Last October the government of the Netherlands released a document announcing its future plans. The paper was finalized after a negotiation of more than 200 days. The document promises changes in various aspects of society. They include additional police funding and improvements of counterterrorism and cyber security. The government also envisages reforms in the labour market concerning sick leave, procedures for dismissal, rules for paternity leave and minimum wages. It plans to adopt a new system for pensions and amend the rules for child benefits. The paper also includes schemes on climate change, immigration, education and housing.

The 30 percent reimbursement ruling

The plans of the government specifically related to foreign employees concern changes to the thirty percent rule in the framework of envisaged tax reforms.

The 30 percent reimbursement ruling gives tax advantages to highly skilled foreign employees in the country, allowing them to receive 30 percent of their wages free of tax. Therefore such employees pay tax on seventy percent of their income. The rule is a form of reimbursement of the expenses migrants make for their relocation to the country, including housing, travel and visas. This tax advantage is a method to attract highly qualified international workers and fill existing expertise gaps in Holland. Currently foreign employees can claim the advantage for 8 years, even though it has been estimated that only about 80 percent of them actually benefit from it.

Last October the government made an announcement that soon the maximum period of the 30 percent ruling will be reduced from 8 to 5 years. The change will apply to newcomers and employees that are already using the advantage.

Read more on the 30 percent reimbursement ruling in our FAQ.

A petition signed by 30 000 people

Until now approximately 30 000 have supported a petition asking the government of the Netherlands to keep the old rule for employees who have already moved to the country and currently benefit from the advantage.

People have created Facebook groups to highlight and discuss the issue and have launched a campaign to raise money to fight in court the decision of the government. They say that they recognize the government’s authority to change the policy for future foreign employees as appropriate, but the amendments should not apply to current expats who have already moved to the Netherlands with the assumption that they will be entitled to 8 – 10 years with reduced taxes.

The decision to limit the 30 percent ruling term for existing claimants without a period of transition has raised much concern among expats. Employers of international workers are also worried about the repercussions of the proposed change.

Many lawyers specializing in taxation have been contacted by people with concerns about the ruling’s implications.

The 60 000 foreign workers in the Netherlands meeting the strict requirements on income will face significant financial consequences. If, for example, an expat is earning 60 000 Euros a year, then he/she will have to pay approximately 8000 Euros more in taxes. This considerable drop in personal income will inevitably make the country less attractive for foreign professionals. Many other countries worldwide welcome skilled employees, so people willing to work abroad will likely choose other locations. To counter this trend, Dutch employers will have to offer much more attractive packages for relocation and better salaries.

International workers in the Netherlands have already voiced their concerns by lodging complaints and donating money to the campaign for challenging the decision. A person who has arrived in Holland last year commented on the page that he has recently bought a flat, taking a thirty-year mortgage. He feels cheated by the government that decided to change the rules retroactively and considers this practice dishonest.

You can find more information on the campaign at: https://www.gofundme.com/expatfund or hashtag #aDEALisaDEAL

Intercompany Solutions offers comprehensive financial advisory services to expats who live and work abroad. Regardless of your situation, we will help you see your finances clearly and prepare yourself for the future.

On September 19, 2017 (Budget Day in the Netherlands) an official legislative proposal for amendment of the Dutch withholding tax on dividends was published in connection to the Tax Plan for 2018. In summary, the proposal referred to a broadened exemption from withholding tax on dividends applied unilaterally with the aim to maintain the favourable fiscal climate in Holland.

On the same day, the Senate approved all proposals included in the Tax Plan for 2018. Therefore, the broadened exemption from withholding tax on dividends is in force since January 1, 2018.

Dutch exemption from withholding tax on dividends before January 1, 2018

For a number of years, Holland has exempted the distributions of dividends to EU or EEA (European Economic Area) parent companies from withholding tax based on Council Directive 2011/96/EU on the common system of taxation applicable in the case of parent companies and subsidiaries of different Member States. According to this document any income distributed by subsidiaries to parent companies in different member states is not subject to withholding tax on dividends in case the following collective requirements are fulfilled:

• The legal form of the parent company has to be listed in Annex I of Directive 2011/96/EU;
• The parent company has to reside in a Member State of the EU under its national law and pay corporate tax on its income without possibilities of exemption;
• The company needs to hold a minimum of 10 percent of the subsidiary’s voting rights (or capital). The Directive was amended to reduce this holding requirement. It decreased from 25% for 2005 to 20% for 2006; for the next two years it was 15% and in 2009 it became 10%.
• The requirement for minimum period of holding (if any) should be fulfilled.

