Understanding Anti-Tax Avoidance measures in the Netherlands

Intercompany Solutions helps foreign entrepreneurs establish businesses in the Netherlands. If you have any ambitions to expand your current company abroad, the Netherlands is actually one of the most favorable countries in the entire world to expand to. The same goes for starting entrepreneurs: starting a business in a stable country with a solid reputation can often massively increase your chances of success and growth. In particular, any country that is a European Union (EU) member state will greatly enhance your trade possibilities and access to many different markets.

We are therefore specialized in the establishments of Dutch companies for foreigners, helping you out throughout the entire process, which actually only takes just a few business days if you can provide us with all the necessary information. We will later discuss what we will need from you in this article. If you would like to know more about our services, please do not hesitate to contact us directly for further information and personal advice. Our team of experts will gladly help you along the way.

Why do foreign entrepreneurs pay taxes in the Netherlands?

To understand why anti-tax avoidance measures even exist in the Netherlands, it is essential for you to know why you will need to pay Dutch taxes in the first place when you set up a Dutch business as a foreign entrepreneur. Foreign entrepreneurs operating in the Netherlands are required to pay taxes for several reasons, primarily related to the country’s tax sovereignty, economic participation, and compliance with international tax regulations.

1. The territorial taxation principle

The Netherlands, like most countries, applies the territorial taxation principle, meaning that businesses generating income within Dutch borders must contribute to the local tax system. If a foreign entrepreneur has a permanent establishment, such as an office, warehouse, or employees in the Netherlands, they are subject to Dutch corporate income tax on profits made within the country. So this can be a Dutch company, a subsidiary, or even a branch office.

2. Economic contribution and fair competition

Next to the fact that you pay taxes because you are based here, taxes also fund essential public services such as infrastructure, healthcare, education, and legal protections that benefit all businesses, including foreign-owned ones. To ensure fair competition, foreign and domestic companies are subject to the same tax obligations. This prevents unfair advantages where foreign businesses might otherwise operate tax-free while benefiting from Dutch public services.

3. Compliance with EU and international tax rules

The Netherlands follows EU tax directives and OECD guidelines to prevent tax evasion and ensure fair taxation. Measures such as the Anti-Tax Avoidance Directive (ATAD) impose restrictions on profit shifting and tax base erosion. Additionally, tax treaties between the Netherlands and other countries help prevent double taxation, ensuring that foreign entrepreneurs are not taxed twice on the same income.

4. VAT and consumer taxation

Foreign entrepreneurs selling goods and services in the Netherlands must register for VAT if they exceed local thresholds. VAT ensures that businesses contribute their share to the Dutch economy when engaging in commercial activities, regardless of where the company is headquartered. By complying with Dutch tax laws, foreign entrepreneurs can benefit from the country’s business-friendly environment, legal protections, and access to the EU market while contributing fairly to the economy.

Which taxes will you be expected to pay when you own a Dutch company?

Once you understand that you have to pay Dutch taxes, it is also very important to know which types of taxes you might possibly be subjected to. This depends on, among other things, the company type you choose and whether you hire personnel, for example. Below, we have outlined the most common taxes with a short description of each particular tax type, and why you need to pay it in the first place.

1. Corporate Income Tax (CIT)

Foreign companies operating in the Netherlands are subject to corporate income tax (‘vennootschapsbelasting’) on their Dutch-sourced profits. The rates for 2025 are 19% on taxable profits up to €200,000 and 25.8% on profits exceeding that amount. Some tax incentives, like the Innovation Box regime, can lower the effective tax rate for qualifying profits. Non-resident companies are taxed only on Dutch-source income, such as local business operations or real estate holdings.

2. Value-Added Tax (VAT)

Businesses selling goods or services in the Netherlands must charge VAT (‘BTW’). The standard rate is 21%, with reduced rates of 9% (for essentials like food and books) and 0% (for exports and intra-EU trade). You can read more about Dutch VAT in this article, including a comprehensive list of all lower rates and exemptions. Entrepreneurs must register for VAT, file returns regularly and timely (otherwise you can expect hefty fines and worse), and ensure compliance with EU VAT directives. VAT exemptions apply to specific industries like healthcare, education, and financial services.

