In the Netherlands, you have the option to discuss the tax position of your company with the Tax Administration and reach together an agreement regarding the consequences tax-wise. This agreement is binding for the taxpayer and the authorities. It needs to reflect the qualification and interpretation of facts and to conform to the national tax legislation, i.e. it should not contradict it. As of 2004 the policy on rulings is split in two general parts: for advance pricing agreements (APA) and advance tax rulings (ATR), respectively.

Advanced pricing agreements (APA) in the Netherlands

APAs cover the aspects of the arm’s length principle of remuneration and the methodology for transfer pricing. APAs are based on transfer pricing studies. The national tax authorities agree with the taxpayer that the income used for corporate taxation will be determined by such a study.

Advance tax rulings (ATR) in the Netherlands

ATRs cover the tax treatment related to specific circumstances and facts. Usually, ATRs are related to:

• the participation exemption regime (a one-page overview is available);
• the tax consequences with respect to hybrid financing;
• the tax consequences with respect to hybrid entities;
• the presence of permanent establishments in the country;
• the implementation of rules for foreign taxpayers.

When signing an ATR you should carefully go over and confirm the circumstances and facts forming the base of this agreement. If the circumstances and facts change it may be useful to check whether and to what degree the concluded ATR will continue to serve its purpose. Our extensive experience in ATR- and APA-related negotiations guarantees that our clients always get reliable agreements minimizing the probability of surprises.

Holland has signed numerous treaties for the avoidance of double taxation. These bilateral pacts ensure tax relief by avoiding double taxation with respect to income of individuals derived from both a source in Holland and another country.

The Netherlands has signed close to 100 double tax avoidance treaties. Investors planning to establish local businesses should obtain information regarding the advantages offered by these treaties, in case they are applicable to their home countries. For example, Holland has signed such treaties with the United States, the United Kingdom and the Arab Emirates.

Our Dutch specialists in accounting can provide you with details regarding the treaties for the avoidance of double tax concluded with your home country or any other countries you may be interested in.

Double tax avoidance treaties

The treaties for double tax avoidance determine which countries may levy taxes with respect to income generated under Dutch jurisdiction. Persons living outside Holland but deriving income from Dutch sources are taxed just once on capital and income, in accordance with the provision of these treaties.

Thus persons deriving income from Holland but living abroad pay less tax on income in Holland. Our local tax specialists can provide you with more details on the taxes that foreign residents must pay in Holland, including the thirty percent reimbursement ruling for international employees.

You may also benefit from the participation exemption rule to avoid paying tax on dividends.

The significance of the double tax treaties for international investors in the Netherlands

The treaties for avoidance of double taxation are beneficial for both individuals and companies opening branches in Holland. These bilateral conventions provide for reduced rates of withholding taxes for royalties and dividends agreed between the countries.

Companies and individuals residing in countries that have not yet concluded agreements for double tax avoidance with Holland can still take advantage of the Double Taxation Decree that, to a certain extent, reduces the tax burden.

If you need further information on the Dutch taxation system or professional audit and accounting services in Holland, please, get in touch with our tax specialists.

See also the tax office website about the Double Tax Treaties.

In the Netherlands, local companies and branches are subject to the same general taxation regime in accordance to the national law. Still, there are particular differences as branches are not obliged to cover certain taxes required for other business entities. In case you own a Dutch branch our local administrators can check which tax liabilities are applicable in your situation.

Dutch tax regime for branches

The tax regulations in Holland provide for equal taxation of branches and companies with respect to the rates for generated profits. Therefore, if you own a foreign company and decide to establish a Dutch branch, the tax you will need to transfer will be 15% for profit under EUR 395 000 and 25.8% for the amount exceeding this threshold in 2022.

The national government provides incentives for international investors opening branches in Holland. They are not subject to withholding tax, while resident companies pay 15% withholding tax. It is also possible to have clarity on the matter and receive an advanced tax ruling from the authorities.

Our Dutch financial administrators can give you more information about taxation of branches in the Netherlands. Please, do not hesitate to contact them with any questions on this subject.

Branch tax obligations in the Netherlands

In contrast to representative offices, branches allow international investors to perform business operations in Holland. Therefore branches have to be registered at the Commercial Chamber and the Tax Office. They are not subject to tax for capital registration, even if they receive contributions to their capital.

