Transferring profit from a Dutch BV to Türkiye: dividends, interest and service fees

The purpose of setting up a BV in the Netherlands is usually to do business in the European market, but at some point the profit earned has to reach the shareholders or the parent company in Türkiye. How that transfer is made directly affects how much tax arises in both countries and which documents are requested. Postponing this question at formation can lead to expensive corrections later.

This article describes the three main channels for moving profit from the Netherlands to Türkiye: dividend distribution, intercompany loans and interest, and management or service fees. The tax effect of each channel depends on the file, the structure and the conditions of the Türkiye–Netherlands tax treaty. We do not quote rates, because the outcome always requires a tailored assessment.

Channel one: dividend distribution

The most direct route is for the BV to distribute the profit remaining after corporate income tax to its shareholders as a dividend. The dividend is resolved by the general meeting, and the management board assesses that the distribution does not affect the company’s ability to pay its debts; that assessment belongs in the file in writing.

As a rule the Netherlands levies dividend withholding tax on dividends paid abroad. The Türkiye–Netherlands double taxation treaty allows that withholding to be reduced when its conditions are met; they depend on whether the shareholder is an individual or a company, the size of the shareholding and whether the shareholder is the beneficial owner in the treaty sense. We explain how the treaty works in Türkiye–Netherlands double taxation treaty.

If the shareholder is a Turkish company and a Dutch holding has been placed in between, the participation exemption (deelnemingsvrijstelling) comes into play for dividends flowing from the operating BV to the holding: under specific conditions the holding can exempt the dividend it receives from its subsidiary from corporate income tax. This is one of the main tax reasons behind the BV or holding? question.

Channel two: intercompany loans and interest

If the parent company in Türkiye has lent money to the Dutch BV, the BV pays interest on that loan. For the BV the interest is in principle a deductible expense, and for the lender in Türkiye it is income. This channel arises naturally in structures financed with loans rather than share capital.

Two issues stand out. First, the interest must be at arm’s length: the rate, term and security must resemble terms independent parties would agree; otherwise the tax authority may treat part of the interest as a hidden dividend. Second, both countries have withholding and deduction-limitation rules for interest, and the treaty reduces the withholding in some situations. A written loan agreement and interest calculations must be in the file.

Channel three: management and service fees

If the Turkish company genuinely provides services to the Dutch BV (management, technical support, marketing, software), it can invoice for them. The BV records the invoice as an expense; the Turkish company declares the income. This channel only works if the service is real and the fee is set using transfer-pricing logic.

Transfer pricing requires transactions between related companies to be priced as between independent parties. Which service is provided, how it is priced and why that price is appropriate should be documented in a written service agreement and a short pricing memo. Service invoices also need a separate BTW (VAT) assessment.

Substance, documentation and the Turkish side

Whichever channel is chosen, the Dutch side expects the BV to have real substance: a management that takes decisions in the Netherlands, a registered address, a bank account and proper bookkeeping. A BV that exists only on paper raises questions with the Belastingdienst (the Dutch tax authority) when it wants to rely on treaty benefits.

The documentation falls into these groups:

• For dividends: the general meeting resolution and the board’s solvency assessment.
• For loans: a written agreement, interest calculations and payment records.
• For service fees: a service agreement, a pricing memo and regular invoices.
• For every payment: the bank statement and, where applicable, the withholding tax return.

The Turkish side is not idle either. The shareholder or parent company declares the income received from the Netherlands in Türkiye and must keep the payment documents to credit the Dutch tax paid under the treaty. What the Turkish tax authority asks for must be consistent with the Dutch file.

Why this should be planned before formation

The profit transfer channel depends on how the BV is financed and who the shareholder is; both are fixed at formation and costly to change later. Whether the shares are held directly by the Turkish company, by a Dutch holding or by an individual; whether financing comes as share capital or as a loan; which services are provided from where: these questions should be answered well before the first dividend. In our formation and structuring service we treat them as part of the pre-formation analysis.

Conclusion

Profit can be transferred from a Dutch BV to Türkiye through dividends, interest or service fees; the tax effect of each channel depends on the treaty conditions, the structure and the documentation. When the right channel is planned from the start, the tax burden in both countries becomes predictable and later problems are less likely. We are glad to start the tailored assessment for your structure in a free 15-minute intro call.