3. Wage tax & social security contributions

If a foreign entrepreneur hires employees in the Netherlands, they must withhold wage tax (‘loonbelasting’) and pay employer social security contributions. Wage tax rates align with personal income tax brackets. Up to the amount of €38,441, you pay 35.82%. You pay 37.48% for any amount above that up to €76,817, and 49.50% for any number that exceeds this amount. Employers also need to contribute to national insurance schemes like unemployment (WW) and disability (WIA), typically totaling 20-25% of an employee’s salary.

4. Dividend withholding tax

Dutch companies distributing dividends to (foreign) shareholders must withhold 15% dividend tax, unless a tax treaty or EU Parent-Subsidiary Directive applies to reduce or eliminate it. Certain exemptions exist for EU/EEA shareholders meeting specific ownership criteria, such as the so-called participation exemption. Even though Dutch resident companies are generally taxed on their worldwide income under Dutch corporate income tax (CIT), income from a qualifying participation, such as dividends and capital gains, is exempt from Dutch CIT at the shareholder level. This tax relief, known as the participation exemption, applies as long as the shareholder is also a Dutch tax resident company.

5. Real Estate Transfer Tax (RETT)

This is not always relevant, especially when you hire an address on which multiple companies are registered. But if you want to have your own office, some real estate taxes might apply. When acquiring Dutch real estate, foreign investors must pay 10.4% transfer tax. If it is a residential property intended as a primary residence, this will be 2%. Some exemptions apply, such as business restructurings.

How are tax avoidance measures created?

Tax avoidance occurs when companies or individuals exploit legal loopholes to minimize their tax burden. While technically legal, aggressive tax planning can reduce government revenues and create unfair advantages for multinational corporations over smaller businesses. To ensure fairness and compliance with international tax regulations, the Netherlands has implemented several anti-tax avoidance measures.

These measures are influenced by:

• EU Directives, such as the Anti-Tax Avoidance Directive - ATAD
• OECD Guidelines, such as the Base Erosion and Profit Shifting - BEPS Action Plan
• National tax laws and court rulings

The Dutch government develops tax avoidance measures through a multistep process, which we will describe below.

A. International agreements and EU directives

The Netherlands, as an EU member, is required to implement directives like ATAD, which introduce rules such as controlled foreign company (CFC) regulations, exit taxation, and interest deduction limitations. OECD recommendations, such as those from the BEPS framework, influence Dutch policies on profit shifting and tax base erosion. Note that not all EU directives are instantly implemented, so it’s wise to look up which ones are currently upheld in the Netherlands.

B. National legislation and tax reforms

The Dutch Ministry of Finance drafts proposals for tax laws based on international requirements and economic considerations. These proposals undergo parliamentary debate, amendments, and approval before becoming law. So these laws are constantly changing, such as certain tax rates and the way we do business overseas, to name just some examples. It is very important that you (or your accountant) always stay up-to-date regarding possible new laws.

C. Regular evaluation and adaptation

The Dutch government continuously monitors tax policies and adjusts them to close loopholes. Court rulings, both national and EU-wide, can also influence changes in anti-tax avoidance laws.

Some key Dutch anti-tax avoidance measures are:

• Earnings stripping rules: Limits on deductible interest to prevent excessive debt shifting.
• Controlled Foreign Company (CFC) rules: Prevents profits from being parked in low-tax jurisdictions.
• Exit taxation: Ensures companies relocating assets abroad pay taxes on unrealized gains.
• Anti-hybrid rules: Prevent tax benefits from differences in international tax classifications.

We will discuss these measures and some others in detail below. By implementing these measures, the Netherlands balances its attractive business climate with the need to ensure a fair and transparent tax system.

Current tax avoidance measures in the Netherlands

The Netherlands has implemented several tax avoidance measures to align with international standards and prevent profit shifting, tax base erosion, and unfair tax advantages. These measures are based on EU directives, OECD recommendations, and national regulations. Below are some key anti-tax avoidance measures currently in place:

1. Earnings stripping rule (interest deduction limitation)

The purpose of this anti-tax avoidance measure is to prevent companies from using excessive debt to shift profits and reduce taxable income. Companies can only deduct net interest expenses up to 30% of their EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). A €1 million threshold applies, meaning businesses with interest expenses below this amount are not affected. This rule discourages multinational corporations from using high-interest loans to artificially lower taxable profits in the Netherlands.

