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If you wish to set up a company in the Netherlands, you can opt for "private limited liability company", also known as a BV. This legal entity is comparable to the Belgian BVBA. You can have a number of motives for establishing a BV.

Why should I use a Dutch BV?

Although you can also do business with your Belgian BVBA across the border, a Dutch BV, which has a business address in the Netherlands, can give your local customers, business partners and employees just a little more confidence in your organization. And once you operate in the Netherlands, you will soon have to deal with Dutch regulations.

The advantage of a BV is that it is a legal entity so that it can participate in legal transactions under its own name and can thus conclude a purchase agreement itself.

At a BV continuity is guaranteed because death or bankruptcy of a director or shareholder has no consequences for the survival of the company. The shares in a BV can also be transferred relatively easily.

And vice versa: the director and shareholder are - in principle - not liable with their private assets for the debts of the BV or, for example, in the event of bankruptcy of the company. A BV has equity from which creditors can recover. However, please note that under Dutch law a director can in certain cases be held liable for debts of the company.

How do I set up a Dutch BV?

A BV is only possible with a notary and this cannot be deviated from. A notary draws up a deed of incorporation of which the articles of association of the BV to be part of. The articles of association are the basic rules and in any case contain information about the name, purpose, seat and shares (including who will receive shares and the price of the shares).

In Dutch law, many provisions state that the main rule can be deviated from in the articles of association. You can use a BV as you wish within the limits of the law.

From the moment that the notary public passes the deed of incorporation, the BV must be registered in the Trade Register of the Chamber of Commerce. In general, the notary takes care of that registration.

The Shareholder Agreement

If you have more shareholders, you can draw up a shareholders' agreement, preferably prior to the establishment of the BV. Here you can lay down agreements that are not included in the deed of incorporation (the articles of association) or that require further elaboration, such as that shareholders may not compete with each other, regarding the exercise of voting rights, when the shares may be transferred to a third party (or must be offered to the other shareholders) and the board decisions that must first be submitted to the shareholders for approval.

You can make the shareholders' agreement as extensive as possible if you wish, but this must be in line with the deed of incorporation.

The management agreement

It is often recommended that the rights and obligations of the director(s) vis-à-vis the company be laid down in a management agreement. This may include arrangements regarding, among other things, the management and expense reimbursement of the director, the decisions that the director must first submit to the shareholders for approval, non-confidentiality and non-competition agreements, the core duties of the director and the way in which the director must carry out work.

If the director is a natural person, he or she may be qualified as an employee under Dutch employment law. If that is the case, it has employment law and tax consequences. A management agreement often stipulates that the director is not regarded as an employee, but as a contractor. But whether there is a pure contract or an employment contract, that is determined by Dutch law; the name of the contract is inconclusive. More information about Dutch employment law can be found here.

Is a minimum capital required?

When establishing a BV you do not have to pay a mandatory minimum capital. You can set up a BV with a capital of one euro cent.

The Netherlands is one of the ten largest exporters in the world. The food industry is one of the largest industries in the country, while other vast industries are: energy, chemistry, negotiation, machinery, metallurgy, electrical commodities plus sign services, plus sign foreigners.

1. Agriculture

The Netherlands is one of the world's largest exporters of food products plus agricultural products, thanks to the highly mechanized agricultural sector plus innovative agro-food technology, the promising geographical location in the heart of Europe, the mild weather plus the flat fertile floor.

The Dutch agro-industry focuses on international export is laundry before almost 21% of the country's total export value. The Netherlands is in the first position in the European Union (EU), provided that it is in second place in the world, after the United States (US), due to the export of agricultural products.

The agricultural industry provides employment to 4% of the Dutch workforce plus produces vast remnants before the food plus processing industry. One part of the food plus agricultural products exported from the Netherlands includes tomatoes, peppers, cucumbers, apples, flowers, and flower bulbs.

Open a food or agricultural company in The Netherlands 

2. Energy

The energy industry in the Netherlands is one of the main export products of the country plus sign, provided that the source of employment is plus sign patriotic income.

