How can income be taxed by no one at all?

Because two countries disagreed about what the entity was, and each assumed the other would tax it. The Netherlands looked through the partnership to its partners and saw a US matter. The United States looked at the partnership and saw a foreign company whose income was not yet repatriated. Neither side taxed it, and the income sat in the overlap. This is what tax specialists call a hybrid mismatch.

Why did it take two separate reforms to close?

The 2022 change came from an EU-wide directive aimed at hybrid mismatches, which patched the specific situation. The 2025 change was the Netherlands cleaning up its own partnership classification rules so the ambiguity could not arise again in any form. The first plugged the leak; the second removed the pipe.

The CV/BV Structure, Explained

ByLoopholeKiln EditorialPublished17 June 2026

Figures current as of1 January 2026·Corrections

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The CV/BV is the cleanest example of a structure that exists purely in a gap. It used a Dutch partnership that the Netherlands treated as invisible and the United States treated as a real company. Income flowing through it was claimed by neither tax system. It is closed: dismantled in two stages, finished on 1 January 2025.

What it is

A hybrid-entity structure used mainly by US multinationals to create income that was taxed in neither the Netherlands nor the United States. The trick was a disagreement between the two countries over what a particular Dutch partnership actually was. A Dutch "commanditaire vennootschap," or CV, is a limited partnership. Structured in a "closed" form, the Netherlands treated it as tax-transparent, meaning the partnership itself paid no tax and its income was attributed to its partners. The United States, under its check-the-box rules, treated the very same CV as a separate company. That contradiction is the whole structure.

How it works, step by step

A US parent sets up a Dutch closed CV, a limited partnership arranged so that admitting a new partner needs unanimous consent. Under Dutch law that makes it tax-transparent.
Two US-resident subsidiaries of the parent become the partners in the CV.
The CV owns all the shares in a Dutch BV, an ordinary Dutch company that acts as the operating holding company for the group's non-US subsidiaries.
The BV pays dividends, interest and royalties up to the CV.
Under Dutch law, the CV is transparent, so the Netherlands does not tax it; the income is treated as belonging to the partners. But the partners are in the United States, and under US law the CV is treated as a separate foreign company, so US tax is deferred until the money is brought home.
The income therefore falls into the gap. The Netherlands does not tax it because it sees no taxable entity. The United States does not tax it yet because it sees a foreign company holding the money offshore. As long as the profit stays reinvested abroad, it is taxed by neither country.

Who used it

The CV/BV was a structure of a class used by a number of US multinationals to hold tens of billions of dollars in offshore earnings out of tax, and the hybrid-entity mismatch it relied on was scrutinised in US Senate Permanent Subcommittee on Investigations work on offshore profit shifting and in European Parliament committee proceedings. Because the mismatch was a general feature of US-Dutch hybrid planning rather than one company's private scheme, this entry describes the mechanism rather than pinning it to a named user.

Is it still open, and when did it close

Closed, in two stages. From 1 January 2022, the European Union's second anti-tax-avoidance directive (ATAD II) brought in "reverse hybrid" rules that required the Netherlands to treat the CV as a full Dutch taxpayer in the relevant situations, removing the gap on the Dutch side. Then, from 1 January 2025, the Netherlands went further and made all Dutch CVs transparent by default, eliminating the original classification mismatch entirely. The structure no longer functions.

Sources