• Netherlands Tax System

  • TAX RESIDENCY

    Tax Residency

    A company is considered to be tax resident in The Netherlands if it is incorporated under Dutch Civil Law or its management and control is exercised in The Netherlands.

    Taxable Basis

    Netherlands tax resident companies are taxed on their worldwide income.

    Non-Netherlands tax resident companies are taxed only on income generated in The Netherlands.

  • TAX ADMIN

    Taxable Period

    The taxable period for a company in The Netherlands is the calendar year but if the Articles of Incorporation of a company permit it, it can use any other 12-month period.

    Tax Returns

    Every company needs to submit an annual tax return within 5 months from the end of the tax year.

    Consolidated returns are allowed in The Netherlands.

    Tax Assessments

    The Tax Authorities may issue a tax assessment within 5 years from the end of the year in which the tax return is submitted.

  • CORPORATION TAX

    Corporation Tax

    Corporation tax is levied on taxable profits as follows:

    • Taxable profits up to €200,000 at 20%.
    • Taxable profits over €200,000 at 25%.
  • DIVIDENDS

    Dividends from Foreign Investments

    Dividend income is taxable under corporation tax. Dividend income from qualifying participations (see below for definition) is exempt from tax in The Netherlands.

    Dividends from Local Investments

    Dividend payments to local corporations are subject to 15% withholding tax unless they satisfy the Participation Exemption criteria (in such a case 0% withholding tax applies).

    Withholding Tax on Dividends

    The withholding tax on dividend payments to foreign recipients is 15% unless reduced by an applicable tax treaty or by the EU Parent-Subsidiary Directive.

  • INTEREST

    Interest Income

    Interest income is taxable under corporation tax in The Netherlands.

    Interest Expense Deductibility

    Interest payments are generally tax deductible in The Netherlands. However interest deduction is not allowed if the interest relates to:

    • Excessive debt under thin capitalization rules (see below for definition).
    • A loan that is deemed to be an informal credit contribution for tax purposes.
    • A loan that constitutes a hidden profit distribution.

    Withholding Tax on Interest

    There is no withholding tax on interest payments to local or foreign recipients.

    Thin Capitalization

    The thin capitalization rules limit the interest expense deductibility on excessive intra-group debt.

    The thin capitalization rules apply to resident companies, which are part of a domestic or international group.

    The allowed debt-to-equity ratio is 3:1. However, a higher ratio may be allowed if the debt-to-equity ratio of the group is higher than 3:1.

    In calculating the above ratio, third party debt is not taken into account.

  • ROYALTIES

    Royalty Income

    Royalty income is taxable under corporation tax in The Netherlands. The legislation (""Dutch Innovation Box") provides for a deduction of income arising from Research & Development (including royalty income). A detailed analysis of the Dutch Innovation Box regime can be found here.

    Royalty Expense Deductibility

    Royalty payments are tax deductible in The Netherlands provided that they do not constitute a hidden profit distribution or are in conflict with the arm's length principle.

    Withholding Tax on Royalties

    There is no withholding tax on royalty payments to local or foreign recipients.

  • TAX LOSSES

    Ordinary Tax Losses

    Ordinary tax losses can be carried forward for 9 years or carried back for 1 year.

    Group Relief

    A parent company can form a fiscal unity with one or more of its subsidiaries under which the losses of one company may be transferred to another.

    The parent company must own at least 95% of the subsidiary in order to qualify for fiscal unity. In addition, the parent company and the subsidiaries must have the same financial year and must be subject to the same corporate taxes.

    Foreign companies do not qualify for fiscal unity.

  • CAPITAL GAINS

    Disposal of Shares by Foreign Shareholder

    The gain on the disposal of a Dutch company by its foreign corporate shareholder may be exempt from taxation in The Netherlands if it satisfies the participation exemption criteria (see below for definition).

    The gain on the disposal of a Dutch company by its foreign individual shareholder is exempt from taxation in The Netherlands unless it is derived from a substantial shareholding (i.e. over 5%), in which case it is taxed at a flat rate of 25%.

    Capital Gains

    Capital gains are included in ordinary taxable profits and are taxable under corporation tax.

    However, capital gains from the disposal of qualifying participations (see below) are exempt from taxation in The Netherlands.

    Participation exemption

    The participation exemption applies to dividends and capital gains derived from qualifying participations.

    A participation needs to satisfy the following criteria in order to qualify for the exemption:

    1. Shareholding of at least 5%; and
      • The subsidiary is not held as a portfolio investment; or
      • The subsidiary is subject to a statutory tax rate of at least 10% in its country of residence; or
      • Less than 50% (on a fair market basis) of the subsidiaries assets are "passive" assets i.e. portfolio investments.

    Capital Losses

    There are no specific provisions for capital losses. Capital losses are deductible under normal taxable income unless they arise from the disposal of a qualifying participation (see below).

  • PARTNERSHIPS

    Partnership Profits

    Partnerships are treated as transparent entities for tax purposes, which means that their profits ate taxed directly in the hands of each partner.

  • BRANCHES

    Branch Profits

    A Branch is treated in the same manner as other types of companies in The Netherlands.

    There is no remittance tax on profits transferred by a Dutch Branch to its foreign head office.

  • STAMP DUTY

    Stamp Duty

    There is no stamp duty in The Netherlands.

  • CAPITAL DUTY

    Capital Duty

    There is no capital duty in The Netherlands.

  • VAT

    VAT Taxable Transactions

    VAT is levied on the supply of goods, rendering of services, acquisition of goods and import of goods in The Netherlands.

    VAT Standard Rate

    The standard rate of VAT in The Netherlands is 21%.

    VAT Reduced Rate(s)

    The reduced rates of VAT in The Netherlands is 6% and 0%.

    VAT Exempt Transactions

    Medical, services, social services, cultural services, educational services, certain financial services and transactions in shares exempt from VAT in The Netherlands.

    VAT Registration Threshold

    There is no VAT registration threshold in The Netherlands.

    VAT Filing & Payment

    Payment of VAT is made monthly, quarterly or annually depending on the amount payable.