As estimated, 25% of natural gas reserves in the European Union (EU) are located in the Netherlands. Expansive natural gas supplies were discovered in the Netherlands in 1959 and have generated significant revenues for decades. The Netherlands has had no other mining resources since the closure of the coal industry in 1974.

The Groningen Gasveld, situated during Slochteren, is one of the largest natural gas fields in the country.

More information on opening an energy company in The Netherlands.

3. Chemicals

The chemical industry in the Netherlands is one of the most important economic sectors in the country.

It's clear that with an advanced and healthy economy across a range of sectors, the Netherlands is an inviting prospect for foreign entrepreneurs. Contact ICS who can help guide you through the inevitable red tape that surrounds starting up a new company in the Netherlands.

Read here on starting a chemical company in the Netherlands

In the last years, researchers and startups in The Netherlands started innovating in cryptocurrency, Quantum Computing, Artificial Intelligence and alternative energies.

Over the last few years, the government of the Netherlands has been keen to be seen to be taking decisive action against tax evasion. 1n July 2019, for example, the government announced its plan to close loopholes in which companies avoid tax by taking advantage of the differences in tax systems of countries, the so-called hybrid mismatches. State Secretary Menno Snel sent a bill to that effect to the House of Representatives. This bill was one of the measures taken by this cabinet to combat tax avoidance.

The ATAD2 (Anti Tax Avoidance Directive) bill is designed to stop internationally operating companies from taking advantage of the differences between the corporate tax systems of countries. These so-called hybrid mismatches ensure, for example, that payment is deductible, but is not taxed anywhere, or that one payment is deductible several times.

The most famous example of a hybrid mismatch is the CV / BV structure, also known as the "piggy bank at sea". Companies from the United States have been notoriously able to postpone taxation of their global profits for a long time with this structure. But thanks to the measures from ATAD2, the Cabinet is ending the fiscal attractiveness of this structure.

A follow-up to previous measures

ATAD2 is a logical continuation of ATAD1. ATAD1 entered into force on January 1, 2019, and addressed other forms of tax avoidance. This has led, among other things, to the introduction of the so-called earnings stripping measure, a general interest deduction limitation in corporate tax. The bill was presented to the House of Representatives in July 2019 contained further measures against hybrid mismatches.

The majority of the measures in the bill to implement ATAD2 came into force on 1 January 2020. Other European countries have also introduced ATAD2, which was welcomed by the government. Hybrid mismatches are most effective when done on an international basis.

Background to ATAD2

The introduction of ATAD2 was one of the measures taken by this government to combat tax avoidance. In addition, the method for issuing rulings with an international character was tightened from 1 July. The cabinet is also preparing legislation to levy a withholding tax on interest and royalties by 2021, with a very targeted approach to a cash flow of 22 billion euros to low-tax countries.

And more tax avoidance measures are planned. In 2024, for example, the Dutch government plans to bring in a new withholding tax on dividend flows that will apply to low tax jurisdictions. This will herald another important stage in the fight to stop tax avoidance. The new tax is planned in addition to the withholding tax that will be imposed on interest and royalties from 2021.

The new tax will allow the Netherlands to tax dividend payments to countries that levy hardly any taxes and will also help reduce the use of the Netherlands as a conduit country. The tax will be levied on countries with a corporate tax rate of less than 9% and will also apply to countries currently blacklisted by the EU blacklist. These are not half-hearted measures by any means.

Any questions? Contact our business consultants for more information.

Are you a business owner who is based in a country other than the Netherlands? Do you supply services or goods to the Netherlands? If so, you might be classed as a foreign entrepreneur in terms of VAT. You may need to file a turnover tax return in the Netherlands and you might also need to pay VAT in the Netherlands. ICS can provide you with more information about the latest VAT regulations in the Netherlands as well as calculating VAT, filing VAT returns, paying VAT, and how to deduct or claim a VAT refund.

