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Netherlands

Besloten Vennootschap met beperkte aansprakelijkheid (Private company limited)

Taxes

Tax residency – Corporate residency is determined by the place of effective management. However, in principle, all companies incorporated under the Dutch Civil Law, are deemed to be tax resident in Netherlands.

Basis – Corporate income tax is levied on worldwide income.

Tax rate – Corporate tax is levied at 20% on the first EUR 200,000 of taxable profits, and 25% on the rest. Rates will be reduced in both brackets, by a total of 4% by 2021: 1% in 2019, 1.5% in 2020 and 1.5% in 2021.

Capital gains – Capital gains are treated as ordinary income and taxed at the standard rate. However, capital gains derived from the disposal of holdings may be tax-exempt provided that the Dutch company holds at least 5% of the shares, and the participation is not held as a portfolio investment, among other conditions.

Dividends – Dividends received are subject to Corporate Income Tax. However, as with capital gains, if the Dutch company holds at least 5% of the shares, the participation is not held as a portfolio investment, and the subsidiary is subject to a reasonable effective tax rate, dividends received may be tax-exempt.

If distributed profits are tax deductible by the subsidiary, for instance under the EU’s Parent Subsidiary Directive, the tax-exemption may not apply.

If the participation exemption is not available, a credit for the underlying tax may be obtained.

Interests – Interests are subject to corporate income tax.

Royalties – Royalties are generally subject to corporate income tax.

Withholding Taxes – Dividends paid to resident or non-residents are usually subject to a 15% withholding tax, unless tax rate is reduced or exempted under a tax treaty or exempted under the EU parent-subsidiary directive.

Currently, there is no withholding tax on interests, royalties and technical fees.

Foreign-source income – Certain foreign-source income such as foreign branch income or real estate income may be exempted or excluded from the tax base.

Double taxation of foreign dividends, interest and royalties is relieved by a tax credit provided by Dutch tax treaties or unilaterally if the payer is a resident of a developing country designated by Ministerial Order. If no relief applies, a deduction of the foreign tax paid is allowed.

Dividends and capital gains that qualify for the aforementioned participation exemption may not be subject to taxes.

Losses – Losses arising from taxable income may be carried forward for 9 years and carried back for 1 year.

Inventory - Inventory may be valued at the lower of acquisition/production costs or market value. First in first out (FIFO), Last in first out (LIFO) or average cost methods are generally permitted.

Anti-avoidance rules – There is transfer pricing legislation in Luxembourg. Transactions between related entities have to be governed by OECD’s arm’s-length principle and must be documented.

Acceptable transfer pricing methods include the comparable uncontrolled price, resale price, cost plus, profit split and transactional net margin methods. It is possible to enter into an advance pricing agreement for the use of a certain transfer pricing methods.

There are no thin capitalization rules.

There are no controlled foreign company rules either. However, there is an obligation to annually reassess shareholdings of 25% or more in low-taxed companies whose assets consist of at least 90% of passive income assets. CFC rules may be introduced at 2019.

Labor taxes –National Insurance Tax, Employee Insurance Contribution and Dutch Health Insurance are paid by both the employer and employee. The employer must withhold social security contributions from the employee’s salary at an aggregate rate of 27.65% (2018) calculated on the first EUR 33,994 (2018) of each employee’s gross salary.

Tax credits and incentives – There are additional deductions available for investments in energy-efficient assets and environmental assets. Companies conducting certain R&D activities may be eligible for a reduction of wage taxes.

Personal income tax – An individual is deemed to be tax resident in Netherlands based on a series of facts and circumstances such as: permanent home, employment duties, family residence, registration with local authorities, local bank accounts and local assets and the intended length of stay in Netherlands.

Foreigners are usually deemed tax residents if their family is residing in Netherlands or if they stay in Netherlands more than 1 year. However, expats may opt for several tax benefits if they fulfil certain conditions.

Tax residents are subject to tax on their worldwide income.

Employment, enterprise and housing income is taxed at progressive rates of 36.55% up to 51.95%, although a 14% base deduction may apply for entrepreneurs. Interests are taxed at 25% and income from savings and investments is usually taxed based on a fixed presumed gain (assets minus debt) at a rate of 30%. Calculation of presumed gains are based on past market returns realized.

Capital gains are usually taxed at progressive rates 36.55% up to 51.95%, exceptions may apply.

