The tax law in the Netherlands offers a preferential regime for corporate taxation with the aim to promote activities related to investments in novel technologies and development of innovative technology. This is the Innovation Box (IB) regime. For profits meeting the requirements for IB, companies owe a total of 7% corporate tax, rather than the 19 – 25.8% usually levied (according to the rates for 2024).

Description of the IB regime

To be eligible for taxation under the IB regime, companies should have fixed intangible assets that meet certain requirements. According to the IB rules, qualifying assets are determined taking into account the taxpayer’s company size. Small taxpayers have a total 5-year group turnover below 250M Euro, while the total gross benefit derived from the eligible intangible assets for the 5-year period is below 37.5M Euro. Companies exceeding these thresholds are qualified as large taxpayers.

In these terms:

qualifying assets of small taxpayers are fixed intangible assets developed in-house and derived from Research and Development (R&D) activities benefitting from remittance reduction (WBSO – R&D tax credit / R&D certificate);

qualifying assets of large taxpayers (excluding cases of software or biological products for plant protection) must meet some additional conditions. Besides R&D certificates, the companies must also have an EU license for medicinal products,  a breeder’s right/(requested) patent, a certificate for additional protection or a certified utility model. Assets related to qualifying fixed intangible assets or exclusive licenses may also qualify under particular circumstances. Logos, brands and similar assets are not eligible for tax reduction.

If the eligibility conditions are fulfilled, then such profits are not taxed at the usual rate of corporate tax, i.e. 25.8%, but at a reduced rate of 7%. Therefore the actual tax amounts to 7%. Before applying the reduced tax rate, the expenses for the asset’s development need to be recaptured from the profits, which means that their amount will be taxed using the full general rate).

It is important to mention that R&D certificates allow both large and small taxpayers to apply for a tax credit with respect to wage tax liabilities. Since 2016 the basis for remittance reduction related to R&D consists of the costs for wage tax plus other R&D expenditures and costs.

Determination of the profits from technology and benefits of the IB regime

The profits eligible for reduced corporate income tax are determined by the expenses of the taxpayer related to the qualifying assets’ development. The expenditures for development are split in two categories: eligible and non-eligible, using the so-called nexus approach. Eligible expenditures are all direct costs related to the fixed intangible asset’s development, except any costs for outsourcing R&D tasks (costs incurred for outsourcing can reach a maximum of 30% of the eligible expenditures). Therefore, the formula below is applied:

eligible costs x 1.3

eligible profits = --------------------------------------------------   x profits

total costs

The profits are determined by tailoring. A simple functional analysis and transfer pricing can be used for a start.

Losses

The IB regime is structured so that it can also bring advantages to companies that aren’t currently paying taxes, e.g. due to accumulated tax losses in the past. In this case, if the company uses the IB regime, the full recapture of its accumulated losses from tax can take longer, so the period for which the entity is not liable for taxes will be extended.

If the developed assets in the field of technology lead to losses, the lost amounts can usually be deducted for the means of taxation at the usual 25.8% rate, and not the low effective 7% rate. Also, any initial losses that were incurred before the start of business operations can also be deducted at the general corporate tax rate of 25.8%. The reduced 7% rate is applicable again only after recapture of IB losses. A taxpayer can only have one IB. Therefore the amounts relevant to the intangible fixed assets under IB regime are consolidated.

Application submission and certainty for future taxes (Advance Tax Rulings, ATR)

A company can use the reduced corporate tax rate by selecting the relevant items in its yearly corporate tax return. In Holland, it is not only possible, but it is a standard procedure to go over the practical aspects of the IB principles and the question of profit allocation with the Tax and Customs Administration (Revenue Service). Taxpayers have the option to conclude binding agreements (ATRs) with the administration and, by doing so, have certainty with respect to future taxes. It is important to mention that the information on tax rulings is exchanged with international tax authorities. Read more on the Advance Tax Rulings in the Netherlands

If you need more details or legal support, please, get in touch with our Dutch tax agents.

Holland has long been attractive for entrepreneurs looking to establish a business due to numerous social, cultural and geographical factors. Its comparatively favorable tax climate is also an important prerequisite in the process of decision-making.

Value Added Tax (VAT)

Value Added Tax has a great influence on corporate cash flows. Generally, a business can request a VAT refund for the amount it has incurred. Still, it may take several months until the tax is recovered through the periodical return. The period for foreign VAT reclamation may even be longer than a year and its duration depends on the EU member involved with the application for refund.

Negative influence of VAT on cash flows is also observed in the process of import of products in the European Union. Importers are obliged to pay VAT that can be reclaimed only retroactively, in the VAT return, or in a time-consuming process requiring a separate refund application. As a consequence, companies have to prepay the VAT on their imports with adverse effects on their cash flows. On this background, few member states of the EU have adopted schemes for deferral of VAT payments that would otherwise be due at the time of import.