In Holland, the value added tax and wage tax rates for branches are identical to those applying to local companies. The amounts vary with respect to the scope and volume of the commercial activities. The hiring of employees and their actual number may be associated with specific tax liabilities.

Do you have questions regarding the tax regulations applicable to your company’s Dutch branch or the amount of employee taxes that you will need to cover? Please, do not hesitate to get in touch with our Dutch bookkeeping specialists.

Import of products to the Netherlands

The import of products originating in non-EU countries to Holland is generally taxable for VAT purposes, regardless of whether the import is performed by a private, taxable, non-taxable or exempt entity. Therefore VAT is usually due at import and is normally transferred to the Dutch Customs. In case you are interested in starting an import/export business in the Netherlands contact our local incorporation agents, who will guide you in the process.

License for VAT deferment

Holland has adopted a special system in connection to Art. 23, Act on VAT, resulting in the issue of Article 23 licenses. These licenses enable importers to postpone the VAT payment, rather than transfer the amount upon import. The system shifts the VAT liabilities to the recurrent VAT returns. Therefore the import VAT is declared in the respective periodic return but may be deducted as well in case no full deduction of VAT is applied. So VAT is not actually paid on import, which brings interest and cash-flow advantages. The license for VAT deferment is only issued to taxable, non-taxable and exempt entities (not issued to natural persons).

Requirements for VAT deferment license

Generally, the following requirements must be fulfilled in order to apply for a VAT deferment license:

• the candidates should either reside in Holland or have fiscal representatives / permanent establishments in the country;
• the candidates should regularly import goods;
• the candidates should keep transparent records with respect to the goods for import.

The importation of delivery trucks and private cars is subject to different conditions.

Application for VAT deferment license

Below is a non-exhaustive list of the information that must be included in the VAT deferment application:

• VAT/Tax ID number of the importer/applicant;
• Importer/applicant name;
• Type of product for import into Holland;
• Quantity of product;
• Envisaged frequency of import (annually);
• Price of the products for import (annually);
• Country of origin of the product (non-EU).

The tax authorities in Holland must process the application in an 8-week period.

Frequently asked questions

• I am based in the Netherlands with a BV. My supplier in Netherlands has Article 23. What VAT am I paying? And anything I should look out for?If your supplier has a permit based on article 23, then he can import goods in the NL without paying VAT. He has to declare this import in his VAT declaration. After the goods are imported he can sell these goods to a Dutch BV. When the imported goods are sold to you (Dutch BV), 21% VAT is applicable over the price of the goods. So if you buy the goods for 100 Euro, you pay VAT over 100 Euro. If you use the goods for your company and you pay VAT over your revenues, you can deduct this VAT.
• What advantage do I have with an Article 23 license?
  The advantage of an article 23 license is liquidity.Vat is not a cost for the entrepreneur. So you do not ''gain'' any profit by the license. However, you save financing cost. When you import big quantities of goods with an Article 23 license, you do not have to wait until the tax office refunds you the VAT you have paid over the goods. As the tax is deferred. This advantage can amount to your total monthly of quarterly purchases (multiplied by 21%).

Our agency can quickly make the necessary arrangements for issue of Article 23 license for VAT deferment. Contact us for more information or read here for more on the advantages of the Dutch tax system.

The Dutch credit system can be broadly defined as the relationships between persons (legal or natural) who provide loans and persons who take them. Therefore the system operates with credits provided by both non-banking and banking institutions for use by legal or natural persons.

Parties involved in credit transactions

Credit transactions take place between a lender (the person providing the credit) and a debtor (the person benefitting from the credit). Usually, the credit is a monetary amount that needs to be repaid in a particular period of time, including interest, i.e. the benefit (gain) that the creditor receives for lending money to the debtor using the loan. Creditors have claim rights to the loans and can demand their return, including interest, according to the provisions of their agreements with the debtors. The debtor carries the obligation to pay back the loan and interest within a certain time period specified in the agreement.

Loan types in the Netherlands

A PL (personal loan) is a type of credit in the Dutch credit system where the amount, interest rate and term of the loan are specified in an agreement between a bank institution and a debtor. Therefore personal loans have fixed monthly payments consisting of principal and interest.

Dutch revolving credits have a limit indicating the maximum possible amount available as a loan to the debtor. The interest and principal are transferred monthly. In most cases, they are calculated as a fixed percentage with respect to the limit.

Dutch real estate owners can use property tax credits based on the appreciation of goods. Property values (WOZ values) determined by municipalities establish the amounts that may be loaned in property tax credits. Such credits are usually characterised by sharp interest rate increases.

