The economy of the Netherlands is increasing in strength with the most recent forecast of the Dutch Bureau analysing economic policy (CPB) predicts economic growth of 3.2% in 2018 and 2.7% in 2019.

An economic boom

The Central Economic Plan for 2018 prepared by CPB forecasts the economic situation in the Netherlands this year and next year. Estimates are made for a smooth Brexit where trade with the UK will continue on the basis of a new agreement. If, however, the situation turns out otherwise, the national economy may suffer damages. Recently there has been a small migration of UK based companies to leave with their headquarters to the European mainland.

The report of the CPB predicts economic growth of 3.2% for 2018 and 2.7% for 2019. If the estimate proves accurate, Holland will surpass the economy of the Eurozone by 0.6% for the period from 2017 to 2019.

This economic boom is a result of several factors including expanding budgetary policy, strong housing market, low interest and a good international economic climate.

Even though the Dutch economy is growing, the surplus of the government is unlikely to increase. Last year it was 1.1% GDP. The report forecasts 0.7% surplus for this year and 0.9% for 2019. The decrease is mainly due to greater governmental spending.

Unemployment in Holland is expected to decrease

CPB’s report raises the hopes that the unemployed in the country will decrease. The figures are 4.9% for 2017, 3.9% for 2018 and 3.5% for 2019. The rate for next year will hit a record low since 2001.

This decrease in the number of unemployed people means that businesses will have to work harder in searching for employees. This will likely bring an increase in the number of permanent employment contracts and higher salaries to attract and retain staff.

Dutch households will be able to purchase more

The report of the CPB foresees a 1.6% average increase in the purchasing power of households by next year. This will affect differently certain households. The ones on welfare benefits shall experience only 0.8% increase, the employed will notice a 1.8% increase and retired persons will experience an increase of 1.3%.

The Dutch government has decided to support a new policy on taxes proposed by Menno Snel, State Secretary of Finance and to take action with respect to the first priority on the agenda: stop tax evasion and avoidance.

For the coming years, the policy includes 5 priorities:

1. to stop tax evasion and avoidance;
2. to reduce the taxes on labour;
3. to promote a competitive tax climate for real activities in the economy;
4. to make the system for taxation greener,
5. and more workable.

According to Snel these five priorities constitute a big step towards an improved tax system. He adds that the new system is still incomplete. This and the next government need to put continuous efforts in pursuing a more comprehensible, workable, fairer and simpler tax system in order to ensure unbiased taxation for businesses and individuals alike.

Stopping tax evasion and avoidance

The State Secretary’s policy to tackle tax evasion and avoidance includes two pillars: to promote integrity and transparency and to protect the tax base.

Introducing a withholding tax system

In 2021 Holland plans to adopt a withholding tax system with respect to royalty and interest flows to jurisdictions with low taxes and cases of abusive arrangements for taxes. In this way, Holland will no longer be a channel to low-tax countries. Mr. Snel makes it clear that he aims to stop tax evasion and avoidance and to end the image of Holland as a state that facilitates tax avoidance by multinationals. The good investment climate is threatened by this impression.

Treaties

It is the government’s aim to provide Holland and its partners with efficient tools to counter tax avoidance. Therefore, the government is adding more provisions than numerous other countries to stop abuse in its treaties for tax by virtue of the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting. This action is aimed at preventing improper use of the extensive Dutch system of tax-related treaties.

Building on the European tax avoidance directives

Holland will adopt more stringent measures in the implementation of the two EU directives preventing tax avoidance (ATAD1 and ATAD2) than foreseen in these directives., e.g. no group exemption regarding the rule for earnings stripping. Furthermore, no stand-still clauses will be applied with respect to existing loans and the maximum threshold shall be decreased from 3M to 1M Euros.

Holland will introduce a rule for minimum capital for insurance companies and banks to promote more equivalent treatment of equity and debt for all sectors. This action is expected to result in a healthier economy and greater company stability.

Non-disclosure right and public announcement of fines

Transparency is very important in tackling tax evasion and avoidance. The general policy aims in this aspect are inherited by the previous government. Holland shall clarify the non-disclosure right for notaries and lawyers. Culpable negligence fines will be announced publicly so that these providers of financial services become more accountable in giving advice on planning taxes.