Article 23 license

Companies established in Holland have the option to apply for the Article 23 VAT deferral license. This document makes it possible to postpone the import VAT payment until the submission of the periodical return. In the statement, the VAT can be included as payable, but at the same time, its amount is also deducted under input VAT. This means that businesses do not necessarily have to pre-finance VAT. Without Art. 23 license, the VAT due for import would become immediately payable at the country’s border. Its subsequent reclamation occurs either through the periodical return or through a lengthy process for refund requiring a special application. As mentioned above, the refund of this VAT may take months, even years, depending on the case. VAT deferral licenses are granted to companies registered in Holland and international businesses without local establishment that have assigned a Dutch fiscal representative (a tax service provider holding a general licence) for the purpose of VAT.

In most members of the EU, the VAT payable at import has to be transferred to the customs and tax administration at the time of importation or shortly after. Countries like Ireland, Germany, Italy, Great Britain, Spain and Sweden do not offer options for postponed accounting. In other countries, the payment of VAT can be deferred, but only in specific cases and under strict conditions. The only country that provides an option comparable to the Dutch deferral license is Belgium. There the transfer of due VAT can be postponed until the submission of the periodical VAT return.

The EU Directive on the common system of value added tax provides the option to grant an exemption from VAT on import goods destined for another member state straight after import. Import goods intended for storage or sale in the respective member state cannot be exempt from import VAT. However, there is a possibility to suspend the payment of VAT and duties due at the time of import for a particular time period.

When goods enter the territory of the EU, companies the option to store them in the so-called customs warehouses. Such warehousing is possible in all member states, although the formal procedure varies depending on the state. In this case, the payment of duties and VAT is deferred until the goods’ removal from the customs warehouse. Thus VAT and duty payments are temporarily suspended to the advantage of cash flow. At some point in time, these taxes become payable. On the other hand, if the goods’ next destination is unknown, their storage in a customs warehouse can be beneficial. For example, if the goods are subsequently shipped to third countries, no VAT and customs duties become due.

Why should you choose the Netherlands as your gateway to Europe

Considering the above, one can conclude that logistic and geographical factors are just some of the significant reasons to import goods through Holland. The option to avoid VAT pre-financing can be decisive for companies in planning the routes of their import goods.

There is also another factor that must not be overlooked: the level of responsiveness of the different customs and tax administrations across the European Union. Some adopt a strictly formal approach, while others welcome dialogue. The customs and tax administration in Holland is open to discussions. It is acknowledged for its high quality of service and proactive approach. The officers are also ready to confirm particular arrangements in written form, guaranteeing certainty (in advance) to taxable entities. The responsiveness of the Dutch administration is a valuable quality and a strong motivator, along with the favourable VAT arrangements at import, for businesses to choose Holland as a European gateway.

Are you interested? Our company has the network, local competencies, and experience to assist you in the efficient structuring of your import/export operations, both in Holland and abroad. We are here to consider your needs and meet them. If you would like to receive more information on the possibilities, please, do not hesitate to get in touch with us.

Holland has a well developed regulatory framework for private businesses, partnerships and corporations. The main elements of the framework consist of: clear rules on financial statements, auditing, and the publication of audits.

Because of the clarity and relative simplicity of the regulations, corporations are able to have a stable base of operations where they can plan for the long term. In this article, we lay out a summary of the requirements for accounting, auditing and publication in the Netherlands. If you would like to receive more detailed information, please contact us.

Mandatory preparation of financial statements

Practically all corporate entities registered in Holland are obliged to present financial statements. The requirement is statutory and often included in the entity’s Articles of Association (AoA).

Foreign companies are obliged to submit their yearly accounts in their home countries and provide a copy to the Dutch Commercial Chamber. Branches are an exception to this rule as they are not obliged to prepare separate financial statements.

Importance of the financial reports for Dutch businesses

Financial statements constitute the foundation of corporate governance and, as such, are a vital element of the legal system in Holland.

Their main purpose is to report to shareholders. Once the shareholders accept the statements, they discharge the directors’ board for its performance. Their equally important secondary purpose is to protect creditors. Practically all corporate entities are obliged to register at the Trade Registry of the Commercial Chamber and publish annually particular financial data. The Registry is publically accessible and represents an important information source with regard to the national market.

Financial statements also have to do with taxation. Even though the tax law provides independent rules for determining the tax basis, the first step of the process is to consider the statements.

Contents of Dutch financial statements

As a minimum, the statements contain a profit/loss account, balance sheet and notes on the accounts.