Business loans for financing are concluded between Dutch bank institutions and legal persons. Postbank, Rabobank, ING and ABN AMRO are the most popular banks offering such loans. Business loans are usually concluded by a limited business entity such as the BV company. In such cases, the company is liable for repayment of the loan, not the director of the BV. Read more on directors' liability.

Supplier credits are the most commonly used credits for the purposes of financing businesses. Suppliers provide credits as payments for months or years. These credits have the benefit of not compromising the companies’ liquidity.

In subordinated loans creditors are subordinated in case of debtor bankruptcy, i.e. they are last in the priority order. Such subordination needs to be agreed in a contract.

Credit contracts

The Dutch credit registration agency (BKR) is a significant institution in the framework of the national credit system. It keeps important information with respect to all debtors, creditors and credits in the country through the Credit Registration Database (CKI).

BKR receives all details provided in credit contracts: credit amount, date of conclusion, planned month for full repayment, actual month of full repayment, credit type, details on repayment, the debtor’s personal information (name, birth date, residence, address, personal ID details) and the credit institution’s details.

If you would like to know more about the Dutch credit system, the available loan types and the criteria for eligibility, please, call our business consultants.

The service sector is the most advanced in Holland’s economy and accounts for over two-thirds of the Gross Domestic Product. The sector includes transport, insurance and banking. Four banks established in the country are ranked in the global top 60: Fortis, Rabobank, ING and ABN AMRO. They have a network comprising roughly 6500 branches in Holland and 500 more in 50 other countries. Meanwhile, more than sixty branches and subsidiaries of European, Asian and American banks operate in the country.

De Nederlandsche Bank

The history of the Dutch banking system dates from 1814, when DNB (De Nederlandsche Bank) – the first publically owned bank that offered non-convertible low-value currency – was established. Therefore it is considered as the central bank of the country and was included in the European Central Bank System (ESCB) in 1999.

DNB, part of ESCB, is an administrative body with independent management. Routine operations are supervised by its management board. DNB also has a Board of Supervisors of the Crown. It is appointed as recommended by the collective meeting of the boards of executives and supervisors. DNB’s shareholder meetings and the respective minutes are kept secret.

As of October 30, 2004, the Nederlandsche Bank and the Pensions and Insurance Supervisory Authority (called Insurance Board since 2001) have merged. Therefore the bank carries the huge responsibility of monitoring the abovementioned institutions, additionally to its traditional supervision of banking. Pension funds or insurance companies cannot be established without DNB’s approval. The bank grants its permission only in case the life insurance company or pension fund is managed by specialists and has adequate financial resources.

Types of Dutch banks

The Dutch banking system comprises the following institutions: saving banks, commercial banks, mortgage banks and credit unions.

ABN AMRO (including RBS, BSCH and Fortis) and ING are the most significant Dutch banks.

The Dutch banking system also contains a bank providing specialized services and products to individuals (POSTBANK) by working with the national post office. It handles more than seven million accounts.

Rabobank is a network of credit unions. Rabobank Nederland owns fist position in this network. The Dutch banking system includes numerous credit institutions (about 302 in total) along with CEB N.V.

Bunq is a relatively new Dutch internet bank which has its focus on individuals. This bank offers banking services for non-residents.

The Dutch banking system is quite concentrated and included in the global top five with an 86.8 percent total assets share.

Banking sector efficiency is assessed by the proportions of total bank assets and administrative expenses. Using this criterion, the Dutch system is deemed effective, based on the scoring for the past several years. Economic profitability (ROA) is also used as a performance measure. It depends on the proportions of aggregate bank assets and net profit.

If you need more details regarding the Dutch banking system or if you need assistance to open a Dutch bank account, please, call our local business consultants. They will provide more information and customized assistance.

The Netherlands has a large network of agreements for avoidance of double taxation providing tax advantages to international investors establishing companies there. Among these agreements is the treaty with the USA. The first convention for the avoidance of double taxation between Holland and the USA was signed in 1992. Its first amendment dates from 1993.

Our local consultants specializing in company establishment can provide you with additional information about the Dutch tax system.

Scope of the double tax treaty between the Netherlands and the USA

The convention for avoidance of double tax between Holland and the USA covers:

• taxes on income, salaries, corporate profit and dividends in Holland;
• income and excise taxes with respect to insurances imposed to Dutch insurance agents established in the United States.