Financial market integrity

The Dutch government is preparing legislation for the creation of a registry for ultimate owners. The legislation regulating trust offices will become more stringent.

European initiatives for culture change

The Dutch government approves the proposals of the EC to increase transparency. The Commission has proposed a mandatory disclosure directive requiring financial intermediaries (lawyers, tax advisers, trust offices, notaries, etc.) to inform the authorities of possibly abusive cross-border schemes for tax planning. The legislation proposed regarding the reports of multinational enterprises for tax jurisdictions will show the extent of compliance with tax obligations.

The national government provides support to companies developing innovative products by means of grants, innovation credits and tax benefits. The European Union also offers different grants for innovation.

Innovations create opportunities

Inventive businesses can participate in the quest for solutions concerning fundamental social issues, such as population ageing, deadly diseases and food security. The development of new products can give them access to markets they have not previously explored. Innovations boost the economy and create jobs. Therefore the government embraces innovative initiatives. Its financial support allows companies to promptly place their innovative services and products on the market.

Investment in leading sectors

The innovative leading sectors in the Netherlands are rated among the best in the world. The Dutch government is eager to cement their top position on the international market. There are 9 top sectors in the Netherlands, namely:

1. The creative industries
2. The logistics sector
3. The energy industry
4. The high technology industry
5. The chemicals industry
6. The life sciences and health sector
7. The water sector
8. The propagation materials and horticulture industry
9. The agriculture and food sector

Alliance of the Top Sectors for Innovation and Knowledge (TKI)

The private sector, the government, various research centres and universities are collaborating through the Alliance of the Top Sectors to make these sectors even more competitive. They look for means to establish innovative services or products on the market.

Stimulating innovation in the top sectors

The government stimulates innovation through the following initiatives:

National Icons

National Icons is a biennial competition where the government announces several winning products or projects. The selected entries address main social issues and prove that Dutch innovations qualify among the best in the world.

Innovation Expo

This Expo is organized every 2 years and its purpose is to boost innovation. The event in the spring of 2016 highlighted the EU Presidency of the Netherlands. The Expo is also a network of innovation including 3000 private sector representatives, knowledge institutions and public bodies. They collaborate with the aim to make technological breakthroughs and innovations.

Volg Innovatie

“Volg Innovatie” is a database maintained by the Enterprise Agency of the Netherlands. It gives information about the financial contributions of the Ministry of Economy to different projects.

National Scientific Agenda

The National Scientific Agenda of the Ministry of Economy and Climate Policy (MECP) specifies major topics for research for the coming years. It considers the following questions: Which fields appear promising for the scientific sector in the Netherlands? What can science do to solve social issues? In what ways can science open economic opportunities to introduce innovations?

Attache Network for Innovation

Dutch consulates and embassies have innovation attaches. Their job is to help Dutch companies conducting business abroad by, for example, providing them with contacts of potential partners in the face of other companies or research institutions.

Smart Industry

This initiative strengthens the industries in the Netherlands by encouraging the application of modern technology and IT, such as nanotechnology, robots and 3D printing.

Future Fund for Innovation

The Future Fund of the government provides additional financial support to innovative small and medium enterprises for the achievement of key perspective research goals. Starting in 2018 it will provide 5 million Euros annually and its starting capital is 200 million Euros. All activities of the fund are pending review in 2020.

Tax credit for development and research

The tax credit for development and research approved by the MECP aims to provide an incentive for entrepreneurs to make investments in research.

As an expat, one incurs significant costs, especially upon relocation. Depending on the situation, an expat may have to pay for visa, residence permit application, driving licences, Dutch courses, housing and bills.

The 30% ruling is created to mitigate the negative effects of these expenses on one’s income.

Conditional on eligibility, the 30% rule means that the tax base of your gross salary as an expat in the Netherlands may be reduced by 30%.

How does the 30% rule work

The Netherlands taxation department (“Belastingdienst”) coordinates and supervises the application of this rule.

You can calculate how much you will gain from using the 30% ruling yourself – just multiply your gross yearly salary by 30% – this will be the amount not taxed. 70% will still be taxed, using the legally applicable rates.