Generally Accepted Principles in Accounting (GAAP) in Holland

The Dutch rules for accounting are regulated. The accounting principles are primarily based on European directives.

The GAAP apply to private and public companies with limited liability and to other entities, e.g. some partnership forms. Companies listed on the stock market, insurance companies and financial institutions are subject to special rules.

The Dutch accounting principles differ from the international standards for financial reporting (IFRS) but they are continuously harmonized. As of 2005 all companies listed in the European Union are obliged to follow the IFRS. This rule also applies to the Dutch insurance companies and financial institutions. The question whether private limited liability companies (BVs), non-listed public limited liability companies (NVs) and other local business entities can follow the IFRS is still being discussed.

The Dutch accounting principles

According to the principles of accounting all financial information has to be understandable, reliable, relevant and comparable. All financial statements have to reflect realistically the position of the company in line with the principles.

The profit & loss account, balance sheet and notes must present truthfully and dependably the equity of the shareholders on the date of the balance sheet, the annual profit and, if at all possible, the liquidity and solvability of the company

Companies participating in international groups may choose to prepare their statements in compliance with accounting standards accepted in another member of the EU, if a reference to these standards is included in the attached notes.

The principles of accounting need to be presented in the statement. Once implemented, these principles can be changed only if the change is well justified. The reason for the change must be explained in the respective notes, together with its consequences with respect to the company’s financial position. The Dutch legislation lays out specific requirements for disclosure and valuation that must be respected.

The official reporting currency is the Euro, but depending on the specific company activities or its group structure, the report may involve another currency.

Consolidation, audit and publication requirements in Holland

The consolidation, audit and publication requirements depend on company size: large, medium, small or micro. The size is determined using the criteria below:

• number of staff
• asset value in the balance, and
• net turnover.

The following table summarizes the parameters used for classification. The asset values, staff and net turnover of group companies and subsidiaries qualifying for consolidation must also be included. Companies qualifying for the large or medium category must meet at least 2 of the 3 criteria in two consecutive years.

Criterion	Large	Medium	Small	Micro
Turnover	> 20 M Euro	6 – 20 M Euro	350 K – 6 M Euro	< 350 K Euro
Assets	> 40 M Euro	12 – 40 M Euro	700 K – 12 M Euro	< 700 K Euro
Employees	> 250	50 - 250	10 – 50	< 10

Dutch requirements for consolidation

In principle, corporations must include the data of any subsidiaries and companies in their group in their financial statements in order to present a consolidated report.

According to the law in Holland controlled subsidiaries are legal entities in which companies can exercise indirectly or directly >50 percent of the rights to vote at the meeting of shareholders or are authorised to dismiss or appoint >50 percent of the supervisory and managing directors. Partnerships where companies are full partners also fall within the scope of the subsidiary definition. Group companies are legal entities or partnerships in the structure of company groups. The decisive consolidation factor is the control (managerial) over the subsidiaries, regardless of the percentage of held shares.

The financial information of subsidiaries or group companies does not need to be presented in the financial statements (consolidated) if:

1. It is insignificant compared to the whole group:

• it takes too much time or resources to obtain the subsidiary’s / group company’s financial data;
• the company is held with the intention to be transferred to a different owner.

2. Consolidation can be excluded if the group company or subsidiary:

• meets the criteria for a small business from statutory point of view (these criteria are presented in the point on publication conditions);
• is not listed on the stock market.

3. Consolidation can also be excluded under the following circumstances:

• the company hasn’t been informed in a written form of any objections to the lack of consolidation within six months following the financial year’s end by a minimum of 10 percent of the members or holders of ≥ 10 percent of the capital issued;
• the financial data pending consolidation has already been presented in the statements of the parent corporation;
• the consolidated statements and yearly report meet the requirements of the 7^th EU Directive;
• the consolidated statements, the yearly report and the audit report, if not already translated to Dutch, were translated to or prepared in German, English or French and all documents are in one and the same language;
• within six months of the date of the balance sheets or within 1 month of permitted postponed publication, the papers or their translations mentioned above were submitted at the Trade Registry office where the company was registered or, alternatively, a notification was made with reference to the Trade Registry office where these papers are available.

Requirements for audit in Holland

The law in Holland requires that large and medium companies have their yearly reports audited by qualified, registered and independent local auditors. Auditors are appointed by shareholders, members of the general meeting, or, alternatively by the managing or supervisory board. In principle, audit reports should include points clarifying whether:

• the statements give information in line with the generally accepted principles of accounting in Holland and represent accurately the company’s yearly result and financial position. The company’s liquidity and solvency may be assessed;
• the report of the Managing Board fulfils the statutory requirements; and
• the necessary additional information is provided.