Dutch foundations working in the United States are subject to special provisions that are also included in the double taxation treaty. These concern the US excise tax. Furthermore, the convention covers similar taxes applicable in both Holland and the USA.

The double tax treaty provisions apply on the basis of tax residency.

Taxation of natural persons in accordance with the double tax avoidance treaty between the Netherlands and the USA

In the Netherlands, residents pay income tax and local companies are liable for corporate tax. For the purposes of double taxation avoidance, all treaties concluded by the Netherlands include provisions covering corporate and income taxes.

International entrepreneurs establishing companies in Holland have the option to choose their tax residency, i.e. pick the country that will hold them liable for tax payment. Foreign taxpayers can choose to pay taxes in accordance with the agreement between Holland and the USA for the avoidance of double taxation or take advantage of the Unilateral Double Tax Avoidance Decree of 2001. The double tax avoidance treaty with the US stipulates that US residents who earn income in Holland shall benefit from credit with respect to taxation of interests, royalties and dividends.

Taxation of businesses in accordance with the double tax avoidance treaty between the Netherlands and the USA

Regarding the tax regime for US companies operating in Holland and vice-versa, the double tax avoidance treaty provides for permanent establishment status that covers:

• branches;
• workshops;
• factories;
• mines/exploitation sites
• other offices and places of management;

The agreement for double tax avoidance is valid for facilities already established for 12 or more months.

Double taxes are avoided through reduction of the tax liabilities of Dutch companies in the US. On the other hand, Holland grants tax deductions to US companies operating simultaneously in the two countries.

Our Dutch consultants on company establishment can provide further information regarding the methods to avoid double tax by virtue of the Holland – USA treaty.

Amendments relevant to the double tax avoidance treaty between Holland and the USA

The double tax agreement between the two countries was amended in 2004 to include new provisions for pensions, dividends, alimony and branches. According to them, taxes on dividends transferred to a resident of Holland by a company in the US can be levied in the Netherlands. The rates for taxation of dividends are as follows:

• five percent of the dividend amount (gross) if the beneficiary owns no less than 10 percent of the votes in the corporation transferring the dividends;
• fifteen percent in all other cases.

Dutch and US branch offices are taxed by the country of registration of their permanent establishment. As regards annuities, alimony and pensions, persons with such income are liable for income tax only in their country of residence.

Free advice for corporate taxes

If you are looking for advice for your corporate taxes, look no further. We provide an initial free consultation for all starting entrepreneurs in the Netherlands.

ICS has been inspired by the work of The Kansas tax aide organisation. Kansastaxaide made an initiative to help individuals that do not have the means to make a proper account filing.

If taxes are filed wrongly, persons may be fined or even criminally liable. To prevent a too high administrative burdon, Kansas tax aide helped lower and middle income Kansans with the nationwide AARP-tax-aide program.

The AARP Foundation tax aide program is ideal for bringing finacially literate retired individuals, such as former tax accountants, lawyers, bookkeepers, government workers and entrepreneurs, together with people in need. Such as, single mothers who are in need for state funding to finance the education of their children.

We at Intercompany Solutions share the AARP philosophy and feel everyone, whatever the budget, has the right to a tax consultation. Even if we cannot assist with the matter at hand, we will be happy to introduce you to the right party for your specific question.

We are experienced tax experts from the Netherlands, with a specialization in all entrepreneurial matters. From corporate income tax, to Value Added tax to private tax filings of entrepreneurs. If you have a question, don't hesitate to contact us.

We firmly believe that bringing prosperity to others, will eventually bring prosperity to us.

Contact us

If you need comprehensive information regarding the amendments to the treaty for avoidance of double taxation with the US, do not hesitate to contact our Dutch agents specializing in company formation.

Guidelines for US Entrepreneurs: How to Start a Netherlands Company

Holding companies are among the most advantageous business entities in the Netherlands due to the beneficial tax regime they are under. Furthermore, Dutch holdings are globally recognized for the conveniences they offer to both foreign and local shareholders.

Investors should keep in mind that holdings are established in order to gather diverse assets of separate companies under a common umbrella. Our Dutch specialists in company formation are ready to assist international entrepreneurs planning to incorporate local holding companies.

Corporate tax and the 'participation exemption' applicable to holding companies

Dutch holding companies are taxed in the same way as other corporate entities in Holland. They need to pay 15% corporate tax on profits up to EUR 395,000 and 25.8% above this margin (2022).