Take into account while calculating your gross yearly income, that this rule also applies to allowances for holidays, benefits and bonuses. A car, provided by your company, is also counted into your salary. Severance pay and pension-related premiums, however, are NOT counted.

A maximum tax (effective) rate of 36.4% is applicable to the rule. This is significantly lower than regular taxation brackets in the Netherlands (highest being 52 percent).

How long can you benefit from this rule as an expat

The maximum length of application of this rule for one person is 8 years. However, this length can be reduced, in case the expat has worked in Holland before. For those employees, who have been using the rule before 2012, the maximum length of application used to be ten years. Read more on the latest developments concerning the 30% reimbursement ruling and its duration.

Additional advantages and benefits

There are other advantages to using this rule, namely:

One can select the “non-resident” option in their tax declaration (Boxes 2 and 3 of the income tax declaration). If this status is used, assets listed in Box 2 and Box 3 are not taxable. The only exception are investments in real estate.

An expat, as well as the members of his/her family, can receive a driving licence, issued in the Netherlands, in place of their old one, without going to a driving test. Normally, a driving test would be required for this.

If an employer agrees to fund international school attendance, the reimbursement will be free of taxation.

Note that if these options are used, the other deductions are still applicable.

Expats working in the Netherlands as entrepreneurs can also apply for this benefit if they are employed through their own limited liability business (BV).

It is also a way for an entrepreneur to attract valuable foreign specialists.

Application requirements

To apply for the 30% rule you have to meet the following conditions that characterise you as a skilled worker:

• The expat must be employed by a Netherlands-based company.
• The expat must have professional knowledge and experience that is not easily found in Holland. An employee is considered to have this type of experience when their salary meets certain requirements.
• The employee and employer agree, that the rule is applicable (agreement must be in written form)
• The employee has been transferred/recruited from another country.
• Before commencing work in the Netherlands, the employee has resided outside of a 150km distance from the Netherlands more than two years.

Do not hesitate to contact our advisory team if you have questions regarding this rule.

The application process

To begin the process, an expat employee and his/her employer should submit the “Application for implementation of the 30% ruling” (“Verzoek loonheffingen 30% regeling”) to the Netherlands taxation department.

Late application

It’s possible that you just found out that you’re eligible. You can still apply. Depending on the time of application, you may also be eligible for retroactive reimbursement.

For example, if you file the respective documents within 4 months from starting work, you will be reimbursed retroactively for the first months. In case of submitting the documents later than 4 months from beginning your job, you need to wait for the approval of your application.  The reimbursement period will begin on day one of the first month following this approval.

You can apply even years after you began work – the only condition is that you were eligible at the time you began working in Holland.

What happens if you change jobs?

In the event of termination of employment, where this rule has been applied, one can re-apply for continuing the application of the rule. For this, the new job must meet the requirements, set above. Additionally, in this case, the application must be filed no later than 3 months after the end of the previous employment.

Read our FAQ for more information on the 30 percent tax ruling.

For three years now an unprecedented number of firms have set up a new business in Amsterdam. Only in 2016, more than 150 multinational corporations have opened locations in the metropolitan area of the Dutch capital. This is a sign that Amsterdam is not only the prime business hub of the Netherlands but of the continent as well.

The city is an attractive destination for many international investors. Our local lawyers can assist you in opening a subsidiary or a branch of an international company in the country.

Amsterdam is an attractive location for international companies

IBM’s report on global trends confirms the competitiveness of Amsterdam as a destination for foreign companies. The city is ranked third in attracting international investments, but also fourth in PwC’s ranking for opportunities and EY’s European survey.

Amsterdam owes its global attractiveness to its agreeable business climate and its capability to remain stable throughout a year full of business challenges in Europe. Some international companies fearing the consequences of Brexit have opted for relocation and have chosen the Netherlands for their new bases of operations.

Establishing headquarters in the Dutch capital

The Netherlands offers many benefits for international companies. Some of its most attractive features are its convenient European location, developed connectivity and infrastructure, numerous opportunities for business and employment, and a suitable pool of qualified and talented Dutch and international workers.