Extended Exemption from Dutch Withholding Tax on Dividends since January 1, 2018

From the beginning of 2018, the Dutch exemption from withholding tax related to dividends has a broader scope. It applies to the distributions of dividends in the following cases:

• The parent corporation would have qualified for the participation exemption in the Netherlands, i.e. its interest in the distributing entity/subsidiary is 5% or more;
• The parent corporation resides in the EEA, EU or a country that has signed a tax-related treaty with the Netherlands including provisions for dividends.
• The corporation has not been denied a withholding tax reduction with regard to dividends under the treaty between Holland and the country where it resides by virtue of a counter-abuse provision.
• The parent corporation does not own a part of the distributing entity’s/subsidiary’s capital with the chief purpose to avoid the Dutch withholding tax on dividends. This condition is verified through a “subjective test”. An assessment is made to check if the company owns a part of the capital of the distributing entity/subsidiary with the intention to circumvent Dutch withholding tax on dividends and if the company was interposed to achieve a better position with respect to Dutch withholding tax on dividends. If the assessment yields a positive result, it is followed by an “objective test”. Its purpose is to ascertain if the entity is artificial, i.e. it was not established for legitimate business reasons reflecting the economic reality. In general, entities are not considered artificial in case:
• the parent corporation has an operating business; or
• the corporation is a holding that has acquired a better position with regard to the Dutch withholding tax on dividends in comparison to indirect shareholders (grandparent company) having an operating business, but its relevant substance is sufficient. This means that the parent corporation (intermediate holding) meets two additional requirements for substance, on top of the existing ones stipulated in Dutch law: 1) The parent corporation has costs for employees amounting to no less than 100 000 Euros; 2) The parent corporation has office space where it performs its business activities.

The additional requirements for substance are in effect from April 1, 2018.

Who gets an advantage?

The exemption from Dutch withholding tax on dividends benefits parent corporations based outside the EU that operate active businesses and reside in jurisdictions with which Holland has signed tax treaties. The treaties must include provisions regarding dividends that provide for partial withholding tax reductions.

Intercompany Solutions B.V.

Are you developing a business outside of the EU and considering an expansion to new markets beyond your country’s borders? The broader scope of the exemption from withholding tax on dividends makes Holland a convenient jurisdiction for businesses outside the EU looking for options to expand their operations to the Netherlands and Europe.

Our team at Intercompany Solutions has the skills and knowledge to support you through each phase of your expansion process. Would it be beneficial for you to work with a competent partner to help you with your plans for expansion? Get in touch with our professionals, discuss your ideas and see what we can do for you.

The Dutch government obtains its revenue mostly by taxation. The Financial Ministry implements the national legislation on taxes and the Belastingdienst deals with its actual execution. You must pay taxes if you generate income while staying in Holland.

A brief history of taxation in Holland

Dutch people started paying taxes centuries ago. In the 1800’s the government guaranteed its income through taxation of indispensable goods like soap, firewood, salt, meat, grain, wine, coal, wool and peat. Back then all people were taxed equally regardless of their actual earnings.

In 1806 the Financial Minister at the time, Alexander Gogel introduced a general system for taxation. Income tax, or “inkomstenbelasting”, was adopted only in 1914. Its purpose is to tax everyone proportionally to their respective income, following the principle: “The more you earn, the more you pay.”

Twenty years later, in 1934, a tax on sales (omzetbelasting) was introduced. In 1968 it was substituted by the value-added tax on sales. In 1964 the government adopted the payroll tax, or “loonbelasting”.

The Belastingdienst (Dutch tax office)

The Dutch office for collection of taxes and customs is called Belastingdienst and it is within the structure of the Financial Ministry. Its responsibilities include:

• goods export, import and transit;
• fraud detection (economic, fiscal and financial);
• levying and collection of taxes;
• payment of income-related benefits for health care, rent and childcare.

The tax system in Holland

What common types of taxes will you encounter while working and living in Holland? Is it compulsory for you to submit a yearly return for income tax? This article will give you the necessary information about the tax system in the country.