Other taxes – Transfer of immovable property is usually taxed at 6%. There is a municipal tax levied on real property. Inheritances received from Dutch residents are taxed at rates between 10% and 40%.

There is a landlord tax, charged to landlords that rent out more than 50 houses.

The sale of goods and services are subject to V.A.T. at a standard rate of 21%. Reduced rates and exemptions may apply.

  • Offshore Income Tax Exemption
  • Offshore capital gains tax exemption
  • Offshore dividends tax exemption
  • CFC Rules
  • Thin Capitalisation Rules
  • Patent Box
  • Tax Incentives & Credits
  • Property Tax
  • Wealth tax
  • Estate inheritance tax
  • Transfer tax
  • Capital duties
  • 25% Offshore Income Tax Rate
  • 25% Corporate Tax Rate
  • 25% Capital Gains Tax Rate
  • 25% Dividends Received
  • 15% Dividends Withholding Tax Rate
  • 0% Interests Withholding Tax Rate
  • 0% Royalties Withholding Tax Rate
  • 1 Losses carryback (years)
  • 9 Losses carryforward (years)
  • FIFOLIFOAverage cost Inventory methods permitted
  • 119 Tax time (hours)
  • 9 Tax payments per year
  • 13.8% Social Security Employee
  • 13.8% Social Security Employer
  • 51.95% Personal Income Tax Rate
  • 21% VAT Rate
  • 124 Tax Treaties

Country details

Netherlands
EUR
Amsterdam
Europe
n l - N L , f y - N L
16645000

The Kingdom of the Netherlands is a transcontinental sovereign state. Its main jurisdiction is the Netherlands, located in northwestern Europe, member of the BENELUX and the European Union, known for a flat landscape of canals, tulip fields, windmills and cycling routes. It borders to the north and west with the North Sea, to the south with Belgium and to the east with Germany.  The Kingdom also comprises the constituent Caribbean territories of Aruba, Curaçao, Sint Maarten and the dependent special municipalities of the Caribbean Netherlands (Bonaire, Sint Eustatius and Saba).

Frequently known by the name of its most influential and relevant historical region, Holland, the country is one of the most densely populated areas in the world, with 41 543 sq. km and 17 million inhabitants. Its capital is Amsterdam, although the The Hague is the seat of government. Its official language is Dutch, but English is widely spoken among its population. Other regional languages include Frisian and Papiamento. The legal tender currencies of the Kingdom are the Euro (EUR) in Netherlands, the US Dollar (USD) in the Caribbean Netherlands, the Aruban Florin (AWG) in Aruba, and the Netherlands Antillean Guilder (ANG) in Curaçao and Sint Marteen.

Netherlands is one of the most developed states worldwide, ranking seventh in the Human Development Index (HDI) (2016). Its economy is characterized by stable industrial relations, low unemployment, an a surplus in the trade balance, being an important commercial hub in Europe. In the industrial activity predominates the agro-industries, steel products and aluminum, metal and engineering, machinery and electrical equipment, bulk chemicals, natural gas, petroleum products, construction, transportation equipment, microelectronics and fishing.

A highly mechanized agricultural sector employs only about 2% of the labor force but generates large surpluses for the food industry and for export, being the third worldwide. Its main agricultural products are dairy products, poultry, meat, livestock, flower bulbs, flowers, vegetables and fruits, sugar beets, potatoes, wheat, barley.

The Services sector accounts almost three quarters of the GDP, and mainly comprised by tourism, commerce, hotels, restaurants, transportation, storage and communications and financial services (banking and insurance).

Netherlands has an attractive tax regime for tax optimization, attracting the establishment of holding companies, which under certain conditions may not pay taxes on the dividends and profits reported by their subsidiaries. In addition to be one of the countries with more tax treaties to avoid double taxation.