The process for company registration in the Netherlands is easy, with different possibilities for incorporation. EU companies are free to open branches in the country, while other international corporations can register subsidiaries.

The increasing number of companies opening headquarters in the country does not come from Europe alone. Some of the biggest players of the year also come from the regions of North Africa and the Middle East. North American corporations account for more than a half of all expanding businesses in the metropolitan area of Amsterdam.

If you need more information on how to start your business in Amsterdam, please, contact our law firm in the Netherlands.

The Dutch newspaper “Het Financiële Dagblad” (The Financial Daily) has recently conducted research showing that the average amount large EU enterprises spend on corporate tax equals 23.3 percent of their profit. The authors analyzed the tax liabilities of 25 companies - the biggest on the Stock Exchange in Amsterdam - including Unilever, Heineken, ING Group and Philips, and reviewed the corporate taxes they pay in various European countries.

The analysis showed that the rates of corporate tax differ significantly among the EU countries. While Maltese, French and Belgian companies pay between 33 and 35 percent tax on their corporate income, the liabilities of Bulgarian, Lithuanian, Latvian and Irish businesses amount to 10 to 15 percent. Some countries outside the European Union, e.g. the United Aram Emirates, Guernsey and the Cayman Islands do not collect taxes on corporate income. According to the newspaper the highest rate of corporate tax (55 percent) applies to companies involved in the gas and oil industry in the United Arab Emirates.

Top 5 of the tax-friendly countries in the EU

The research results show that the top five low-tax destinations for large companies in the European Union are as follows:

1. Bulgaria

For quite some time the country has been popular with its convenient fiscal policies. The corporate income tax flat rate is the lowest in the European Union and is fixed at 10 percent. Personal income is taxed at the same rate. Furthermore, Bulgaria attracts entrepreneurs with its strategic location, developed business infrastructure and low costs for labour. Read here on Bulgarian company types.

2. Ireland

The normal rate of the corporate tax in the country is 12.5 percent on income from trade and 25 percent on income from other sources. The local taxation system is a good example of encouraging competition and boosting of investments. The tax on personal income is progressive in the margins of 20 to 40 percent.

3. The Netherlands - The Western European alternative with a solid reputation

The Netherlands comes in on a respectable 6th place with a corporate tax of 19 percent. (The Dutch corporate tax rate has been lowered in 2021). The Netherlands is known as a global trading hub with an international workforce that is 93% fluent in English. The reputation of the country, combined with its tax treaties, have lead to the biggest firms in the world to establish their headquarters in the Netherlands. Amongst such companies are Apple, Starbucks, Google and many other fortune 500 companies.

The Netherlands is lowering the corporate tax rate in the coming years.

Read more on corporate income tax in the Netherlands.

4. Latvia

The country collects corporate income tax at 15 percent flat rate. In January, 2017 it introduced a lower rate of 12 percent for micro enterprises to support companies with low turnover that meet particular requirements. Latvia also attracts investors with its skilled workforce and developed transport infrastructure. The most popular fields for investment are logistics, transport, IT, life sciences, renewable energy and woodworking. The tax on personal income is 23 percent.

5. Lithuana

A flat tax rate of 15 percent applies for both corporate and personal income generated in the country. Lithuania is considered the second most favourable European state for investors. Also, its economy is rated in the European top 5 for fast growth. Lithuania is popular with its R&D sector, outstanding digital infrastructure, low labour costs and qualified specialists.

During the past decade virtual currencies, such as Bitcoin, Qtum, Litecoin and Ethereum, have become increasingly popular. They are currently used as both methods for payment and investment instruments. The emergence of cryptocurrencies led to a legislative vacuum that had to be replaced by adequate regulations.

The present publication focuses on Bitcoin (by far, the most popular virtual currency) taxation. Bitcoins substitute real currencies and have a real monetary value. This means that they can be converted into US and Australian dollars, Euros or any other virtual currency. Most Bitcoin transactions are anonymous and take place on the Internet. Bitcoins are not regulated and do not depend on backings from central banks and governments.