The appointed auditor reports to the supervisory and managing boards. The competent institution should first consider the audit report and then approve or determine the financial statements.

If it is not mandatory to carry out an audit, the parties may do so voluntarily.

The Dutch publication requirements

All financial statements should be finalized and accepted by the members of the managing board within 5 months following the financial year’s end. After that the shareholders have two months to adopt the statements after their approval by the management directors. Also, the company has to publish its yearly report within 8 days of the shareholders’ approval or determination of the statements.  Publication means submission of a copy at the Trade Registry, Commercial Chamber.

The period for preparation of the statements can be extended by up to five months by the shareholders. Therefore the publication deadline is 12 month following the financial year’s end.

If the entity’s shareholders also act in the capacity of managing directors, then the date of approval of the documents by the Management Board would also be the date of adoption by the meeting of shareholders. Under such circumstances, the publication deadline is five months (or ten months, if an extension of five months has been given) following the financial year’s end.

The requirements for publication depend on the company size. They are summarized in the table below.

Document	Large	Medium	Small	Micro
Balance sheet, notes	Fully disclosed	Condensed	Condensed	Limited
Profit & loss accounts, notes	Fully disclosed	Condensed	Not necessary	Not necessary
Valuation principles, notes	Fully disclosed	Fully disclosed	Fully disclosed	Not necessary
Management report	Fully disclosed	Fully disclosed	Not necessary	Not necessary
Statements on cash flow	Fully disclosed	Fully disclosed	Not necessary	Not necessary

Can we help you?

We can offer you a full list of services for accounting, including the preparation of financial statements/yearly reports, administration, tax compliance and payroll services.

Please, contact us with any questions related to this article or in case you want us to send you a specific proposal for engagement.

In the Netherlands, you have the option to discuss the tax position of your company with the Tax Administration and reach together an agreement regarding the consequences tax-wise. This agreement is binding for the taxpayer and the authorities. It needs to reflect the qualification and interpretation of facts and to conform to the national tax legislation, i.e. it should not contradict it. As of 2004 the policy on rulings is split in two general parts: for advance pricing agreements (APA) and advance tax rulings (ATR), respectively.

Advanced pricing agreements (APA) in the Netherlands

APAs cover the aspects of the arm’s length principle of remuneration and the methodology for transfer pricing. APAs are based on transfer pricing studies. The national tax authorities agree with the taxpayer that the income used for corporate taxation will be determined by such a study.

Advance tax rulings (ATR) in the Netherlands

ATRs cover the tax treatment related to specific circumstances and facts. Usually, ATRs are related to:

• the participation exemption regime (a one-page overview is available);
• the tax consequences with respect to hybrid financing;
• the tax consequences with respect to hybrid entities;
• the presence of permanent establishments in the country;
• the implementation of rules for foreign taxpayers.

When signing an ATR you should carefully go over and confirm the circumstances and facts forming the base of this agreement. If the circumstances and facts change it may be useful to check whether and to what degree the concluded ATR will continue to serve its purpose. Our extensive experience in ATR- and APA-related negotiations guarantees that our clients always get reliable agreements minimizing the probability of surprises.

Holland has signed numerous treaties for the avoidance of double taxation. These bilateral pacts ensure tax relief by avoiding double taxation with respect to income of individuals derived from both a source in Holland and another country.

The Netherlands has signed close to 100 double tax avoidance treaties. Investors planning to establish local businesses should obtain information regarding the advantages offered by these treaties, in case they are applicable to their home countries. For example, Holland has signed such treaties with the United States, the United Kingdom and the Arab Emirates.

Our Dutch specialists in accounting can provide you with details regarding the treaties for the avoidance of double tax concluded with your home country or any other countries you may be interested in.

Double tax avoidance treaties

The treaties for double tax avoidance determine which countries may levy taxes with respect to income generated under Dutch jurisdiction. Persons living outside Holland but deriving income from Dutch sources are taxed just once on capital and income, in accordance with the provision of these treaties.

Thus persons deriving income from Holland but living abroad pay less tax on income in Holland. Our local tax specialists can provide you with more details on the taxes that foreign residents must pay in Holland, including the thirty percent reimbursement ruling for international employees.

You may also benefit from the participation exemption rule to avoid paying tax on dividends.

The significance of the double tax treaties for international investors in the Netherlands

The treaties for avoidance of double taxation are beneficial for both individuals and companies opening branches in Holland. These bilateral conventions provide for reduced rates of withholding taxes for royalties and dividends agreed between the countries.

Companies and individuals residing in countries that have not yet concluded agreements for double tax avoidance with Holland can still take advantage of the Double Taxation Decree that, to a certain extent, reduces the tax burden.

