Netherlands-N. V.

Basic taxes (briefly)

Personal tax 9,45-49,5%
Corporate tax (in detail) The standard income tax rate is 25%. For companies with profits of up to 245,000 euros, the tax rate is 15%
Capital gains tax. Details Capital gains and dividends are included in the general tax base
VAT. Details The standard VAT rate is 21%. A reduced rate of 9% applies to some goods and services
Other taxes Social contributions, Real estate transfer tax, Real estate tax, Inheritance and gift tax
Government fee No
Stamp duty No

International tax agreement

Tax treaties entered Albania, Algeria, Argentina, Armenia, Aruba, Australia, Austria, Azerbaijan, Bahrain, Bangladesh, Barbados, Belarus, Belgium, Bosnia and Herzegovina, Brazil, Bulgaria, Canada, China, Croatia, Curacao, Czech Republic, Denmark, Egypt, Estonia, Ethiopia, Finland, France, Georgia, Germany, Ghana, Greece, Hong Kong, Hungary, Iceland, India, Indonesia, Ireland, Israel, Italy, Japan, Jordan, Kazakhstan, Korea, Kosovo, Kuwait, Kyrgyzstan, Latvia, Liechtenstein, Lithuania, Luxembourg, Macedonia, Malawi, Malaysia, Malta, Mexico, Moldova, Montenegro, Morocco, Netherlands Antilles, New Zealand, Nigeria, Norway, Oman, Pakistan, Panama, Philippines, Poland, Portugal, Qatar, Romania, Russia, Saudi Arabia, Serbia, Singapore, Sint Maarten, Slovakia, Slovenia, South Africa, Spain, Sri Lanka, Suriname, Sweden, Switzerland, Tajikistan, Taiwan, Thailand, Tunisia, Turkey, Turkmenistan, Uganda, Ukraine, UAE, United Kingdom, United States of America, Uruguay, Uzbekistan, Venezuela, Vietnam, Yugoslavia, Zambia, Zimbabwe
   
Tax Exchange Information Agreement (TEIA) Andorra, Anguilla, Antigua and Barbuda, The Bahamas, Belize, Bermuda, British Virgin Islands, Cayman Islands, Cook Islands, Costa Rica, Dominica, Gibraltar, Grenada, Guernsey, Isle of Man, Jersey, Liberia, Liechtenstein, Marshall Islands, Monaco, Montserrat, Samoa, St Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, Turks and Caicos


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TAXATION

Personal Income Tax

Personal taxation depends on tax residency. Residents are taxed on their worldwide income. Nonresidents are taxed only on their Netherlands-source income.
Personal income is categorized and taxed within one of 3 ‘boxes’, depending on the source of income.
Box 1 is income from employment and housing, which is taxed at progressive rates as follows:
EUR 1 – 19,645 5.85%
EUR 19,646 – 33,363 10.85%
EUR 33,364 – 55,991 42%
From EUR 55,992 52%

Box 2 is income from a substantial holding in a company, which is taxable only if the individual’s direct or indirect holding exceeds 5% of the company’s issued capital. The tax rate is 25% on dividends and capital gains from the transfer of shares.
Box 3 is income from savings and investments. It is calculated as 4% of the net assets, on which a 30% tax rate applies, resulting in the effective tax burden of 1.2% of the net value. Each person is entitled to a tax-free capital threshold of EUR 21,139 applies for each resident taxpayer. Net assets are the average of the capital position on 1 January and 31 December of the relevant year. Relevant capital includes savings and bank accounts, a second home, equity and other shares.
Total amount of tax due is arrived at by adding together the taxes for the three boxes and taking into account general deductions.
Tax year conforms to calendar year. The tax return must, in principle, be filed before 1 April of the next calendar year. Administrative penalties may be imposed for late filing or failure to file a Dutch return, or the late payment or non-payment of tax. Criminal penalties are imposed if the Dutch authorities can prove fraud or gross.