Dutch tax advisors

It is not easy to calculate your taxes. This even applies to the majority of Dutch citizens and the tax requirements can be especially confusing for internationals. The revenue service acknowledges these difficulties in its own slogan: “There is no way to make it enjoyable, but with us, it’s easier.”

In case you need assistance with calculating your taxes and submitting the necessary documents, please, feel free to contact our advisors. They will be happy to help you out.

The 30% reimbursement ruling

Migrants with high professional qualifications who work in Holland might be eligible for 30% tax advantage. Check whether you meet the criteria for reimbursement ruling in this article.

Below are the answers to the most common questions regarding the 30% reimbursement ruling in the Netherlands:

When should I apply for the 30% reimbursement ruling?

Expats may apply for this tax advantage within 4 months after the conclusion of their employment contracts. For those applying after the 4-month interval, the ruling becomes effective on the month after the submission of the application. People who have been hired in the Netherlands for some time can also take advantage of the 30% reimbursement ruling but it will not apply to any previous years. The application processing period is case-dependent and may take from 1 to 6 months.

Is there a maximum duration for the 30% reimbursement ruling?

In the beginning of 2012, this period was set at 8 years. For applications approved before 2012, the period remains ten years. After 5 years the applicants may be requested to provide proof that they continue to fulfil the requirements of the ruling. Previous employment and stay in the country reduce the duration period of the reimbursement ruling.

In October 2017 the Dutch government announced its plans to reduce the duration of the 30% ruling from 8 to 5 years. Read more on the latest developments.

How can I maintain the 30% reimbursement rule when changing jobs?

It is not difficult to maintain this tax advantage, as long as the new employment starts no longer than 3 months after the termination of the previous one. The procedure for application must be repeated within 4 months from the beginning of the new job. The new employer has to provide a statement that the applicant possesses rare qualifications and expert knowledge.

What can I do if my application for the 30% reimbursement ruling is denied?

If the competent authorities deny your application, you can submit an objection within 6 weeks. If the decision remains the same, you can lodge an appeal.

How is the 30% reimbursement ruling applied to my salary?

The reimbursement is relevant to the gross salary agreed with the employer. Pension premiums are subject to different regulations. The rest of the benefits (bonuses, holiday allowances, etc.) are included in the ruling if they are considered as severance pay. This salary requirement is waved for researchers and other scientists working in the field of education, such as medical interns.

What is the definition of an “incoming employee”?

In the Netherlands, an incoming employee is a person who, before the beginning of his/her employment, has spent at least two-thirds of the past two years at least 150 kilometres away from the country’s borders.

How can I prove I possess valuable qualifications and expert knowledge on the background of the Dutch labour market?

University education and/or ample work experience can justify the high value of your skills in the labour market. Furthermore, your employer has to provide reasonable grounds (in written) for hiring you by stating your rare qualifications. Have in mind that since the beginning of 2012 the requirement for minimum salary has virtually replaced the skill requirement. However, for particular positions, you might still be asked to prove your qualifications.

Are there any negative consequences to the 30% reimbursement ruling?

The 30% tax reduction with respect to the gross salary leads to a significant decrease in unemployment and disability benefits, tax refunds (mortgage loans), pension, social security, etc, as these are mostly or even exclusively based on the taxable salary.

Every Dutch company is required to subscribe at the Trade Registry of the Chamber of Commerce. This is a necessary prerequisite for VAT registration and fulfillment of other financial duties. The procedure is mandatory for all types of legal entities, including private limited companies, companies with limited liability, foundations and associations. Registration at the Chamber of Commerce is also mandatory for partnerships (e.g. general partnerships) and sole proprietors. The procedure for subscription at the Trade Registry involves the payment of a registration fee amounting to 50 Euros.

After the completion of the registration process, the Chamber of Commerce issues a registration number. Legal entities and associations also obtain an additional Identification Number (RSIN). Furthermore, company branches receive unique 12-digit establishment numbers.

After successful inclusion in the Trade Registry, the Chamber of Commerce transfers automatically the information of the company to the taxation system.

Meanwhile, your entity is also registered for Value Added Tax in the country. The VAT number is issued at the time of registration at the Commercial Chamber for sole proprietors and within several weeks for all other business forms: corporations, companies with limited liability, partnerships. Unless there are additional questions by the tax office to determine your VAT status.

