Dutch Corporate Income Tax
Dutch corporate income tax deals with the tax that should be paid in the Netherlands, on the profits that are earned by companies. A number of rules apply to this, but in general, a Dutch company has to pay 15% corporate tax. This is also called ‘vennootschapsbelasting’ in Dutch. This tax applies to the worldwide profits of a company.
There are many Dutch tax rules that have to be taken into account if you are setting up a business in the Netherlands, or if you are doing business with a company within the Netherlands. There are also many ways to benefit from tax subsidies, facilities and other regulations that reduce the burden. A great consultant can help with this.
Corporate tax is considered to impact the earnings, whilst the VAT tax system is designed to collect tax from individuals, through the companies. For more information on VAT Read here.
Dutch corporate tax rates
Currently, the Dutch corporate income rate is 15%. This rate applies to taxable income of up to 245,000 euros. On the excess, a rate of 25% applies. This bracket may be extended in the future, which means that business can earn more at a rate of 15%. If activities are covered by the innovation box, a reduced rate may apply. The measures have been proposed by the Dutch government to stimulate a competitive tax environment for international businesses.
This innovation box provides tax relief to promote innovative research. If any profits are gained from innovative activities, they will be taxed at a special rate. Natural persons, for example self-employed people, have to pay taxes on their profits through their own income taxation returns. Their rate might be slightly higher, but their company costs are often lower.
2020: 16.5% below €200.000, 25% above
2021: 15% below €245.000, 25% above
2022 15% below €395.000, 25.8% above
There are some exemptions when it comes to the Dutch corporate income tax. The two most important exemptions are capital gains and dividends that are derived from qualifying subsidiaries, and income attributable to a foreign business enterprise. The first exemption applies when the subsidiary is an active company.
If that is the case, the Dutch parent company also needs to have an interest of at least 5% in such a company. In that case, it is a ‘qualifying subsidiary’, which means that the capital gains and dividends from this subsidiary are exempt of corporate taxes. The other exemption is slightly less complicated and has fewer requirements.
If a Dutch company receives income from a foreign branch, this income is also exempt from Dutch corporate tax. However, this branch must be a permanent establishment or representative. This is one of the reasons that The Netherlands has internationally been known as a tax haven.
The Netherlands harbours many holding companies for multinationals and participates in many bilateral tax treaties. The various exemptions in taxation systems facilitate avoidance of paying taxes by large corporations. And even though this reputation may be a bit questionable, it isn’t illegal to use the facilities that the Netherlands is offering in this area.
Best advice about Dutch corporate income tax
If you want to know more about Dutch corporate income taxes or its implications for your business, it would be wise to consult a specialist about this. And if you’re looking for a specialist, you only have to remember one name: Intercompany Solutions.
Intercompany Solutions offers boutique solutions and is market leader in quality corporate services and advice on taxes.
We provide all the advice, guidance, and information you need for setting up a company or corporate structure abroad. We handle the legal form, investments, legal matters, visa requirements, and immigration and make sure that everything is addressed. We help our clients avoid pitfalls and grow their business abroad. Contact us for more information.