Corporate tax

Corporate tax is levied on all companies established in the Netherlands (resident taxpayers) and on certain non-resident companies that derive income from the Netherlands. The Corporate Tax Act stipulates that all companies incorporated under Dutch law are deemed to be established in the Netherlands. Other factors taken into account in determining whether the company is established in the Netherlands include: 1) the place of effective management; 2) the location of the head office; 3) the location of shareholders’ meetings.
Corporate tax is due on all profits derived from conducting a business, including trading income, foreign-source income, passive income and capital gains. The rates and brackets are as follows: profit of up to EUR 200,000 is taxed at 20% and the excess at 25%.
The tax return must, in principle, be filed before 1st of June of the next calendar year. Administrative penalties will be imposed for late filing or failure to file a Dutch return, or the late payment or non-payment of tax. Criminal penalties are imposed if the Dutch authorities can prove fraud or gross.

Capital gains tax

Capital gains are included in taxable profits and subject to normal corporate tax. Under the participation exemption, capital gains derived from the sale of shares in a company are, in principle, exempt from corporate tax.

Losses

Losses may be carried forward for nine years and carried back for one year. Losses incurred in fiscal years 2009 through 2011 may be carried back for three years upon request, in which case, the term for carryforward is limited to six years. Special restrictions apply to losses incurred by a company whose activities are at least 90% finance and holding activities.

Dividends

Dividends received by a Dutch resident company are exempt if the participation exemption applies (see under Participation exemption).

Participation Exemption

The Corporate Income Tax Act provides for a ‘participation exemption’, which is designed to avoid double taxation on profits distributed by a subsidiary to its parent company. There are a few criteria to apply for participation exemption:
  1. a parent company holds at least 5% of the shares in a subsidiary;
  2. the subsidiary is not a ‘Low Taxed Portfolio Investment Company’, which means it meets at least one of the following criteria:

  • less than 50% of the assets of the subsidiary consist of ‘passive’ assets based on fair market value of the assets (‘asset test’); or
  • when the asset test is not met, such subsidiary is subject to a profit tax that results in a levy of at least 10% on a taxable profit recalculated according to Dutch standards (‘tax test’); or
  • when the asset and tax test are not met, such subsidiary is a real estate investment subsidiary (a real estate company being defined as company whose assets consist of at least 90% real estate).

There is no minimum holding period for the Dutch participation exemption to apply. Thus, the shares of the participation do not need to be held by the Dutch company for a certain period of time.

Incentives

Various investment deductions and reliefs are available. Under the “innovation box” regime, income derived from self-developed intellectual property (R&D) is effectively taxed at a 5% rate.
A research and development allowance (RDA) applies for costs and expenditure directly related to a taxpayer’s R&D activities (except for wage costs). The RDA reduces taxable income and, for 2013, the RDA percentage is 54% of R&D costs and expenditure. Assuming a marginal tax rate of 25%, the net benefit will be 13.5%.
A special tonnage tax regime applies to shipping companies. A 0% tax liability or an exemption is provided for qualifying investment funds.

Tax year

The tax year generally corresponds to the calendar year, although a deviating year may be used if so provided in the company's articles of association. The tax year usually is 12 months, but shorter or longer periods are permitted in the year of incorporation.

VAT

VAT is imposed on the supply of goods, provision of services, acquisition of goods by businesses and the importation of goods.
The standard VAT rate is 21%. A reduced rate of 6% applies to the supply, import and acquisition of goods and services, which include food and medicines; art; books, newspapers and magazines; passenger transport etc. There is also a zero rate for goods transported to another EU Member state on which VAT is levied.

VAT Registration

There is no registration threshold in the Netherlands.

VAT tax period and returns

Depending on the amount of VAT payable, VAT returns are filed monthly, quarterly or annually. Please note that VAT returns must be filed even though no VAT has been received or paid. These so called “zero returns” are obligatory for “dormant companies” as well. If “zero reports” are not submitted in time, Tax Authorities will make an estimation of the taxable amount, (administrative) penalties may be imposed and possible previously given permission to file returns only quarterly or annually may be conversed to Monthly returns.

Withholding tax

Dividends paid to residents or non-residents are subject to withholding tax of 15%. For residents, the withholding tax may be offset against the recipient’s corporate or individual tax liability. For non-residents, in most cases the withholding tax is a final tax. 15% rate may be reduced under an applicable treaty, and no withholding tax will be imposed where the Dutch participation exemption applies or if the dividend is paid to a qualifying parent company under the EC Parent-Subsidiary Directive.
The Netherlands does not levy withholding tax on interest, royalties or technical service fees.