The Netherlands VAT number

Once you have obtained your Netherlands VAT  number registration, consider the following information about the Value Added Tax number you have received: it consists of fourteen characters starting with NL (the code of the country), continuing with the Identification Number or the Civic Service Number and ending with a three-digit code from B01 to B99. Your Dutch VAT number will be stated by the local tax authorities on the forms and letters they send you. In some of the forms, the authorities will use your general tax number. It is almost identical to the Value Added Tax number but lacks the country code.

VAT in the Netherlands

VAT rates in the Netherlands can be 0, 9 or 21%, depending on the case. If you are conducting business in a foreign country, the 0% rate might apply. For many services and goods, the country applies the reduced 9% rate (e.g. medicines, foods, housing reconstruction – paint and plaster). For all other services or goods, the authorities charge VAT at the general 21% rate. Some activities within the scope of certain industries are not subject to VAT, i.e. an exemption has been granted. These include journalists, writers, composers and cartoonists, collective interests, insurance and financial services, healthcare, fund-raising, gambling, education, childcare, television and radio, sports clubs and organizations.

If you need more detailed information and help with VAT registration in Holland, please, contact our local team of lawyers. You can also read more on taxation in the Netherlands.

Updated: 6 February 2024

The Netherlands uses a value-added tax system (short: VAT). This system is very similar to the system that is used in other states of the European Union. Not all transactions are subject to VAT, but in Holland, it is very common to charge this value-added tax. The regular tax rate is 21%, and this rate is charged on (almost) all goods and services by businesses within Holland.

If products are imported from outside of the EU, this VAT rate may also apply. Holland also has a lower rate. This rate was 6% until 2019. The rate has been increased to 9% as of 2019 and it applies to specific goods and services, for instance, food products, medicine, art, antiques, books, entry to museums, zoos, theatres, and sports.

Read here for more information on the Dutch tax system.

VAT exemptions Netherlands

Of course, the Netherlands also has a number of exemptions. Visible exports are among those. These are zero-rated. There are also some exemptions for special goods and services, mainly medical, cultural, and educational services. If VAT exemptions apply, you don't have to pay the tax, and you cannot deduct it.

It is not possible to claim a refund of the VAT that is charged over the costs and investments that are related to the goods and services that fall under the VAT exemptions. Goods and services that are exempted from VAT are: letting or selling immovable property (provided that it is > 2 years old), healthcare services, childcare, care services and home care and others.

Are there any other tax exemptions in the Netherlands?

These aren't the only tax exemptions in Holland. Other tax exemptions are sports organisations and sports clubs, services supplied by sociocultural institutions, financial services and insurances, services supplied by composers, writers, and journalists, education, and fundraising activities.

There is also an agricultural scheme in place, which applies to agricultural and livestock farmers, foresters, and market gardeners. All the goods and services that are provided by these entrepreneurs are also exempted from VAT. This scheme is called 'Landbouwregeling'. All other tax exemptions in Holland can be requested from the Dutch tax office.

VAT rate for foreign entrepreneurs

If you are doing business in Holland, but your business is established outside the Netherlands, you will have to deal with the Dutch regulations. If the service or product you provide is supplied in the Netherlands, you usually have to pay value added tax here. However, in reality, the tax is often reverse-charged to the person who receives the service or product.

If this is not a possibility, you have to pay the value added tax in Holland. Reverse-charging VAT is possible if your client is an entrepreneur of legal entity, established in the Netherlands. In that case, you can exclude the tax from your invoice and state 'VAT reverse-charged'. You are allowed to deduct the tax charged over any costs related to this transaction.

More information about the Holland VAT rate

The value-added tax rate in the Netherlands is rather straightforward. However, there are some exceptions that can make it harder to understand every little detail. If you want to be sure you are doing everything right, it would be best to hire a consultant who can guide you through the process. Intercompany Solutions, for example. We can help to set up your business in Holland.

We provide corporate solutions for investors and companies worldwide and serve international clients who are interested in company formations and corporate services. We help entrepreneurs with all aspects of their company setup. Read more on setting up a business in the Netherlands.