Even though under most jurisdictions the Bitcoin currency is not considered as legal tender, some taxation systems recognize its significance and the respective authorities have proposed a particular fiscal treatment. Below is a brief overview of methods for Bitcoin taxation in the USA, the EU, UK, Germany, Australia and Japan.

Taxation on Bitcoin in the USA

In collecting federal tax, the Revenue Service of the United States considers Bitcoin as property, not as a currency. All transactions with Bitcoin are taxed in line with the principles valid for property taxation. Therefore details on Bitcoin transactions need to be submitted to the Revenue Service for the purposes of taxation.

Taxpayers offering services or goods paid in Bitcoin are required to report the amount of gained Bitcoin in their yearly tax returns. Bitcoin value is calculated taking into account the fair value on the market in US dollars (exchange rate) at the time of receipt of the payment.

If the taxpayer is using the cryptocurrency as a capital asset (as investment property such as bonds, stocks, etc.), he/she should consider any taxable losses or gains. Taxable gains result from transactions where the received value in dollars is higher than the virtual currency’s adjusted basis. Alternatively, a loss results from transactions where the received value in USD is lower compared to the virtual currency’s adjusted basis.

In the United States, people involved in mining of Bitcoins (validating transactions and maintaining a ledger) are also obliged to pay taxes. In case of successful mining, they have to add the value of mined Bitcoins to their total annual income.

Failure to fulfil the tax requirements for virtual currencies can result in penalties. Compliance with the US tax regulations and accurate assessment of taxes related to Bitcoin transactions can be achieved through maintenance of detailed records.

Bitcoin taxation in The EU

In 2015 the highest court in the European Union (ECJ) determined that transactions in Bitcoin shall not be charged with VAT in connection to the legislative provisions for transactions in bank notes, coins and currencies as means for payment. Therefore the European Court of Justice considers Bitcoin as a currency rather than property.

Even though Bitcoin transactions are not subject to VAT, they may incur other taxes, for example on income or capital gains. Bitcoin is treated differently for the purposes of taxation depending on the EU Member State.

United Kingdom

The United Kingdom treats Bitcoin in the same way as foreign currencies. Bitcoin transactions are subject to the rules for taxation applicable to currency losses and gains. On the other hand, transactions with Bitcoin that are considered “speculative” may be exempt from taxes. The information on measures for tax enforcement connected to transactions in Bitcoin provided by the local tax authority (HMRC) is rather vague. It implies that such exchanges are to be considered on a case-by-case basis, depending on the particular circumstances and established facts.

Germany

Since 2013 the country has been treating Bitcoin as private money. Even though the virtual currency is taxable at a rate of 25 percent for capital gains, the tax is chargeable only in case the Bitcoin profit is accumulated in the course of 1 year after the virtual currency was received. Therefore taxpayers holding Bitcoin for more than a year are not liable for tax on capital gains. In this case, any virtual currency transactions will be considered as private sales that are non-taxable. In Germany Bitcoin is treated in a way similar to shares, stocks and other investments.

Taxes on Bitcoin in Japan

The country recognises Bitcoin officially as a method of payment. Since July 01, 2017 the currency is not subject to consumption tax. Japan considers virtual currencies as values similar to assets. As such, they may be transferred in a digital manner or used for payment. Therefore profit from trade in Bitcoin is treated as business income and generates tax liabilities for capital gains and income.

Bitcoin taxes in Australia

The country considers all transactions in Bitcoin or any other virtual currency as barter arrangements. The national taxation system recognizes Bitcoin as an asset generating capital gains rather than as a foreign currency or money. All Bitcoin transactions must be properly documented, recorded and dated. Received payments must be declared in Australian dollars in the same manner as normal income.

Personal transactions with Bitcoin are exempt from taxes if they meet the following conditions:

1.) the virtual currency is used for purchase of services or goods intended for personal purposes

2.) the transaction value is below 10 000 AUD.

Bitcoin exchange and mining for the purpose of conducting business is taxable as stock trading.

Conclusion

The legal framework determining Bitcoin taxation varies by jurisdiction. Some countries (EU Member States) perceive Bitcoin as a currency, while other (Australia, USA) recognize it as an asset or property. Then there are jurisdictions, such as Japan, that have adopted an intermediate approach and define Bitcoin as a value, similar to an asset.