Stamp duty

Stamp duty is not levied in the Netherlands.

Government fee

There is no government fee for companies in Netherlands.

Other taxes and duties

Real Property Tax Municipalities impose an annual tax at varying rates on owners of real property. Real property tax is deductible for corporate tax purposes
Social Security Contributions on employment income are payable by employers and employees. The contributions are calculated on gross salaries, less pension premiums withheld from the salary
Transfer Tax is payable at the rate of 2% on the acquisition of real property in the Netherlands or certain related rights
Inheritance tax is due on inheritances received from Dutch residents. Rates vary between 10% and 40%.

Anti-avoidance rules

Transfer pricing: Intracompany pricing for goods and services must be at arm's length, and documentation must be maintained on intragroup transactions. It is possible to enter into an advance pricing agreement for the use of a certain transfer pricing method.
Thin capitalization: The thin capitalization rules were abolished and replaced with new rules as from 1 January 2013. Under the old rules, interest expense paid to affiliated companies that related to “excess debt” (i.e. debt exceeding a 3:1 debt-to-equity ratio or the “group” ratio) was not deductible. The new rules disallow the deduction of interest costs relating to excess debt (deemed to be) associated with the acquisition price of participations. The excess debt for purposes of this rule will be calculated based on a mathematical rule, under which operational participations acquired from a third party generally will be excluded.
Controlled foreign companies: There is no specific CFC legislation, but there is an obligation to annually reassess shareholdings of 25% or more in low-taxed companies whose assets consist of at least 90% "passive" assets.
Other: The abuse of law doctrine applies where the motive of a transaction or series of transactions is the avoidance of tax.
Disclosure requirements: no

Double Tax Agreements

Netherlands has exchange of tax information relationships with 130 jurisdictions through
  • 98 DTCs: Albania, Argentina, Armenia, Aruba, Australia, Austria, Azerbaijan, Bahrain, Bangladesh, Barbados, Belarus, Belgium, Bosnia and Herzegovina, Brazil, Bulgaria, Canada, China, Croatia, Curacao, Czech Republic, Denmark, Egypt, Estonia, Ethiopia, Finland, France, Georgia, Germany, Ghana, Greece, Hong Kong, Hungary, Iceland, India, Indonesia, Ireland, Israel, Italy, Japan, Jordan, Kazakhstan, Korea, Kosovo, Kuwait, Kyrgyzstan, Latvia, Lithuania, Luxembourg, Malawi, Malaysia, Malta, Mexico, Moldova, Mongolia, Montenegro, Morocco, New Zealand, Nigeria, Norway, Oman, Pakistan, Panama, Philippines, Poland, Portugal, Qatar, Romania, Russia, Saudi Arabia, Serbia, Singapore, Sint Maarten, Slovakia, Slovenia, South Africa, Spain, Sri Lanka, Suriname, Sweden, Switzerland, Tajikistan, Taiwan, Thailand, Tunisia, Turkey, Uganda, Ukraine, UAE, United Kingdom, United States of America, Uruguay, Uzbekistan, Venezuela, Vietnam, Zambia, Zimbabwe;
  • 29 TIEAs: Andorra, Anguilla, Antigua and Barbuda, Bahamas, Belize, Bermuda, British Virgin Islands, Cayman Islands, Cook Islands, Costa Rica, Dominica, Gibraltar, Grenada, Guernsey, Isle of Man, Jersey, Liberia, Liechtenstein, Marshall Islands, Monaco, Montserrat, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, Samoa, San Marino, Seychelles, Turks and Caicos Islands;
  • 1 multilateral mechanism, Convention on Mutual Administrative Assistance in Tax Matters.

Foreign exchange control

There are no foreign exchange controls in the Netherlands.

ACCOUNTS

Annual accounts

All Dutch companies are required to prepare annual accounts and file them with the Dutch Chamber of Commerce. The accounts need to be prepared within 5 months after financial year-end, be approved by the general meeting within 2 months after the preparation and be filed within eight days of such approval. In any event the annual accounts of a financial year should be filed within 13 months after the financial year-end. The general meeting of shareholders may extend the period for preparing the annual accounts for a maximum period of six months.
The annual accounts comprise:
  • management board’s report;
  • financial statements, consisting of: • balance sheet
• profit and loss account
• notes
  • other information. 