Dutch corporate tax deals with the tax that should be paid in the Netherlands, on the profits that are earned by companies. A number of rules apply to this, but in general, a Dutch company has to pay 19% corporate tax. This is also called ‘vennootschapsbelasting’ in Dutch. This tax applies to the worldwide profits of a company.

There are many Dutch tax rules that have to be taken into account if you are setting up a business in the Netherlands, or if you are doing business with a company within the Netherlands. There are also many ways to benefit from tax subsidies, facilities and other regulations that reduce the burden. A great consultant can help with this.

Corporate tax is considered to impact the earnings, whilst the VAT tax system is designed to collect tax from individuals, through the companies. For more information on VAT Read here.

Dutch corporate tax rates

Currently, the Dutch corporate tax rate is 19%. This rate applies to taxable earnings of up to 200,000 euros. On the excess, a rate of 25,8% applies. This bracket may be extended in the future, which means that business can earn more at a rate of 19%. If activities are covered by the innovation box, a reduced rate may apply. The measures have been proposed by the Dutch government to stimulate a competitive tax environment for international businesses.

Exemptions

There are some exemptions when it comes to the Dutch corporate tax. The two most important exemptions are capital gains and dividends that are derived from qualifying subsidiaries, and earnings attributable to a foreign business enterprise. The first exemption applies when the subsidiary is an active company.

If that is the case, the Dutch parent company also needs to have an interest of at least 5% in such a company. In that case, it is a ‘qualifying subsidiary’, which means that the capital gains and dividends from this subsidiary are exempt of corporate taxes. The other exemption is slightly less complicated and has fewer requirements.

Foreign branches

If a Dutch company receives earnings from a foreign branch, this earnings are also exempt from Dutch corporate tax. However, this branch must be a permanent establishment or representative. This is one of the reasons that The Netherlands has internationally been known as a tax haven.

The Netherlands harbours many holding companies for multinationals and participates in many bilateral tax treaties. The various exemptions in taxation systems facilitate avoidance of paying taxes by large corporations. And even though this reputation may be a bit questionable, it isn’t illegal to use the facilities that the Netherlands is offering in this area.

Best advice about Dutch corporate tax

If you want to know more about Dutch corporate taxes or its implications for your business, it would be wise to consult a specialist about this. And if you’re looking for a specialist, you only have to remember one name: Intercompany Solutions.

Intercompany Solutions offers boutique solutions and is market leader in quality corporate services and advice on taxes.

We provide all the advice, guidance, and information you need for setting up a company or corporate structure abroad. We handle the legal form, investments, legal matters, visa requirements, and immigration and make sure that everything is addressed. We help our clients avoid pitfalls and grow their business abroad. Contact us for more information.

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.

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.

The dividend tax Netherlands is a kind of income tax on payments of dividends to the shareholders of companies. The Netherlands tax law has provisions for a fixed rate on dividends. In case the business meets particular criteria, tax exemptions may apply. Our local agents can give you comprehensive information on tax compliance with respect to any Dutch entity.

The maximum rate for a dividend tax Netherlands is 25%. However, companies do not owe dividend taxes if they fulfil certain requirements for participation exemption. This exemption concerns capital gains and dividends from shares of no less than 5%. Subsidiaries can be eligible for participation exemptions if they are active and pass the tax test (for being taxed in accordance to the Dutch principles). Additionally, less than 50% of the company’s assets can be passive. If a subsidiary meets these conditions, its income from dividends is exempt from taxes.

Dutch companies not qualifying for participation exemption are liable for taxes at the usual corporate rate with respect to profit from shares. If Dutch subsidiaries are subject to corporate tax but they do not meet all criteria to benefit fully from the exemption, they may receive a special credit.

Our lawyers in the Netherlands can provide you with detailed information on the provisions relevant to dividend income.

Dutch corporate taxes

According to the national law companies established in the country are resident and need to pay taxes on any income generated worldwide. Non-resident entities performing activities in the Netherlands owe taxes only with respect to income generated locally.

The Netherlands tax on corporate income is levied for all profits from business activities in the Netherlands, including income from foreign sources, capital gains and passive income.

The Dutch Tax office or ''Belastingdienst'' in Dutch, is the agency in charge of internal revenue and taxation. If you need more details on the Dutch tax system, do not hesitate to contact our local lawyers. We offer comprehensive services with respect to tax compliance. You can also check our article on paying taxes in the Netherlands.

