Dutch tax system 2018 - a basic high-level overview of the Dutch taxation of companies

Dutch resident entities are subject to Dutch corporate income tax (“CIT”) at a rate of 20% over the first € 200,000 of profit. The profits exceeding this amount are taxed at 25%. Since the Netherlands is determined to remain an attractive jurisdiction for active business enterprises, the Dutch government intends to gradually lower the 25% rate to 21% and the 20% rate to 16% through 2021. Tax losses are in principle available for set-off with the profits of the previous year and the next 9 years, although the Dutch government intends to reduce the carry-forward term to 6 years.

Pursuant to the Dutch participation exemption regime, benefits derived from a qualifying shareholding, including dividends and capital gains, are exempt from Dutch CIT to avoid double taxation.

Dividends distributed by a Dutch company to its shareholders are in principle subject to dividend withholding tax (“DWT”) at a rate of 15%, although an exemption may apply. As per 1 January 2018 distributions by a Dutch are exempt for – in short – business structures in which shareholders are entities resident in treaty jurisdictions and holding more than 5% of the shares. The Dutch government intends to abolish the DWT as of 1 January 2020, except in case of abusive situations and payments to low tax jurisdictions.

Currently the Netherlands do not levy a withholding tax on interest and royalty payments, although the Dutch government intends to introduce such a withholding tax as of 1 January 2021 in case of abusive situations and payments to low tax jurisdictions.

The Netherlands has concluded many tax treaties which prevent double taxation. As such, for example withholding taxes on dividends, interest and royalties may be reduced.

A non-Dutch resident entity may be subject to Dutch CIT with respect to profits earned in the Netherlands. Such income may include profits from Dutch business (permanent establishment), profits from Dutch real estate and profits from a substantial interest in a Dutch resident entity.

The general value added tax (“VAT”) rate amounts to 21%. A lower rate of 6% or an exemption may apply.

Real estate transfer tax may be due upon a transfer of real estate. The general rate amounts to 6%, for residential real estate a rate of 2% may apply. 

Individuals are taxed with Dutch personal income tax (“PIT”). PIT taxes various income categories differently. Income from employment may be taxed up to 51.95%, however certain deductions are available. Further highly skilled and/or educated workers migrating to the Netherlands may be eligible for the 30% ruling, which provides that 30% of income earned is not subject to Dutch PIT in order to provide a relief for extra costs which expats usually incur. If a 30% ruling is granted, the concerning Dutch tax resident individual may choose to be treated for Dutch PIT purposes as a so-called partial non-Dutch resident. As a consequence of this choice only Dutch sources income would be taxed in the Netherlands.

Our services
We can assist you with a broad range of tax related services, including not only tax advice but also the preparation and filing of CIT and VAT returns. Further our notaries and lawyers may help you with the incorporation of Dutch entities as well as other Dutch legal issues.

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