VAT registration for foreign business owners

In certain cases, a foreign entrepreneur who has to cope with Dutch VAT can opt to register for VAT with the Dutch tax authorities.

This is a possibility, for example, if a businessman does not want to offer bank guarantees, as is a requirement for General Tax Representation. Another benefit is the fact that the latter is more straightforward to arrange than a General Tax Representation permit.

There are certain disadvantages for a non-Dutch national to register for Dutch VAT. This is because foreign entrepreneurs are not entitled to a permit under Article 23 (VAT reverse charge) because it is only for people who live in the Netherlands as an entrepreneur or are established there. Since the VAT cannot be transferred it is a given that it must always be paid.

VAT on foreign receipts

First of all: all expenses must be made for your business can be deducted. If so: you can deduct the costs.

For VAT: on hotels outside the NL, VAT of the country of the hotel will be applicable.
So for example you stay in a hotel in Germany, German VAT will be applicable. You can’t deduct this German VAT in your Dutch VAT declaration. There are possibilities to ask this VAT back with the German tax authorities, but a threshold applies and it is a time-consuming process.

This is therefore only interesting when it concerns large amounts. The costs of the hotel can of course be deducted from the Dutch profit. For airline tickets no VAT is applicable. You can deduct the costs of the profit (if it is a trip for business).

It would good to discuss with your suppliers when it is possible that suppliers do not charge you VAT. If you have an active VAT number in the Netherlands, they can verify that with the EU Vies register. And see that they are allowed to invoice you at 0% reversed charge. For other countries outside the EU, other rules apply.

How to apply for a Dutch VAT number

When foreign entrepreneurs want to apply for a Dutch VAT number, they only have to submit a few documents, but they must first complete an application form from the tax authorities. As soon as the Dutch VAT number is supplied, a foreign entrepreneur is legally able to trade in any country within the European Union.

Adequate VAT administration is needed for this and this is where a company such as ICS can provide valuable assistance. An international company can opt to have this administration undertaken by an administration office based in the Netherlands. The Tax and Customs Administration carries out strict checks, especially when reclaiming VAT so it is extremely important to ensure that the correct paperwork is always in order. If the administration is outsourced to an accounting office, this office is not responsible for the activities with which the foreign company is involved in the Netherlands.

Do you want assistance with applying for a VAT Registration for foreign entrepreneurs? The experienced VAT specialists at ICS will help you on your way.

Do you market new innovative products based on your own R&D? Then you may be eligible for the Innovation Box. The Innovation Box reduces corporate tax for profits from innovative activities. As of 2018, an effective tax rate of 7% applies instead of the maximum rate of 25%. The tax authorities implement the Innovation Box.
If you want to use the Innovation Box, you will need to submit an R&D statement and in some cases also a patent. This scheme is only of interest to companies subject to corporate tax, such as private limited companies. Contact ICS for more information about the potential benefits of the Innovation Box.

The small-scale investment allowance (Kleinschaligheidsinvesteringsaftrek or KIA)

Do you invest in business assets? Then you can deduct an amount from the profit with an investment deduction. You are then eligible for a small-scale investment allowance (KIA). The amount of KIA depends on the amount invested.

Who is eligible?
You may be eligible if your company is established in the Netherlands and you are liable to pay income tax or corporate income tax;
You invest in company resources for your company.

In 1 year you invest a certain amount in new or 2nd-hand business assets. In the table of the Tax Authorities, you will find the percentages for the investment deduction.

Divestment addition
Do you sell or donate your assets within 5 years of your investment? And is the total value more than € 2,300? If so, you must repay part of the deduction via the divestment addition.

How can you apply?
You can apply the small-scale investment deduction to your income tax or corporate tax return.

Energy investment allowance (EIA)

If you invest in certain energy-saving assets and sustainable energy, you may deduct part of the investment costs from your taxable profit via the EIA scheme. This means you pay less income tax or corporate tax. Contact the tax specialists at ICS to find out if you are eligible to do this.