If you need further information on the Dutch taxation system or professional audit and accounting services in Holland, please, get in touch with our tax specialists.

See also the tax office website about the Double Tax Treaties.

In the Netherlands, local companies and branches are subject to the same general taxation regime in accordance to the national law. Still, there are particular differences as branches are not obliged to cover certain taxes required for other business entities. In case you own a Dutch branch our local administrators can check which tax liabilities are applicable in your situation.

Dutch tax regime for branches

The tax regulations in Holland provide for equal taxation of branches and companies with respect to the rates for generated profits. Therefore, if you own a foreign company and decide to establish a Dutch branch, the tax you will need to transfer will be 19% for profit under EUR 200 000 and 25.8% for the amount exceeding this threshold in 2024.

The national government provides incentives for international investors opening branches in Holland. They are not subject to withholding tax, while resident companies pay 15% withholding tax. It is also possible to have clarity on the matter and receive an advanced tax ruling from the authorities.

Our Dutch financial administrators can give you more information about taxation of branches in the Netherlands. Please, do not hesitate to contact them with any questions on this subject.

Branch tax obligations in the Netherlands

In contrast to representative offices, branches allow international investors to perform business operations in Holland. Therefore, branches have to be registered at the Commercial Chamber and the Tax Office. They are not subject to tax for capital registration, even if they receive contributions to their capital.

In Holland, the value added tax and wage tax rates for branches are identical to those applying to local companies. The amounts vary with respect to the scope and volume of the commercial activities. The hiring of employees and their actual number may be associated with specific tax liabilities.

Do you have questions regarding the tax regulations applicable to your company’s Dutch branch or the amount of employee taxes that you will need to cover? Please, do not hesitate to get in touch with our Dutch bookkeeping specialists.

Import of products to the Netherlands

The import of products originating in non-EU countries to Holland is generally taxable for VAT purposes, regardless of whether the import is performed by a private, taxable, non-taxable or exempt entity. Therefore VAT is usually due at import and is normally transferred to the Dutch Customs. In case you are interested in starting an import/export business in the Netherlands contact our local incorporation agents, who will guide you in the process.

License for VAT deferment

Holland has adopted a special system in connection to Art. 23, Act on VAT, resulting in the issue of Article 23 licenses. These licenses enable importers to postpone the VAT payment, rather than transfer the amount upon import. The system shifts the VAT liabilities to the recurrent VAT returns. Therefore the import VAT is declared in the respective periodic return but may be deducted as well in case no full deduction of VAT is applied. So VAT is not actually paid on import, which brings interest and cash-flow advantages. The license for VAT deferment is only issued to taxable, non-taxable and exempt entities (not issued to natural persons).

Requirements for VAT deferment license

Generally, the following requirements must be fulfilled in order to apply for a VAT deferment license:

• the candidates should either reside in Holland or have fiscal representatives / permanent establishments in the country;
• the candidates should regularly import goods;
• the candidates should keep transparent records with respect to the goods for import.

The importation of delivery trucks and private cars is subject to different conditions.

Application for VAT deferment license

Below is a non-exhaustive list of the information that must be included in the VAT deferment application:

• VAT/Tax ID number of the importer/applicant;
• Importer/applicant name;
• Type of product for import into Holland;
• Quantity of product;
• Envisaged frequency of import (annually);
• Price of the products for import (annually);
• Country of origin of the product (non-EU).

The tax authorities in Holland must process the application in an 8-week period.

Frequently asked questions

• I am based in the Netherlands with a BV. My supplier in Netherlands has Article 23. What VAT am I paying? And anything I should look out for?If your supplier has a permit based on article 23, then he can import goods in the NL without paying VAT. He has to declare this import in his VAT declaration. After the goods are imported he can sell these goods to a Dutch BV. When the imported goods are sold to you (Dutch BV), 21% VAT is applicable over the price of the goods. So if you buy the goods for 100 Euro, you pay VAT over 100 Euro. If you use the goods for your company and you pay VAT over your revenues, you can deduct this VAT.
• What advantage do I have with an Article 23 license?
  The advantage of an article 23 license is liquidity.Vat is not a cost for the entrepreneur. So you do not ''gain'' any profit by the license. However, you save financing cost. When you import big quantities of goods with an Article 23 license, you do not have to wait until the tax office refunds you the VAT you have paid over the goods. As the tax is deferred. This advantage can amount to your total monthly of quarterly purchases (multiplied by 21%).

Our agency can quickly make the necessary arrangements for issue of Article 23 license for VAT deferment. Contact us for more information or read here for more on the advantages of the Dutch tax system.