The Netherlands and its taxation system offer many special benefits to international investors. Corporate taxation in the country varies depending on the taxable profit of businesses: there are two rates determined by the amount of income. Our local lawyers are available to assist you in opening a company and fulfilling the requirements for your full corporate tax compliance in the Netherlands.

Corporate taxation in the Netherlands

Any business incorporated in the Netherlands is regarded as a resident company liable for corporate taxes. Resident entities owe taxes with respect to income obtained worldwide while non-resident ones are taxed only on the profit generated in the country.

The rate of corporate taxes is 19% for up to EUR 200 000 of taxable yearly income and becomes 25.8 % for amounts exceeding this value. Corporate tax is charged for any profits generated from business activities in the Netherlands, including income from trading, international operations, passive and source incomes, etc. In principle, all costs connected to the activity of the company are deducted from the total profit.

The Dutch Tax office or ''Belastingdienst'' in Dutch, is the agency in charge of internal revenue and taxation.

Exemptions of corporate tax Netherlands

Certain items of the income are exempt from corporate taxes. These are dividends and capital gains obtained from particular subsidiaries and profits generated by foreign businesses. This is regulated in the subsidiary-parent directive.

Local subsidiaries are eligible for exemption from Dutch corporate tax if they are active and the Dutch parent company holds at least 5% interest. These subsidiaries must undergo a test showing whether they qualify for exemptions. The parent company will be eligible for participation exemption in case they are already charged with reasonable taxes in the country where the subsidiary is located. Similarly, a subsidiary would qualify for participation exemption in case its passive assets do not exceed 50 % of the total assets.

Our lawyers in the Netherlands can provide you with further details about corporate tax exemptions and their application with respect to your Netherlands company.

Other characteristics of corporate taxation

The tax system in the Netherlands offers different reliefs and benefits. Certain budget allocations, for instance, apply for development and research activities. Such allowances reduce the company’s taxable income. Similarly, companies working in the field of export and import can take advantage of a special tax regime with respect to tonnage available for companies dealing with shipping.

Physical and corporate persons who are employed or perform business activities in the Netherlands need to follow the local requirements for taxation. Paying taxes in the Netherlands is obligatory both for companies established in the country and branches of international entities. Substance has a role in the tax status, a business address in the Netherlands needs to be compliant to the substance requirements by the tax authorities.

If you own a business, our representatives can provide you with details on the Dutch Tax System local auditing and accounting principles. We can also assist you with registering a company in The Netherlands.

Corporate taxation in the Netherlands

The taxation of corporations in the Netherlands is based on residency. Companies set up locally are considered as legal entities of Dutch residents, a Dutch Resident Company. They owe corporate taxes with respect to their income generated worldwide. Non-resident companies are taxed only with respect to income generated in the country. The rate of corporate taxes is 19% for yearly profits up to EUR 200 000. Income exceeding this amount is taxed at 25.8% percent. In the coming years the corporate tax rates will further decrease.

The country does not charge withholding taxes on royalties or interest. Dividends are not taxed at the domestic level; otherwise, the tax rate on dividends is 15%. The Netherlands has signed numerous agreements with other states worldwide to avoid double taxation and lower the tax burden on companies.

Other applicable taxes for companies in the Netherlands are the tax for transfer of real estate and VAT (21 percent standard rate and 6%reduced rate). All entities paying VAT in the Netherlands need a registration.

For Dutch companies, the accounting year usually matches the calendar one with 12 months duration. Shorter periods can be considered in the incorporation year. The tax on corporate income is paid annually, up to 5 months after the financial year ends.

The Dutch Tax office or ”Belastingdienst” in Dutch, is the agency in charge of internal revenue and taxation.

Personal taxation in the Netherlands

Dutch residents are taxed with respect to their income worldwide; nonresidents pay taxes only on income generated locally. The principle of taxation of physical persons is progressive with three sections: section 1 applies to income from housing, employment or enterprises; section 2 is for income from substantial interest; section 3 is relevant for investments and savings.

Physical persons are obliged to respect the taxation year and deposit any liabilities before the first of April on the next year. Delays/non-payment are subject to penalties.

If you would like more information on taxes and tax requirements, do not hesitate to contact our agents in the Netherlands.