If you would like to receive more information on Bitcoin taxation in the different EU Member States or how to start a European cryptocurrency business please contact our legal advisors. You can also read on cryptocurrency regulations in the Netherlands.

If you would ask a regular Joe in the streets in the Netherlands, he would probably not define the Netherlands as a 'tax haven'. However, for some companies, the Netherlands was regarded as a tax haven.

The taxation system in the Netherlands focuses on attracting foreign capital, and a great way to do this, is by offering tax-breaks and subsidies. Holland has, for example, double tax agreements with many countries. One of the biggest breaks for many businesses is the fact that incoming royalties are untaxed in Holland. The Netherlands is currently addressing the criticism by implementing a variety of new regulations to combat tax avoidance.

What exactly is a tax haven?

Before we get into that more, it is important to know what exactly a tax haven is. A tax haven is a country that offers foreign businesses (and also individuals) a minimal taxation liability in a stable environment. Little or no financial information about this liability will be shared with foreign authorities.

Businesses do not have to operate out of the tax haven, to benefit from the local policies. This means that a business can be established in a country where taxes are high, but that it chooses to pay its taxes in a country with a very low (or even zero) rates for taxes. Especially many multionals look for tax havens, since that helps them improve their profits. Many US companies are very well known examples.

Usually they are mentioned in relation to using different low tax juridisctions such as BVI (British Virgin Islands), Hong Kong, Panama. Mentions about these practices are recently quite well known, such as in ''The Panama Papers'', and are described as well in older articles, such as in Rovnickwriting ''Sun sand and lots of money''. The latter referring to how many tropical countries, who primarily focus on the tourism industry, are accredited with billion dollar turnovers of (Western) multionals taking place there, despite little to none actual local business activity.

Multinational corporations are often accused of exploiting local regulations (by ''shopping'' the most favourable conditions). Many international corporations with stores worldwide, pay taxes only in a handfull of jurisdictions. Shifting the profit to more favourable jurisdictions. The criticism is that (usually) more poor countries are not paid their fair share of taxes by this corporations.

The tax justice network classifies different tax havens which are used by multinationals to avoid tax.
''Corporate tax havens also foster a worldwide race to the bottom. As one jurisdiction introduces a new tax loophole or incentive or tax cut to attract mobile capital, others will try to put in place an even more attractive offering, triggering others in turn to join in, resulting in an unseemly race to the bottom that steadily shifts the tax burden away from wealthy shareholders of multinational corporations, who are mostly wealthy people, and towards lower-income groups. That is why, in many countries, corporate taxes are falling while corporate profits are rising. As a result of this race, tax cuts and incentives don't stop at zero: they turn negative. There is no limit to multinationals’ appetite for free-riding off public goods and subsidies paid for and provided by others. This race to the bottom gets called "competition" but it is a completely different beast from the market competition we are familiar with, and for the reasons given above it is always pernicious.'' Source

To avoid such occurances, and a race to the bottom. Europe is taking decisive actions to set a policy for taxing multinationals in the entire Eurozone. This prevents corporations from turning competing governments against one another to attract the multinational. The first step in such regulations is to have multinationals disclose their turnover, earnings and taxation in each country. Such collective action will also allow the Eurozone to push back against the interests of the United States, which wants its multinationals to be taxed as much as possible in the United States.

The Netherlands, beneficial tax regulations

The Netherlands is providing an attractive fiscal climate to multinationals. The methods through which it does that are competitive, yet above-board. not comparable to the traditional tax havens. From 2024 it is 19% for €200.000 and if it exceeds that amount it becomes 25.8% for the corporate tax rates. (compared to BVI 0%). This new regulation seems to be aimed mostly at smaller corporations, positioning the Netherlands to attract more small businesses.

The Netherlands offers advanced tax rulings for multinationals, so the tax inspector will discuss with them how they should interpret the rules. What is allowed and what is not. Instead of providing a control in hindsight and risking fines, the Netherlands prefers to talk up front. Communicating clearly with new businesses, instead of providing an uncertain atmosphere.