The Dutch credit system can be broadly defined as the relationships between persons (legal or natural) who provide loans and persons who take them. Therefore the system operates with credits provided by both non-banking and banking institutions for use by legal or natural persons.

Parties involved in credit transactions

Credit transactions take place between a lender (the person providing the credit) and a debtor (the person benefitting from the credit). Usually, the credit is a monetary amount that needs to be repaid in a particular period of time, including interest, i.e. the benefit (gain) that the creditor receives for lending money to the debtor using the loan. Creditors have claim rights to the loans and can demand their return, including interest, according to the provisions of their agreements with the debtors. The debtor carries the obligation to pay back the loan and interest within a certain time period specified in the agreement.

Loan types in the Netherlands

A PL (personal loan) is a type of credit in the Dutch credit system where the amount, interest rate and term of the loan are specified in an agreement between a bank institution and a debtor. Therefore personal loans have fixed monthly payments consisting of principal and interest.

Dutch revolving credits have a limit indicating the maximum possible amount available as a loan to the debtor. The interest and principal are transferred monthly. In most cases, they are calculated as a fixed percentage with respect to the limit.

Dutch real estate owners can use property tax credits based on the appreciation of goods. Property values (WOZ values) determined by municipalities establish the amounts that may be loaned in property tax credits. Such credits are usually characterised by sharp interest rate increases.

Business loans for financing are concluded between Dutch bank institutions and legal persons. Postbank, Rabobank, ING and ABN AMRO are the most popular banks offering such loans. Business loans are usually concluded by a limited business entity such as the BV company. In such cases, the company is liable for repayment of the loan, not the director of the BV. Read more on directors' liability.

Supplier credits are the most commonly used credits for the purposes of financing businesses. Suppliers provide credits as payments for months or years. These credits have the benefit of not compromising the companies’ liquidity.

In subordinated loans creditors are subordinated in case of debtor bankruptcy, i.e. they are last in the priority order. Such subordination needs to be agreed in a contract.

Credit contracts

The Dutch credit registration agency (BKR) is a significant institution in the framework of the national credit system. It keeps important information with respect to all debtors, creditors and credits in the country through the Credit Registration Database (CKI).

BKR receives all details provided in credit contracts: credit amount, date of conclusion, planned month for full repayment, actual month of full repayment, credit type, details on repayment, the debtor’s personal information (name, birth date, residence, address, personal ID details) and the credit institution’s details.

If you would like to know more about the Dutch credit system, the available loan types and the criteria for eligibility, please, call our business consultants.

The service sector is the most advanced in Holland’s economy and accounts for over two-thirds of the Gross Domestic Product. The sector includes transport, insurance and banking. Four banks established in the country are ranked in the global top 60: Fortis, Rabobank, ING and ABN AMRO. They have a network comprising roughly 6500 branches in Holland and 500 more in 50 other countries. Meanwhile, more than sixty branches and subsidiaries of European, Asian and American banks operate in the country.

De Nederlandsche Bank

The history of the Dutch banking system dates from 1814, when DNB (De Nederlandsche Bank) – the first publically owned bank that offered non-convertible low-value currency – was established. Therefore it is considered as the central bank of the country and was included in the European Central Bank System (ESCB) in 1999.

DNB, part of ESCB, is an administrative body with independent management. Routine operations are supervised by its management board. DNB also has a Board of Supervisors of the Crown. It is appointed as recommended by the collective meeting of the boards of executives and supervisors. DNB’s shareholder meetings and the respective minutes are kept secret.

As of October 30, 2004, the Nederlandsche Bank and the Pensions and Insurance Supervisory Authority (called Insurance Board since 2001) have merged. Therefore the bank carries the huge responsibility of monitoring the abovementioned institutions, additionally to its traditional supervision of banking. Pension funds or insurance companies cannot be established without DNB’s approval. The bank grants its permission only in case the life insurance company or pension fund is managed by specialists and has adequate financial resources.

Types of Dutch banks

The Dutch banking system comprises the following institutions: saving banks, commercial banks, mortgage banks and credit unions.

ABN AMRO (including RBS, BSCH and Fortis) and ING are the most significant Dutch banks.

The Dutch banking system also contains a bank providing specialized services and products to individuals (POSTBANK) by working with the national post office. It handles more than seven million accounts.

Rabobank is a network of credit unions. Rabobank Nederland owns fist position in this network. The Dutch banking system includes numerous credit institutions (about 302 in total) along with CEB N.V.

Bunq is a relatively new Dutch internet bank which has its focus on individuals. This bank offers banking services for non-residents.

The Dutch banking system is quite concentrated and included in the global top five with an 86.8 percent total assets share.