2. Controlled Foreign Company (CFC) rules

The purpose of this measure is to prevent Dutch companies from shifting profits to subsidiaries in low-tax jurisdictions. A Dutch company must pay tax on the passive income, such as royalties, dividends, and interest of a foreign subsidiary, if the following applies:

• The Dutch company owns more than 50% of the subsidiary
• The subsidiary is located in a low-tax jurisdiction (corporate tax rate below 9%) or on the EU’s blacklist of non-cooperative tax jurisdictions

This ensures that profits remain taxable in the Netherlands rather than being artificially parked in offshore entities.

3. Exit taxation

The purpose of this anti-tax avoidance measure is to prevent companies from relocating assets abroad to avoid taxation. When a company moves its headquarters, assets, or intellectual property out of the Netherlands, it must pay taxes on unrealized capital gains. This measure ensures that companies leaving the country do not escape Dutch tax obligations.

4. Hybrid mismatch rules

The purpose of this measure is to prevent tax benefits from differences in the classification of financial instruments or entities between countries. For example, if one country considers an entity taxable while another does not, companies can sometimes exploit the difference to avoid taxes by basically deducting the same expense twice. The Netherlands has closed such loopholes, ensuring that hybrid mismatches cannot be used for double taxation.

5. Substance requirements for holding companies

The purpose of this anti-tax avoidance measure is to prevent companies from using Dutch entities as “letterbox companies” to benefit from tax treaties. Dutch companies must meet substance requirements, such as:

• Having a physical office and employees in the Netherlands
• Having at least €100,000 in annual wage expenses
• Proving that strategic decisions are made in the Netherlands

Without sufficient substance, companies may not qualify for tax treaty benefits.

6. Mandatory disclosure rules (DAC6)

The purpose of this specific measure is to detect and prevent aggressive tax planning. It works due to the fact that tax advisors, lawyers, and accountants must report cross-border tax arrangements that could indicate tax avoidance. The Dutch tax authorities then use this data to investigate and close loopholes.

7. Withholding tax on interest and royalties (since 2021)

The purpose of this anti-tax avoidance measure is to prevent tax avoidance through payments to so-called ‘tax havens’. This is realized by a 25.8% withholding tax that applies to interest and royalty payments made to low-tax jurisdictions. This prevents Dutch entities from shifting profits to offshore subsidiaries via inflated royalty or interest payments.

8. Pillar Two: global minimum tax

The purpose of this measure is to ensure that multinational corporations pay at least 15% corporate tax in each country where they operate. The Netherlands will implement the OECD’s Pillar Two rules, requiring large companies (with revenue above €750 million) to pay a top-up tax if their effective tax rate is below 15%. This discourages profit shifting to low-tax countries and ensures fair tax distribution.

So, as you can see, The Netherlands has a strong and varied set of anti-tax avoidance measures that align with EU and OECD standards. These rules prevent companies from exploiting tax loopholes while maintaining a business-friendly environment, which is also particularly beneficial for smaller companies and startups, as they are less prone to be swallowed by megalomanic multinationals. 

How paying taxes helps the system run smoothly

No one really likes to pay taxes; let’s be honest about that. Taxes are often seen as an unavoidable and annoying burden, but keep in mind that they serve as the foundation of any well-functioning society. While some may attempt to avoid or minimize their tax contributions, the reality is that taxation plays a very large role in maintaining things such as social order, economic stability, and collective well-being. We will discuss some background information on this below, so you might understand the importance of paying taxes in a more profound way. People often dislike paying taxes, but without taxes, your civilization would literally collapse. Now, of course, there can also be the issue of overtaxation, but that’s a topic for another article, maybe some other time.

The social contract: giving and receiving

Taxation started when leaders offered protection to citizens in exchange for money to uphold a kingdom or other form of territory. The idea of taxation is also closely tied to the concept of the social contract, which is a philosophy that was introduced by thinkers like Jean-Jacques Rousseau and John Locke. This type of contract suggests that individuals agree, either explicitly or implicitly, to surrender a portion of their personal wealth to the state in exchange for protection, infrastructure, and public services. Without taxation, essential functions such as education, healthcare, law enforcement, and national defense would collapse. This would inevitably lead to societal disorder.