Tax treaties

Country Type Date Signed
Uruguay TIEA 2012-10-24
Canada DTC  1986-05-27
Estonia DTC  1997-03-14
Slovenia DTC  2004-06-30
Cook Islands TIEA 2009-10-23
Ethiopia DTC  2012-08-10
Hungary DTC  1986-06-05
Kyrgyzstan DTC  1986-11-21
Kuwait DTC  2001-05-29
Liechtenstein TIEA 2009-11-10
United Kingdom DTC  1980-11-07
Greece DTC  1981-07-16
Tajikistan DTC  1986-11-21
Germany DTC  1959-06-16
Ukraine DTC  1995-10-24
Kosovo DTC  1982-02-22
Czech Republic DTC  1974-03-04
Chinese Taipei DTC  2001-02-27
Uganda DTC  2004-08-31
China DTC  1987-05-13
Sint Maarten DTC  1964-10-28
Indonesia DTC  2002-01-29
Qatar DTC  2008-04-24
Georgia DTC  2002-03-21
Saint Kitts and Nevis TIEA 2009-09-02
Nigeria DTC  1991-12-11
Australia DTC  1976-03-17
Bahrain DTC  2008-04-16
Serbia DTC  1982-02-22
Latvia DTC  1994-03-14
South Africa DTC  2005-10-10
Bermuda TIEA 2009-06-08
Finland DTC  1995-12-28
Anguilla TIEA 2009-07-22
France DTC  1973-03-16
Azerbaijan DTC  2008-09-22
Turkey DTC  1986-03-27
Belize TIEA 2010-02-04
Malta DTC  1977-05-18
Antigua and Barbuda TIEA 2009-09-02
Japan DTC  2010-08-25
Aruba DTC  1964-10-28
Sweden DTC  1991-06-18
Hong Kong, China DTC  2010-03-22
Portugal DTC  1999-09-20
Switzerland DTC  2010-02-26
Seychelles TIEA 2010-08-04
San Marino TIEA 2010-01-27
Ghana DTC  2008-03-10
Marshall Islands TIEA 2010-05-14
Brazil DTC  1990-03-08
Belarus DTC  1996-03-26
Ireland DTC  1969-02-11
Saudi Arabia DTC  2008-10-13
Russian Federation DTC  1996-12-16
Korea, Republic of DTC  1978-10-25
Andorra TIEA 2009-11-06
Turks and Caicos Islands TIEA 2009-07-22
Jordan DTC  2006-10-30
Austria DTC  1970-09-01
Grenada TIEA 2010-02-18
Liberia TIEA 2010-05-27
Bulgaria DTC  1990-07-06
Argentina DTC  1996-12-27
Venezuela DTC  1991-05-29
Mexico DTC  1993-09-27
Norway DTC  1990-01-12
Saint Lucia TIEA 2009-02-12
Pakistan DTC  1982-03-24
Former Yugoslav Republic of Macedonia DTC  1998-09-11
United States DTC  1992-12-18
Spain DTC  1971-06-16
Denmark DTC  1996-07-01
Zambia DTC  1977-12-19
United Arab Emirates DTC  2007-05-08
Thailand DTC  1975-11-09
Zimbabwe DTC  1989-05-18
New Zealand DTC  1980-10-15
Armenia DTC  2001-10-31
Moldova, Republic of DTC  2000-07-03
Uzbekistan DTC  2001-10-18
Curaçao DTC  1964-10-28
Kazakhstan DTC  1996-04-24
Dominica TIEA 2010-05-11
Bosnia and Herzegovina DTC  1982-02-22
Singapore DTC  1971-02-19
Tunisia DTC  1995-05-16
Bangladesh DTC  1993-07-13
Israel DTC  1973-07-02
Malawi DTC  1969-06-18
Croatia DTC  2000-05-23
Montserrat TIEA 2009-12-10
Cayman Islands TIEA 2009-07-08
Samoa TIEA 2009-09-14
Italy DTC  1990-05-08
Philippines DTC  1989-03-09
Albania DTC  2004-07-22
Lithuania DTC  1999-06-16
Mongolia DTC  2002-03-08
Suriname DTC  1975-11-25
Saint Vincent and the Grenadines TIEA 2009-09-01
Bahamas, The TIEA 2009-12-04
Romania DTC  1998-03-05
India DTC  1988-07-30
Sri Lanka DTC  1982-11-17
Montenegro DTC  1982-02-22
Viet nam DTC  1995-01-24
Oman DTC  2009-10-05
Guernsey TIEA 2008-04-25
Barbados DTC  2006-11-28
Costa Rica TIEA 2011-03-29
Panama DTC  2010-10-06
Monaco TIEA 2010-01-11
Iceland DTC  1997-09-25
Jersey TIEA 2007-06-20
Luxembourg DTC  1968-05-08
Egypt DTC  1999-04-21
Belgium DTC  2001-06-05
Poland DTC  2002-02-13
Gibraltar TIEA 2010-04-23
Isle of Man TIEA 2005-10-12
Slovakia DTC  1974-03-04
Malaysia DTC  1988-03-07
Morocco DTC  1977-08-12

Tax treaties Map

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