Blockchain technologies have sparked a significant interest across the globe. Blockchain technologies such as a decentralized autonomous organization (DAO) have the potential to create an immutable, open, and transparent financial infrastructure. By using blockchain technologies for corporate purposes, the growth and innovation of organizations can increase. This also means that organizations can quickly adapt to significant changes and stay on top of their business.
Duijn’s Tax Solutions can help entrepreneurs to meander through the various regulations and assist with reducing tax exposure throughout the operation of a DAO.
What is a DAO?
Simply put, a DAO is an organization that functions without directors and managers, as every person inside the organization is part of the direction and management. This is possible by optimally using the possibilities of blockchain technology. Every vote counts, meaning that the majority of the votes combined choose the directions of the organization. This means that the community within the DAO is responsible for decision-making. Via the blockchain mechanisms using smart contracts, every individual within the DAO gets a vote and every vote is equal! Voting takes place through various voting mechanisms that are previously encoded inside smart contracts. The decisions that are supported by the majority of the voters are executed. This eliminates hierarchy within an organization and creates democratic decision-making within the organization.
Why is a DAO unique?
DAO is unique because there is no hierarchy. The rules within the organization are defined and enforced in the form of smart contracts. If someone has an idea for the organization to move forward, this idea will be voted on, and based on the votes, the decision will be made. Next to that, there are a lot of possibilities as the smart contracts that a DAO will be based on can be programmed to meet the founders’ ideas.
Another reason why a DAO is unique is that it allows for automation of decision-making, without eliminating the human touch to it. As community voting allows for decisions to be made, the participants of the DAO community solely spend a short while voting for or against proposals, and the results will automatically be implemented through the working of the smart contract. This also saves time as board meetings are no longer needed to make important decisions and changes will not take extra human effort since they are implemented automatically.
What are the great benefits of a DAO?
A DAO can operate very efficiently as there is no need for board meetings or elaborate voting procedures, just a simple voting procedure suffices for decision making. Therefore, it could save a lot of time compared to an old-fashioned business model with a board of directors. Next to that, everyone has an equal voice within the DAO as everyone can propose their ideas and these ideas will be considered by all the other members. Everyone can contribute to the growth of the organization and the majority should always be satisfied with the operations as a majority is always required for decision making.
Another great benefit of a DAO is that it allows for transparency and verification, as it operates on the blockchain where the information is publicly accessible. There is no trust between parties required as the smart contract ensures the system will work. Since the smart contracts are publicly accessible, every possible investor will know the rules of the DAO and the way the DAO operates.
Last but not least, there are multiple ways to organize the management structure. This might be helpful for people who want to set up a DAO without immediately setting up the decentralized organization. After the incorporation of a DAO there are possibilities to shift to a more or fully decentralized management, for example by phasing into a decentralized management structure according to the DAO is ready for this step. Alternatively, it is also possible to set up a DAO with a decentralized management structure from the beginning or shift directly from a hybrid management structure to a decentralized management structure. Regardless of the management structure, participants will hold their profit rights and investments by new participants are also still possible. Therefore, there are plenty of ways to organize the management structure of the DAO, tailored to the desires of the DAO community.
What is DTS?
Duijn’s Tax Solutions (DTS) is a fast growing international tax consultancy with offices in Amsterdam and Arnhem. Hendrik started DTS in 2011 and wanted to work in a team of dedicated professionals, working on complex tax matters in industries that can shape the future. The interaction between new technologies and the current legal frame-work demand a boundaryless mindset. This combination makes our team entrepreneurial, open-minded and appreciative of the differences that makes us stronger. The team consists of approximately 20 versatile colleagues who are very involved with each other and dedicated to their work.
The services that DTS provides relate to Dutch tax law, international tax law, transfer pricing and dividend tax. In addition, DTS often also acts as a tax representative. The clients at DTS are mainly international clients who are active in many different sectors, such as the technical sector, the food sector, the energy sector and sustainability.
We believe that crypto is here to stay. With our DAO expert Jimmy Cox, your DAO is set up to always be at least one step ahead of its competition.
Best in the business
With our expertise, setting up a DAO entity will be smooth sailing. We incorporate DAO entities in an efficient manner and make sure that your DAO is ready to grow from the get-go. Choosing for DTS to help you set up a DAO means setting up a DAO with a tax-efficient and corporately viable structure. An additional benefit is that the Netherlands are known for its friendly business climate. The Dutch DAO structure is very easy and accessible as it allows the DAO to operate easily and efficiently on a global scale, due to the high number of tax treaties the Netherlands has with other countries.
If you are interested in the working of a DAO structure, we can provide you with more information. For questions about setting up a DAO, do not hesitate to contact us and ask for Jimmy Cox.