Banking sector efficiency is assessed by the proportions of total bank assets and administrative expenses. Using this criterion, the Dutch system is deemed effective, based on the scoring for the past several years. Economic profitability (ROA) is also used as a performance measure. It depends on the proportions of aggregate bank assets and net profit.

If you need more details regarding the Dutch banking system or if you need assistance to open a Dutch bank account, please, call our local business consultants. They will provide more information and customized assistance.

The Netherlands has a large network of agreements for avoidance of double taxation providing tax advantages to international investors establishing companies there. Among these agreements is the treaty with the USA. The first convention for the avoidance of double taxation between Holland and the USA was signed in 1992. Its first amendment dates from 1993.

Our local consultants specializing in company establishment can provide you with additional information about the Dutch tax system.

Scope of the double tax treaty between the Netherlands and the USA

The convention for avoidance of double tax between Holland and the USA covers:

• taxes on income, salaries, corporate profit and dividends in Holland;
• income and excise taxes with respect to insurances imposed to Dutch insurance agents established in the United States.

Dutch foundations working in the United States are subject to special provisions that are also included in the double taxation treaty. These concern the US excise tax. Furthermore, the convention covers similar taxes applicable in both Holland and the USA.

The double tax treaty provisions apply on the basis of tax residency.

Taxation of natural persons in accordance with the double tax avoidance treaty between the Netherlands and the USA

In the Netherlands, residents pay income tax and local companies are liable for corporate tax. For the purposes of double taxation avoidance, all treaties concluded by the Netherlands include provisions covering corporate and income taxes.

International entrepreneurs establishing companies in Holland have the option to choose their tax residency, i.e. pick the country that will hold them liable for tax payment. Foreign taxpayers can choose to pay taxes in accordance with the agreement between Holland and the USA for the avoidance of double taxation or take advantage of the Unilateral Double Tax Avoidance Decree of 2001. The double tax avoidance treaty with the US stipulates that US residents who earn income in Holland shall benefit from credit with respect to taxation of interests, royalties and dividends.

Taxation of businesses in accordance with the double tax avoidance treaty between the Netherlands and the USA

Regarding the tax regime for US companies operating in Holland and vice-versa, the double tax avoidance treaty provides for permanent establishment status that covers:

• branches;
• workshops;
• factories;
• mines/exploitation sites
• other offices and places of management;

The agreement for double tax avoidance is valid for facilities already established for 12 or more months.

Double taxes are avoided through reduction of the tax liabilities of Dutch companies in the US. On the other hand, Holland grants tax deductions to US companies operating simultaneously in the two countries.

Our Dutch consultants on company establishment can provide further information regarding the methods to avoid double tax by virtue of the Holland – USA treaty.

Amendments relevant to the double tax avoidance treaty between Holland and the USA

The double tax agreement between the two countries was amended in 2004 to include new provisions for pensions, dividends, alimony and branches. According to them, taxes on dividends transferred to a resident of Holland by a company in the US can be levied in the Netherlands. The rates for taxation of dividends are as follows:

• five percent of the dividend amount (gross) if the beneficiary owns no less than 10 percent of the votes in the corporation transferring the dividends;
• fifteen percent in all other cases.

Dutch and US branch offices are taxed by the country of registration of their permanent establishment. As regards annuities, alimony and pensions, persons with such income are liable for income tax only in their country of residence.

Free advice for corporate taxes

If you are looking for advice for your corporate taxes, look no further. We provide an initial free consultation for all starting entrepreneurs in the Netherlands.

ICS has been inspired by the work of The Kansas tax aide organisation. Kansastaxaide made an initiative to help individuals that do not have the means to make a proper account filing.

If taxes are filed wrongly, persons may be fined or even criminally liable. To prevent a too high administrative burdon, Kansas tax aide helped lower and middle income Kansans with the nationwide AARP-tax-aide program.

The AARP Foundation tax aide program is ideal for bringing finacially literate retired individuals, such as former tax accountants, lawyers, bookkeepers, government workers and entrepreneurs, together with people in need. Such as, single mothers who are in need for state funding to finance the education of their children.

We at Intercompany Solutions share the AARP philosophy and feel everyone, whatever the budget, has the right to a tax consultation. Even if we cannot assist with the matter at hand, we will be happy to introduce you to the right party for your specific question.

We are experienced tax experts from the Netherlands, with a specialization in all entrepreneurial matters. From corporate income tax, to Value Added tax to private tax filings of entrepreneurs. If you have a question, don't hesitate to contact us.

We firmly believe that bringing prosperity to others, will eventually bring prosperity to us.

Contact us

If you need comprehensive information regarding the amendments to the treaty for avoidance of double taxation with the US, do not hesitate to contact our Dutch agents specializing in company formation.