The Netherlands will combat tax evasion

The Netherlands will cooperate internationally to reduce tax evasion. The government has announced a variety of measures to combat tax evasion. Among the actions named are:

''I. As of 2021, the Netherlands will introduce a withholding tax on outgoing interest and royalty flows to low tax jurisdictions and in abusive situations. This prevents the Netherlands from being used for transfer activities to tax havens.
II. The government wants to offer both the Netherlands and its contract partners an effective set of tools against tax avoidance.
III. In the implementation of the first and second European directive to combat tax avoidance (ATAD1 and ATAD2), the Netherlands will go further than this directive prescribes.
IV. The importance of transparency in the approach to tax avoidance and evasion is evident. The government is, therefore, continuing the policy effort of the previous cabinet. The government will clarify the legal responsibility law of lawyers and notaries. Penalty fines imposed on them are made public. This means that these financial service providers need to be better accountable for the structures on which they advise.
V. To strengthen the integrity of financial markets, the government is working on legislation to establish a so-called UBO register (Ultimate Beneficial Owner). Existing legislation for trust offices will also be tightened.''

Find here the original Dutch regulator position on the measures as announced on 23-02-2018.

Unfair to compare the Netherlands to other ''tax havens''?

We believe it is unfair to address the Netherlands as a mere tax haven, the Netherlands is famous for the colorful capital of Amsterdam and the port of Rotterdam – the biggest port in Europe and until recently, the biggest port worldwide. Also, the Netherlands is very popular for its favorable business environment. The Netherlands has a rich history of international commerce, dating back to the 17th century and the ''VOC'', the first public corporation in the world. Which was likely the biggest corporation to ever exist (inflation corrected).

• The rate of the taxes for corporate income in the country may be among the lowest in Europe (15% corporate tax), but the tax rates are higher than offshore tax havens, who usually do not charge taxation at all.
• The Netherlands does not offer offshore companies
• The infrastructure in the country is among the best worldwide;
• The Netherlands has an actual thriving economy, it is not a mere 'tax haven' republic
• The Dutch citizens are highly educated
• The Netherlands has an excellent reputation as a trade nation ever since the early 1600's
• The Netherlands was the first country in the world to establish a publicly traded company in 1602, with the East India Trading company, where the Dutch
• Business entrepreneurs are always welcome in the Netherlands. The culture is open to international influences, as it has been for hundreds of years.
• The percentage of Dutch people who speak foreign languages is quite high. Almost everyone knows English, and many are also proficient in French or German;
• The results of an investigation performed by G. Thorton in recent years show that Holland is among the top countries worldwide for starting a business;
• The Netherlands attracts various foreign companies thanks to its stable politics and legislation and its good international relations.
• Further studies show that international companies have strong confidence in the Netherlands when starting their business thanks to its international environment and multiculturalism. The country hosts many international companies reporting a positive experience.

Would you like to start a company in the Netherlands?

If you are looking for a stable European country and prosperous economy to expand your business, it might be wise to look into the possibility of establishing a branch of your company in the Netherlands. Intercompany Solutions can help you do this. In the past years, we have helped forming over 500 companies and we offer a 100% satisfaction guarantee.

Our business law experts will make sure that every aspect of setting up your business will be done according to all the relevant laws. We can help you with every aspect, from setting up your business to accounting services, company bank account application, citizenship and residency services, and legal services.

Capital gains from transactions in cryptocurrencies such as Bitcoin are increasingly becoming taxable in countries worldwide. Therefore taxpayers are under the obligation to include cryptocurrency transactions in their yearly tax returns. Non-compliance may lead to serious penalties. This raises the question whether tax authorities are able to adequately identify cryptocurrency owners in order to collect the liabilities.

The anonymity issue

The main concern connected to taxation of cryptocurrencies is their traceability: virtual money is often gained, spent and traded on the internet with full anonymity. Furthermore, additional techniques for anonymization, e.g. private networks for virtual trade and mixing services, provide protection of personal details making transactions virtually untraceable.

The search for solutions

Some countries are taking measures to identify cryptocurrency owners in an attempt to solve the problem with anonymity. The following text discusses the actions taken by China, where most transactions in Bitcoins are concluded (95 percent of global trade for 2017).