Consolidated financial statements, when required, are part of the annual accounts.
Specific requirements to the annual accounts depend on the category of a company. There are three such categories: small, medium-sized and large:
Category Small Medium-sized Large
Total assets, million EUR < 4.4 < 17.5 > 17.5
Net turnover, million EUR < 8.8 < 35 > 35
Average number of employees < 50 < 250 >250

For example, small companies are not required to prepare (nor publish) a management board report. A small company is a company that meets at least two of the three above-mentioned requirements for two consecutive years. These requirements should be determined on a consolidated basis. This implies that the assets, turnover and employees of companies in which the Dutch company has (in)directly the majority of the control should be taken into account. This is however not the case when the Dutch company is exempt from preparing consolidated accounts on the basis of the company being an intermediate (holding) company.
When the company is newly incorporated, the two consecutive year rule cannot apply. In that case, whether or not the company is considered to be ‘small’ is determined on the basis of the financial accounts of the first financial year. The outcome applies to the first two financial years.
Besides, a Dutch company that is part of a group may under certain circumstances be exempt from the filing of annual accounts in the Netherlands. For a company to be exempt in the Netherlands, amongst others, all the following conditions must be met:
  • the parent company of the group declares each year to be personally liable for the debts of the company;
  • the financial details of the Dutch company are included in the consolidated financial accounts of the parent company.

When a company is exempt from the filing of accounts, annual accounts are still required to be prepared and approved.

Audit

The accounts also need to be audited by an outside registered auditor. However, ‘small’ companies are exempt from audit.

Annual Return

Generally speaking, Annual Return is a short review on the current state of the company, which is prepared by annually. As a rule it includes the following information:
  • Incorporation information (registration date, registered address);
  • Information about directors and their resignation;
  • Information about secretaries and their resignation;
  • Information about registered capital, nominal value of shares and amount of issued shares;
  • Information about shareholders and share transfer.

In the Netherlands companies are obliged to prepare and file Annual Return which provides details of those who have held shares throughout the year and the current directors must be filed each year. If you do not deliver the company's annual return, the Registrar might assume that the company is no longer carrying on business or in operation and take steps to strike it from the register.

Tax returns

A provisional assessment, generally based on information from the previous two years, usually is issued in the first month of the taxpayer’s financial year. This assessment is payable in monthly installments for the remaining months of the year. Corporate income tax returns must be filed annually, within six months of the end of the fiscal year. Businesses are expected to file all returns electronically. The tax return should be accompanied by all information required to determine taxable profits, including the balance sheet and profit-and- loss account and any other information requested by the tax inspector. If a company does not meet these obligations or does not file a proper tax return, the inspector may issue an estimated assessment.
Please note that digital declaration – via the website of Tax Authorities, using tax return or accounts software or through an intermediary, such as an accountant or tax adviser -is inter alia mandatory for income tax returns for entrepreneurs, corporate income tax returns, VAT returns, declarations of Intra-Community supplies (ICS), payroll taxes returns, first-day registration, excise duty and consumer taxes returns and declarations for transport of excisable goods (Excise Movement and Control System). VAT returns and statement ICP over 2014 and later years need to be filed with Standard Business Reporting (SBR) through the secure governmental digital channel: “Digiport”. For this you need suitable software for SBR and a “PKI overheid services server” certificate. For tax intermediates transitional provisions are applicable. Tax Authorities work step by step towards full implementation of SBR. An overview of implementation can be found here {http://www.belastingdienst.nl/wps/wcm/connect/bldcontentnl/belastingdienst/intermediairs/aangifte_doen/standard_business_reporting/hoever_zijn_we}
The tax year generally corresponds to the calendar year, although a deviating year may be used if so provided in the company's articles of association. The tax year usually is 12 months, but shorter or longer periods are permitted in the year of incorporation.
Administrative penalties may be due for late filing or failure to file a Dutch return, or for the late payment or nonpayment of tax. Criminal penalties may be imposed if the Dutch authorities can prove fraud or gross negligence.

    Taxes of Netherlands

    Min. rate for corporate tax 25%
    Capital gains tax Regular rate
    VAT 21%
    Withholding tax 15%/0%/0%
    Exchange control No
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