Do you work with a holding structure? Then the management fee between the holding and the operating company is an essential part of your financial and tax strategy. In this article, we explain what a management fee actually is, why it is used, what the legal and tax points of attention are, and how to set this up correctly and smartly according to Dutch regulations.
What is a holding and an operating company?
In the Netherlands, many entrepreneurs choose a structure consisting of a holding BV and one or more operating companies. This is popular because of risk spreading, tax optimization, and flexibility.
- Holding BV: Usually holds all shares in the operating company and functions as an investment vehicle, risk buffer, or central management entity.
- Operating company BV: Carries out the day-to-day operational activities such as sales, production, or services.
This structure is often used by DGA’s, scale-ups, and entrepreneurs who want to protect assets from business risks.
What is a management fee?
A management fee is a business fee that the operating company pays to the holding for services rendered. This fee is usually invoiced monthly or quarterly and is, in principle, subject to 21% VAT.
Typical services for which a management fee is charged are:
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Strategic and general management
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Financial administration and control
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Legal and contractual advice
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IT support
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HR services such as recruitment or payroll administration
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Business development and marketing
Note: these services must demonstrably be provided and not exist only “on paper.” The Tax and Customs Administration assesses the business justification of these costs strictly.
Why use a management fee?
Applying a management fee between the holding and operating companies offers several advantages:
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Fair cost allocation
By arranging management services centrally through the holding and recharging them to the operating company, a transparent and fair cost allocation is created. This is especially useful if there are multiple operating companies. -
Tax optimization
The operating company reduces its taxable profit by recording the fee as an expense. The holding receives this income and can use it for:
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Investments
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Pension accrual
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Dividend distributions (in the long term)
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Reinvestment in other operating companies
This makes it possible to build up capital in a tax-efficient way.
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Risk spreading
By placing strategic and legal functions in the holding, you limit the exposure of these functions to operational risks. If the operating company runs into difficulties, the assets in the holding remain protected. -
Professional structure
A holding that acts as the central point for management and strategy makes your business scalable and attractive to investors or external partners.
Tax and legal points of attention in 2025
In 2025, the Tax and Customs Administration will look more closely at the business rationale and arm’s length nature of internal fees. Therefore, make sure you properly substantiate your management fee between the holding and operating company:
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Business rationale
The fee must be proportionate to the work. If you provide strategic advice, for example, there must also be a demonstrable activity (e.g., minutes, reports, time sheets). -
Market conformity (at arm’s length)
The fee must be equal to what an external party would charge for comparable services. A fee that is too high or merely symbolic can give rise to corrections by the Tax and Customs Administration.
Tip: Use benchmarks or third-party quotations to substantiate your rate.
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Management agreement
Record the agreements in writing in a clear agreement, including:
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Description of services
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Fee structure
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Invoicing moments
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VAT arrangements
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Term and notice period
A good agreement is crucial in the event of an audit.
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VAT remittance
The management fee is, in principle, subject to 21% VAT. Only if you have an approved VAT fiscal unity between the companies can this lapse. You must apply for this with the Tax and Customs Administration. -
Transfer pricing (for larger companies)
For larger groups (from €50 million group turnover) there is an obligation to prepare transfer pricing documentation. Smaller companies are exempt from this, but must still be able to demonstrate that the fee is at arm’s length.
Practical example
A DGA has a holding structure:
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Holding BV: performs tasks in the area of strategy, HR, and administration.
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Operating company BV: runs the day-to-day operation (e.g., a webshop).
The holding invoices €2,500 excluding VAT per month to the operating company. The fee is based on market research and is correctly recorded. The operating company records this as business expenses; the holding as revenue.
Result:
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Tax optimization
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Legal protection
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Clear bookkeeping
Common mistakes
Watch out for these pitfalls when applying a management fee:
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No written agreement
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No actual activities
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Fee is not at the market rate
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Incorrect VAT application
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No invoicing or registration
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Wrongly shifting profits between BVs
These mistakes can lead to corrections, additional tax assessments, or even fines.
When not to use a management fee?
A management fee is not always required. In these situations, it is generally not necessary:
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The holding is completely passive (a holding without activities)
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All activities are carried out solely in the operating company
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The companies are part of a fiscal unity for corporate income tax and do not perform internal charges
If in doubt, always seek advice from a tax specialist.
Conclusion
A properly structured management fee between the holding and operating companies is essential for a healthy, transparent, and tax-efficient business structure. In 2025, the Tax and Customs Administration will look even more critically at internal charges, so make sure your affairs are in order.
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Work with market-conforming rates
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Record agreements in writing
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Remit VAT correctly
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Substantiate your administration
Are you unsure whether your structure complies with the rules? Or would you like to have a management agreement drawn up that is both legally and fiscally correct?
Then contact Balancify. Our experts are ready to help you with personal advice, sample contracts, and smart tools to set up your holding structure professionally and compliantly.
Visit Balancify and discover how we can help you create a future-proof business structure.