While it is natural for individuals to seek to maximize their own financial well-being, too much self-interest can severely compromise the very structures that allow for their prosperity in the first place, such as the state they reside in and where their company is based. Those who benefit from functionalities such as roads, legal protections, emergency services, and public institutions while attempting to avoid contributing to them are, in a sense, undermining the very system that enables their success. This is nonsensical and also not very sustainable. 

Fairness and collective responsibility

A well-designed tax system ensures that wealth and resources are distributed in a way that benefits all members of society. While capitalism allows individuals to accumulate wealth through innovation and hard work, taxation in turn ensures that no one is left behind. So, in a society where the wealthy contribute a fair share to public services, this enables economic mobility, reduces inequality, and creates a more stable and prosperous environment for future generations. So when huge multinationals choose to avoid taxes, they are essentially depriving the rest of the people of basic necessities and needs that need to be met.

Furthermore, businesses also benefit from a well-functioning system. A company operating in a stable, well-governed society is more likely to attract investment, hire skilled employees, and thrive in the long run. In contrast, countries with weak tax enforcement often struggle with corruption, failing infrastructure, and poor public services, which are all factors that ultimately make these countries less attractive for business. This is also one of the main reasons why so many foreign entrepreneurs choose to establish a company in the Netherlands via Intercompany Solutions.

Trust in the system is a two-way street

For taxation to work, there must be trust between the government and its citizens. If taxpayers believe their money is being misused, wasted, or lost to corruption, they may feel justified in avoiding taxes. This is why transparency and accountability are essential, because when people see that their contributions lead to better public services, they are more likely to accept their role in supporting the system. Some argue that taxation is inherently coercive and maybe even theft, but in a well-functioning democracy, citizens have the power to influence how their taxes are used. Voting and public discourse allow people to hold their governments accountable and ensure that taxes serve the greater good rather than being squandered.

A balance between freedom and duty

Ultimately, paying taxes is a balance between individual freedom and collective duty. Too much taxation can stifle innovation and economic growth, while too little can lead to failing public systems and social unrest. The goal should not be to evade taxes, but to ensure that taxation is fair, transparent, and beneficial to society as a whole. In this sense, tax avoidance is not just a financial decision; it is a moral and philosophical one. Choosing to contribute fairly means choosing to invest in the future of a country, its people, and the stability of its institutions. When done right, taxation is not just a burden; it is actually a shared responsibility that upholds civilization itself.

How Intercompany Solutions can assist you in starting a Dutch company

We have a solid and fast business establishment procedure, which allows you to set up a Dutch company in just a few business days. There are some general documents and information that we will need from you, such as:

• The names of all future shareholders
• Valid forms of ID for all future shareholders
• A preferred name for the company, so we can check availability
• A valid Dutch registration address for the company

Since 99% of our customers decide to set up a Dutch BV, which is comparable to a private limited liability company, we focus on the steps that need to be taken to establish one. This involves checking all documents you provide us with and making an appointment with a notary public on your behalf. If you provide us with a power of attorney, everything can be done remotely, and, as such, you won’t have to actually come over to the Netherlands. The notary will officially incorporate your business, at which point you will have to deposit the minimum share capital. Once this is done, we go to the Dutch Chamber of Commerce, and you will receive your registration number and VAT number. If you also have a Dutch bank account (which we can assist you with), you can start doing business right away!

What types of services can we offer you?

Intercompany Solutions has assisted hundreds of foreign entrepreneurs from over 50 different nationalities. Our clients range from small one-person startups to multinational corporations and everything in between. Our processes are aimed at foreign entrepreneurs, and, as such, we know the most practical ways to assist with your company registration. We can assist with the full package of company registration in the Netherlands:

• Company establishment in the Netherlands
• Opening of a local bank account
• Application for VAT or EORI number
• Application for a variety of permits
• Application for a visa or start-up permit
• Startup assistance
• Financial services
• Administrative services
• Secretarial services
• Legal assistance
• Tax and financial services
• Media
• General business advice

We are constantly improving our quality standards to continually deliver impeccable services. 

Intercompany Solutions is your reliable partner for Dutch business establishment

Want to know more about owning a Dutch business? Or would you like personalized information regarding your company or some tax issues you might have? Our experienced team is always ready to provide you with any assistance you might need. We can offer you many different services, as you can see above. If you need periodical assistance with your tax returns, that is no problem at all for us. Just contact us directly with any questions you might have, and we will help you with anything you need.