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

   


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TAXATION

Personal Income Tax

Dutch tax residents pay income tax on their worldwide income, non-residents on income from Dutch sources.
There are three categories of income (boxes) for tax purposes:
1. Employment income, deemed income from housing, periodic payments, and business income. Such income is taxed at progressive rates:
  • Income up to EUR 35,129 – 9.45% (the national insurance premium is also charged on this amount at a rate of 27.65%, i.e. the total fiscal payment rate is 37.1%)
  • Income from EUR 35,130 to 68,507 – 37.1%
  • Income over EUR 68,507 – 49.5%.

2. Income from substantial participation in companies. Substantial participation means holding, individually or jointly with relatives, at least 5% of company shares. Profits from the sale of such investments and dividends on them are taxed at 26.9%.

3. Income from savings and investment. There is no tax as such on capital gains or current investment income (for example, dividends, interest, and royalties – unless it is business income). Instead, the taxpayer's net assets (assets less liabilities) are assessed as at 1 January. This value is used to calculate an annual fixed income taxed at the rate of 31%. There are various deductions and exemptions. The return on net assets is calculated using a special scale:
  • 1.9% for assets with a total value of EUR 50,000 to 100,000
  • 4.5% for assets with a total value of EUR 100,000 to 1,000,000
  • 5.69% for assets with a total value over EUR 1,000,000

Corporate Income Tax

Dutch companies pay tax on their worldwide income. The standard income tax rate is 25%. For companies with profits up to EUR 245,000, the tax rate is 15%.
Capital gains and dividends are included in the general tax base. However, such income is exempt from tax under the substantial participation exemption. This exemption applies if participation is at least 5% and a number of other conditions are met. Such conditions usually include the non-portfolio nature of the investment.
The exemption is also available if the subsidiary is taxed at a sufficient tax rate (at least 10%), and if less than 50% of the subsidiary’s assets are passive assets.
Dividends must not be deductible for corporate income tax by the distributing entity.

CFC Rules

A foreign company is considered a controlled foreign company (CFC) if:
  • (i) a participation held in it, directly or indirectly, solely or jointly with related parties, is more than 50%,
  • (ii) more than 30% of its income is passive income,
  • (iii) the foreign company is from a low-tax jurisdiction (corporate income tax rate is less than 9%) or a jurisdiction listed as non-cooperative by the national government or the EU.

The passive income of a CFC is taxed in the hands of the Dutch controlling person.
CFC rules may disapply if the foreign company is engaged in genuine business activities.

Withholding Tax

Withholding tax is levied on dividends at the rate of 15%. The tax can be reduced under double tax treaties and EU directives.
Withholding tax is not levied on interest or royalties, except for payments to related parties in certain low-tax jurisdictions. In this case, the tax may be levied at the rate of 25%.

VAT

The standard VAT rate is 21%.
Some goods and services are subject to the reduced rate of 9%.

Social Security Contributions

Employees pay a national insurance premium on remuneration up to EUR 35,129 at the rate of 27.65% (payable together with income tax).
Employers pay an employee insurance premium for income up to EUR 58,311 at rates depending on the industry. On average, the contribution is EUR 6,757 per year for a permanent employee and EUR 9,673 for temporary employees.
Employees pay compulsory health insurance contributions of about EUR 1,498, employers – at 7% on remuneration up to EUR 58,311.
There are some other premiums as well.

Immovable Property Transfer Tax

The tax is levied on the market value of the property at the rate of 8%.
A reduced rate of 2% applies when purchasing a property for living in it; in some cases, an exemption applies.
The tax may also be levied on the transfer of shares in a company with a significant share of real estate assets.

Immovable Property Tax

An annual tax is levied on immovable property owners at the municipal level.
The rates depend on the municipality; the tax base is the market value of the property.

Inheritance and Gift Tax

The tax is levied on the market value of the gift or inheritance.
There are tax-exempt thresholds. Their size, as well as the tax rate (from 10% to 40%) depends on the degree of relationship between the parties.

Double Tax Agreements

The Netherlands has entered a whole range of double tax and tax information exchange mechanisms:
  • 101 DTCs: Albania, Algeria, Argentina, Armenia, Aruba, Australia, Austria, Azerbaijan, Bahrain, Bangladesh, Barbados, Belarus, Belgium, Bermuda, Bosnia Herzegovina, Brazil, Bulgaria, Canada, Caribbean Netherlands (Bonaire, Saint Eustatius, and Saba), Chili, China, Croatia, Curaçao, Cyprus, Czech Republic, Denmark, Egypt, Estonia, Ethiopia, Finland, France, Georgia, Germany, Ghana, Greece, Hong Kong, Hungary, Iceland, India, Indonesia, Iraq, Ireland, Republic of Israel, Italy, Japan, Jordan, Kazakhstan, Kenya, Korea, Kosovo, Kuwait, Latvia, Liechtenstein, Lithuania, Luxembourg, Macedonia, Malawi, Malaysia, Malta, Mexico, Moldavia, Montenegro, Morocco, New Zealand, Nigeria, Norway, Oman, Pakistan, Panama, Philippines, Poland, Portugal, Qatar, Romania, Russian Federation, Saudi Arabia, Serbia, Singapore, Sint Maarten, Slovak Republic, Slovenia, South Africa, Spain, Sri Lanka, Surinam, Sweden, Switzerland, Taiwan, Thailand, Tunisia, Turkey, Uganda, Ukraine, United Arab Emirates, United Kingdom, United States, Uzbekistan, Venezuela, Vietnam, Zambia, Zimbabwe.
  • 23 TIEAs: American Samoa, Anguilla, Bahama’s, Bahrein, Barbados, Bermuda, British Virgin Islands, the Cayman Islands, Fiji, Guam, Guernsey, Isle of Man, Jersey, Kuwait, Palau, Panama, Qatar, Samoa, the Seychelles, Trinidad and Tobago, Turkmenistan, Turkish and Caicos Islands, US Virgin Islands, the United Arab Emirates, Vanuatu.

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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