Aiming to combat unlawful transactions in Bitcoins, the government of China has lately adopted regulations that require local exchangers and traders to follow the new policy of the National Central Bank with mandatory verification of personal account details. Thus Bitcoin users are officially required to provide particular information about their transactions, including login details, account information, description of funding sources and history of transactions. These regulations allow the Chinese authorities to collect more details about people exchanging cryptocurrencies, including Bitcoin, to determine their sources of capital and to mitigate the risk of illegitimate actions with virtual money.

Surveillance of internet traffic

Some countries do not have comprehensive strategies and policies intended to make Bitcoin traders respect the relevant tax liabilities and to stop money laundering involving virtual currencies. Thus the local authorities rely on people to report voluntarily their income from Bitcoin transactions by including it in their yearly tax returns. Such is the case with taxpayers in the USA, who are obliged to keep records of cryptocurrency transactions and report any generated income. However, up to now, the reporting level is comparatively low. For example, in the USA only 802 persons reported their income from cryptocurrency transactions in their annual tax returns for 2015.

When the expectation for voluntary reporting is not fulfilled, governmental organizations may resort to intercepting Internet traffic in order to identify Bitcoin users involved in cryptocurrency transactions. This method is working especially when users:

1) mention online personal details such as name/Bitcoin address;

2) Exchange Bitcoins for other currencies. Currency exchange often requires verification of identity, such as copies of personal identifications documents and bank statements. Therefore these transactions could be used to track Bitcoin traffic in both directions: outgoing and incoming;

3) use Bitcoins for payment. The purchase of services and goods online most often requires contact details, e.g. address for delivery (when delivery is not digital). Therefore the taxmen can identify the recipients of these goods; and

4) use Bitcoin wallets without options for masking the IP address.

Conclusion

As described above, the anonymous use of virtual money raises many issues related to tax collection. More countries are gradually adopting measures to resolve the matter. In 2017, after the government of China enforced specific regulations, the EU Parliament and Council prepared a proposal aiming to identify cryptocurrency owners. The document states that the responsible authorities need to monitor virtual currencies since anonymity is an obstacle, not an asset to the Community.

Read here in case you are interested in starting a cryptocurrency business in the Netherlands.

According to a research by Savills Investment Management, Amsterdam remains among the 5 most dynamic European cities for a number of years. The factors used in the ranking are focused mainly on the suitability for new investments. Cambridge, London and Paris are among the other top cities.

If you plan to do business in the Netherlands, our Dutch incorporation agents can give you an expert advice.

The top qualities of Amsterdam

The research performed by Savills covers 130 European cities and compares them with respect to six particular characteristics: inclusiveness, innovation, inspiration, interconnection, investment and infrastructure. The city of Amsterdam ranked 5^th among these jurisdictions with outstanding scores for innovation and investment.

The report underlines Amsterdam’s top qualities and mentions that it is the main Dutch commercial and financial centre with a growing community involved in technology and start-up.

The report states that the top dynamic cities have innovative companies, universities of high quality, ambitious projects for investment in infrastructure and good abilities to maintain a highly professional workforce.

Other Dutch cities ranked in the report are The Hague at the 50^th spot, Eindhoven at 48^th and Utrecht at 46^th place. The Hague is also 8^th on the continent with respect to innovation.

If you would like to learn more about the Netherlands, please read our article The Netherlands, An Introduction. In the article, you will find information on the Dutch workforce, tax regulations and background of the country.

Investments in the Dutch Amsterdam

The Dutch government welcomes and stimulates international investments. No special legal policies exist for international investments and the companies can hold 100 percent of their branches in the country. There are many options to obtain tax incentives in the Netherlands, e.g. subsidies or loans for projects in Research and Development and particularly in the field of protection of the environment. Employment premiums can be obtained for opening new job positions. The country has also adopted special policies for international employees. Our Dutch team of lawyers can give you more information about these benefits.

The most common business forms preferred by international investors in the capital and other cities in the Netherlands are private and public companies with limited liability and branches.

If you need more details on how to make an investment, please, do not hesitate to contact our Dutch law firm.