The so-called “participation exemption” is among the advantages of Dutch holding companies, as it provides for full tax exemption on capital gains and dividend payments. Shareholders of Dutch holding companies are eligible for this exemption if they hold no less than 5% of the capital and meet one or more of the requirements below:

• The holding’s parent company should generate higher returns on investments in comparison to the profit arising from the holding’s asset management;
• All assets in the holding company should include less than 50% passive assets, subject to lower tax rates;
• Appropriate taxes, in accordance with the national legislation, are already levied on the holding company.

Our Dutch specialists can provide you with more details regarding the requirements to qualify for a participation exemption. Read more on the Dutch participation exemption.

Other tax benefits relevant for Dutch holding companies

Dutch holdings offer a number of advantages with regard to taxation. They include:

• free profit repatriation allowed by the tax authorities;
• numerous treaties for avoidance of double taxation: Holland has concluded 80+ treaties on double tax;
• advance rulings issued by the tax authorities are an option for all foreign companies operating in Holland;
• interest payments, dividends and royalties are subject to various tax exemptions and deductions.

The Dutch tax regime with respect to holding companies is among the most advantageous in Europe. This is why the Netherlands is an attractive destination for international investors planning to set up holdings. If you need assistance in establishing a holding and further information regarding its taxation, do not hesitate to contact our Dutch consultants specializing in company registration.

Establish a holding company in the Netherlands

Historically, The Netherlands has been known as a European trade centre and as the maritime link between the Old Continent and North and South America, Asia, and Africa. In order to maintain its status, the country has been working to achieve an even better, friendlier business climate and attract international investors. The efforts are paying off, as currently Holland is the EU base of 2100+ companies from North America, and counting. Why is Holland such an attractive country for doing business? The reasons are many and one of them is the tax system, offering various incentives.

The 10 advantages of the Dutch tax system:

1. The law in the Netherlands provides reductions of the withholding tax on dividends, royalties and interests paid to local companies and excludes from taxation the majority of capital gains obtained from share sales in source jurisdictions.
2. Holland’s investment treaty network is among the most extensive in the world. It includes 96 jurisdictions and Dutch limited liability companies have access to it. The network protects investors from expropriation and guarantees that they will be treated in the same way as domestic or third country investors. In any corporate structure, a Dutch entity can provide protection from foreign government interventions through clauses for settlement of disputes that allow international arbitration using the Dutch judicial system.
3. EU Directives provide a reduction of withholding tax on transactions between related firms.
4. Full tax exemption for income coming from foreign subsidiaries that meet the regulatory requirements. The so-called participation exemption allows tax waiver for eligible capital gains and dividends if a local holding owns at least five percent interest and meets one of two requirements:
   a) The subsidiary’s consolidated assets include <50 percent low-taxed passive investments.
   b) By making investments in the respective subsidiary, the company aims to get a return, greater than the anticipated from the regular management of assets.
   The subsidiary has to pay realistic taxes in accordance with Dutch standards (no less than 10 percent). The law also provides a tax exemption for income, coming from international permanent offices of Dutch companies and tax-effective profit repatriation.
5. Special tax regime for innovation where profits from qualifying intangible assets are taxed at a rate of 5 percent.
6. IP arrangements and financing (inclusive of hybrid debt) without retentions on royalty payments, interest and services, even if paid to a tax haven.
7. Support for Dutch holdings establishing businesses on the territory of the EU.
8. Deferred taxes for corporate restructuring.
9. Option to establish a consolidated group/fiscal unity (if particular requirements are met for direct subsidiaries of companies incorporated in the Netherlands) allowing consolidated taxation.
10. Possibility to defer taxes on gains from conversion or sale of intangible or tangible business assets, excluding passive investments.

Are you looking for tax advantages and exclusive benefits with respect to tax planning? The Dutch entities have plenty to offer. Furthermore, Holland is becoming an attractive jurisdiction for holdings. Learn about the opportunities the country offers by contacting our specialists in incorporation.

Last October the government of the Netherlands released a document announcing its future plans. The paper was finalized after a negotiation of more than 200 days. The document promises changes in various aspects of society. They include additional police funding and improvements of counterterrorism and cyber security. The government also envisages reforms in the labour market concerning sick leave, procedures for dismissal, rules for paternity leave and minimum wages. It plans to adopt a new system for pensions and amend the rules for child benefits. The paper also includes schemes on climate change, immigration, education and housing.