Guidelines for US Entrepreneurs: How to Start a Netherlands Company

Holding companies are among the most advantageous business entities in the Netherlands due to the beneficial tax regime they are under. Furthermore, Dutch holdings are globally recognized for the conveniences they offer to both foreign and local shareholders.

Investors should keep in mind that holdings are established in order to gather diverse assets of separate companies under a common umbrella. Our Dutch specialists in company formation are ready to assist international entrepreneurs planning to incorporate local holding companies.

Corporate tax and the 'participation exemption' applicable to holding companies

Dutch holding companies are taxed in the same way as other corporate entities in Holland. They need to pay 19% corporate tax on profits up to EUR 200.000 and 25.8% above this margin (2024).

The so-called “participation exemption” is among the advantages of Dutch holding companies, as it provides for full tax exemption on capital gains and dividend payments. Shareholders of Dutch holding companies are eligible for this exemption if they hold no less than 5% of the capital and meet one or more of the requirements below:

• The holding’s parent company should generate higher returns on investments in comparison to the profit arising from the holding’s asset management;
• All assets in the holding company should include less than 50% passive assets, subject to lower tax rates;
• Appropriate taxes, in accordance with the national legislation, are already levied on the holding company.

Our Dutch specialists can provide you with more details regarding the requirements to qualify for a participation exemption. Read more on the Dutch participation exemption.

Other tax benefits relevant for Dutch holding companies

Dutch holdings offer a number of advantages with regard to taxation. They include:

• free profit repatriation allowed by the tax authorities;
• numerous treaties for avoidance of double taxation: Holland has concluded 80+ treaties on double tax;
• advance rulings issued by the tax authorities are an option for all foreign companies operating in Holland;
• interest payments, dividends and royalties are subject to various tax exemptions and deductions.

The Dutch tax regime with respect to holding companies is among the most advantageous in Europe. This is why the Netherlands is an attractive destination for international investors planning to set up holdings. If you need assistance in establishing a holding and further information regarding its taxation, do not hesitate to contact our Dutch consultants specializing in company registration.

Establish a holding company in the Netherlands

Historically, The Netherlands has been known as a European trade centre and as the maritime link between the Old Continent and North and South America, Asia, and Africa. In order to maintain its status, the country has been working to achieve an even better, friendlier business climate and attract international investors. The efforts are paying off, as currently Holland is the EU base of 2100+ companies from North America, and counting. Why is Holland such an attractive country for doing business? The reasons are many and one of them is the tax system, offering various incentives.

The 10 advantages of the Dutch tax system:

1. The law in the Netherlands provides reductions of the withholding tax on dividends, royalties and interests paid to local companies and excludes from taxation the majority of capital gains obtained from share sales in source jurisdictions.
2. Holland’s investment treaty network is among the most extensive in the world. It includes 96 jurisdictions and Dutch limited liability companies have access to it. The network protects investors from expropriation and guarantees that they will be treated in the same way as domestic or third country investors. In any corporate structure, a Dutch entity can provide protection from foreign government interventions through clauses for settlement of disputes that allow international arbitration using the Dutch judicial system.
3. EU Directives provide a reduction of withholding tax on transactions between related firms.
4. Full tax exemption for income coming from foreign subsidiaries that meet the regulatory requirements. The so-called participation exemption allows tax waiver for eligible capital gains and dividends if a local holding owns at least five percent interest and meets one of two requirements:
   a) The subsidiary’s consolidated assets include <50 percent low-taxed passive investments.
   b) By making investments in the respective subsidiary, the company aims to get a return, greater than the anticipated from the regular management of assets.
   The subsidiary has to pay realistic taxes in accordance with Dutch standards (no less than 10 percent). The law also provides a tax exemption for income, coming from international permanent offices of Dutch companies and tax-effective profit repatriation.
5. Special tax regime for innovation where profits from qualifying intangible assets are taxed at a rate of 5 percent.
6. IP arrangements and financing (inclusive of hybrid debt) without retentions on royalty payments, interest and services, even if paid to a tax haven.
7. Support for Dutch holdings establishing businesses on the territory of the EU.
8. Deferred taxes for corporate restructuring.
9. Option to establish a consolidated group/fiscal unity (if particular requirements are met for direct subsidiaries of companies incorporated in the Netherlands) allowing consolidated taxation.
10. Possibility to defer taxes on gains from conversion or sale of intangible or tangible business assets, excluding passive investments.

Are you looking for tax advantages and exclusive benefits with respect to tax planning? The Dutch entities have plenty to offer. Furthermore, Holland is becoming an attractive jurisdiction for holdings. Learn about the opportunities the country offers by contacting our specialists in incorporation.