization for significant decisions to even instigating new resolutions, regulations, and proposals. It's essential to distinguish the role of the Supervisory Board from that of a protector in trust law. The duties of a protector stem from a fiduciary nature, presenting a distinct perspective compared to well-established corporate governance and codified laws governing corporate structures in the Netherlands. Notably, the supervisory board can be constituted by family members, while direct family representation within the board structure is also a viable avenue.

Tax Implications

Foundations are only liable for corporation tax if they engage in business activities. This implies that the entity must be actively involved in an enterprise, and taxation is applicable solely to the gains resulting from such business conduct. Should tax authorities conclude that a foundation is indeed conducting business activities, taxation applies exclusively to the gains generated by those activities. If the Family lives outside the Netherlands, then the non-Dutch assets in the foundation, if well- structured will not attract Dutch taxation.


The Dutch Foundation, if established and managed well, provides a suitable and efficient asset protection and wealth preservation structure within a compliant legal and tax framework.


AJ Coetzee International M&A Lawyer and the founder of Rise.

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