The 30 percent reimbursement ruling

The plans of the government specifically related to foreign employees concern changes to the thirty percent rule in the framework of envisaged tax reforms.

The 30 percent reimbursement ruling gives tax advantages to highly skilled foreign employees in the country, allowing them to receive 30 percent of their wages free of tax. Therefore such employees pay tax on seventy percent of their income. The rule is a form of reimbursement of the expenses migrants make for their relocation to the country, including housing, travel and visas. This tax advantage is a method to attract highly qualified international workers and fill existing expertise gaps in Holland. Currently foreign employees can claim the advantage for 8 years, even though it has been estimated that only about 80 percent of them actually benefit from it.

Last October the government made an announcement that soon the maximum period of the 30 percent ruling will be reduced from 8 to 5 years. The change will apply to newcomers and employees that are already using the advantage.

Read more on the 30 percent reimbursement ruling in our FAQ.

A petition signed by 30 000 people

Until now approximately 30 000 have supported a petition asking the government of the Netherlands to keep the old rule for employees who have already moved to the country and currently benefit from the advantage.

People have created Facebook groups to highlight and discuss the issue and have launched a campaign to raise money to fight in court the decision of the government. They say that they recognize the government’s authority to change the policy for future foreign employees as appropriate, but the amendments should not apply to current expats who have already moved to the Netherlands with the assumption that they will be entitled to 8 – 10 years with reduced taxes.

The decision to limit the 30 percent ruling term for existing claimants without a period of transition has raised much concern among expats. Employers of international workers are also worried about the repercussions of the proposed change.

Many lawyers specializing in taxation have been contacted by people with concerns about the ruling’s implications.

The 60 000 foreign workers in the Netherlands meeting the strict requirements on income will face significant financial consequences. If, for example, an expat is earning 60 000 Euros a year, then he/she will have to pay approximately 8000 Euros more in taxes. This considerable drop in personal income will inevitably make the country less attractive for foreign professionals. Many other countries worldwide welcome skilled employees, so people willing to work abroad will likely choose other locations. To counter this trend, Dutch employers will have to offer much more attractive packages for relocation and better salaries.

International workers in the Netherlands have already voiced their concerns by lodging complaints and donating money to the campaign for challenging the decision. A person who has arrived in Holland last year commented on the page that he has recently bought a flat, taking a thirty-year mortgage. He feels cheated by the government that decided to change the rules retroactively and considers this practice dishonest.

You can find more information on the campaign at: https://www.gofundme.com/expatfund or hashtag #aDEALisaDEAL

Intercompany Solutions offers comprehensive financial advisory services to expats who live and work abroad. Regardless of your situation, we will help you see your finances clearly and prepare yourself for the future.

On September 19, 2017 (Budget Day in the Netherlands) an official legislative proposal for amendment of the Dutch withholding tax on dividends was published in connection to the Tax Plan for 2018. In summary, the proposal referred to a broadened exemption from withholding tax on dividends applied unilaterally with the aim to maintain the favourable fiscal climate in Holland.

On the same day, the Senate approved all proposals included in the Tax Plan for 2018. Therefore, the broadened exemption from withholding tax on dividends is in force since January 1, 2018.

Dutch exemption from withholding tax on dividends before January 1, 2018

For a number of years, Holland has exempted the distributions of dividends to EU or EEA (European Economic Area) parent companies from withholding tax based on Council Directive 2011/96/EU on the common system of taxation applicable in the case of parent companies and subsidiaries of different Member States. According to this document any income distributed by subsidiaries to parent companies in different member states is not subject to withholding tax on dividends in case the following collective requirements are fulfilled:

• The legal form of the parent company has to be listed in Annex I of Directive 2011/96/EU;
• The parent company has to reside in a Member State of the EU under its national law and pay corporate tax on its income without possibilities of exemption;
• The company needs to hold a minimum of 10 percent of the subsidiary’s voting rights (or capital). The Directive was amended to reduce this holding requirement. It decreased from 25% for 2005 to 20% for 2006; for the next two years it was 15% and in 2009 it became 10%.
• The requirement for minimum period of holding (if any) should be fulfilled.

Extended Exemption from Dutch Withholding Tax on Dividends since January 1, 2018

From the beginning of 2018, the Dutch exemption from withholding tax related to dividends has a broader scope. It applies to the distributions of dividends in the following cases:

• The parent corporation would have qualified for the participation exemption in the Netherlands, i.e. its interest in the distributing entity/subsidiary is 5% or more;
• The parent corporation resides in the EEA, EU or a country that has signed a tax-related treaty with the Netherlands including provisions for dividends.
• The corporation has not been denied a withholding tax reduction with regard to dividends under the treaty between Holland and the country where it resides by virtue of a counter-abuse provision.
• The parent corporation does not own a part of the distributing entity’s/subsidiary’s capital with the chief purpose to avoid the Dutch withholding tax on dividends. This condition is verified through a “subjective test”. An assessment is made to check if the company owns a part of the capital of the distributing entity/subsidiary with the intention to circumvent Dutch withholding tax on dividends and if the company was interposed to achieve a better position with respect to Dutch withholding tax on dividends. If the assessment yields a positive result, it is followed by an “objective test”. Its purpose is to ascertain if the entity is artificial, i.e. it was not established for legitimate business reasons reflecting the economic reality. In general, entities are not considered artificial in case:
• the parent corporation has an operating business; or
• the corporation is a holding that has acquired a better position with regard to the Dutch withholding tax on dividends in comparison to indirect shareholders (grandparent company) having an operating business, but its relevant substance is sufficient. This means that the parent corporation (intermediate holding) meets two additional requirements for substance, on top of the existing ones stipulated in Dutch law: 1) The parent corporation has costs for employees amounting to no less than 100 000 Euros; 2) The parent corporation has office space where it performs its business activities.

The additional requirements for substance are in effect from April 1, 2018.

Who gets an advantage?

The exemption from Dutch withholding tax on dividends benefits parent corporations based outside the EU that operate active businesses and reside in jurisdictions with which Holland has signed tax treaties. The treaties must include provisions regarding dividends that provide for partial withholding tax reductions.

Intercompany Solutions B.V.

Are you developing a business outside of the EU and considering an expansion to new markets beyond your country’s borders? The broader scope of the exemption from withholding tax on dividends makes Holland a convenient jurisdiction for businesses outside the EU looking for options to expand their operations to the Netherlands and Europe.

Our team at Intercompany Solutions has the skills and knowledge to support you through each phase of your expansion process. Would it be beneficial for you to work with a competent partner to help you with your plans for expansion? Get in touch with our professionals, discuss your ideas and see what we can do for you.

 

The Dutch government obtains its revenue mostly by taxation. The Financial Ministry implements the national legislation on taxes and the Belastingdienst deals with its actual execution. You must pay taxes if you generate income while staying in Holland.

A brief history of taxation in Holland

Dutch people started paying taxes centuries ago. In the 1800’s the government guaranteed its income through taxation of indispensable goods like soap, firewood, salt, meat, grain, wine, coal, wool and peat. Back then all people were taxed equally regardless of their actual earnings.

In 1806 the Financial Minister at the time, Alexander Gogel introduced a general system for taxation. Income tax, or “inkomstenbelasting”, was adopted only in 1914. Its purpose is to tax everyone proportionally to their respective income, following the principle: “The more you earn, the more you pay.”

Twenty years later, in 1934, a tax on sales (omzetbelasting) was introduced. In 1968 it was substituted by the value-added tax on sales. In 1964 the government adopted the payroll tax, or “loonbelasting”.

The Belastingdienst (Dutch tax office)

The Dutch office for collection of taxes and customs is called Belastingdienst and it is within the structure of the Financial Ministry. Its responsibilities include:

• goods export, import and transit;
• fraud detection (economic, fiscal and financial);
• levying and collection of taxes;
• payment of income-related benefits for health care, rent and childcare.

The tax system in Holland

What common types of taxes will you encounter while working and living in Holland? Is it compulsory for you to submit a yearly return for income tax? This article will give you the necessary information about the tax system in the country.

Dutch tax advisors

It is not easy to calculate your taxes. This even applies to the majority of Dutch citizens and the tax requirements can be especially confusing for internationals. The revenue service acknowledges these difficulties in its own slogan: “There is no way to make it enjoyable, but with us, it’s easier.”

In case you need assistance with calculating your taxes and submitting the necessary documents, please, feel free to contact our advisors. They will be happy to help you out.

The 30% reimbursement ruling

Migrants with high professional qualifications who work in Holland might be eligible for 30% tax advantage. Check whether you meet the criteria for reimbursement ruling in this article.