Environmental investments

It is sometimes possible to benefit when you make investments to limit damage to the environment. Investments that are on the Environmental List provide an additional deductible item on the Environmental Investment Allowance (MIA) or you can write off accelerated (Random depreciation of environmental investments (Vamil)). This reduces your income tax or corporate tax. The MIA / Vamil scheme applies to, among other things, environmental measures in industry, agriculture and transport.

In recent years, the construction sector has been the fastest-growing sector for independent entrepreneurs. In 2018, there was a growth of over 7%, and the following year saw a growth of 5.3%, according to the senior sector analysts.

At the same time, there is a shortage of construction workers, a gap that self-employed entrepreneurs are currently diving into. After the crisis of 2008, many construction workers lost their jobs, but now they have the job of sorting them out as self-employed people.

The Netherlands is now widely regarded as one of the healthiest economies in Europe, according to recent surveys despite the impact of the coronavirus pandemic. Amsterdam is now perhaps the most popular European city for establishing a new company, as well as large corporations keen to set up regional headquarters serving the entire European area means that the construction industry has been transformed into one of the most extensively developed parts of the Netherlands' economy. It is also a welcoming country for international investors in the construction sector in other regions of the country.

At ICS, we have registration agents who can provide up-to-date information and advice on all you need to know to establish a construction company.

The Civil Code - The Environmental Licensing Law

The Construction Law regulations fall under the remit of the Netherlands' Civil Code, although there is also additional legislation with which construction companies are required to comply. One of the most relevant is the Environmental Licensing Law. This sets out the rules for a construction company in the Netherlands to comply with on building sites. The law encompasses the following:

The actual building of the property;
Any exemptions for the area planning;
Demolition of current sites;
Building on green spaces.

Dutch law is complex so contact ICS to help you navigate your way through the Environmental Licensing Law and the registration process of your construction company.

Registering your construction company in the Netherlands

You will need to register your company with the Dutch Companies Registrar. You might need to apply for certain licenses which will permit you to carry out construction works. For large construction projects this is highly recommended. For independent contractors, most construction workers do not need a license but simply a safety certificate. This is a 1-day course proving you understand safety at the construction site.

Organisations and businesses in the Dutch construction sector can apply for the all-in-one license for material features which may include:

The construction license;
The environmental license;
The exemption for zone planning;
The nature conservation permit;
The renovation license.

You should be aware that extra licenses and permits may be required depending on the nature of the work involved.

Contractors and independent workers generally do not need to apply for any licenses.

For help in establishing a company in the construction sector, please feel free to contact our ICS representatives in the Netherlands.

How to apply for Dutch EORI number

In the Netherlands, economic operators are identified by Customs by their EORI number. In other words, those who have to deal with Customs from a business perspective, for example by preparing a customs export or import declaration for goods, must be known to customs. This also applies to companies that have a Customs export or import declaration drawn up by, for example, a Customs agent, freight forwarder or logistics service provider. This declaration is made with an EORI number.

When do you need an EORI number?

An EORI number is required if you actually have contact with Customs. This is the case when a Customs declaration is independently filed, it is filed on your behalf, or you apply for a permit. This number (compiled or applied for by Customs) is activated when it is included in the Customs declaration. An EORI number is therefore essential for import- and export firms based in The Netherlands.

How can I look up an EORI number?
You can check another person's EORI number online via this link. This handy tool allows you to look up the EORI number of another person and check whether it is valid and actually exists.
Check EORI number

The Eori number code
The main component of this number already has a company in-house, namely the RSIN or BSN.
The EORI number consists of the letters NL + the RSIN (or BSN) and includes a 9-digit number in addition to the two letters NL. If the RSIN (or BSN) consists of less than 9 digits, this must be completed with zeros before the RSIN (or BSN) to the number of 9 digits (for example NL000123456). This whole forms the EORI number.

How can I apply for an EORI number?
Our tax specialists can assist you with requesting an EORI number for your firm. Our firms has completed dozens of successful EORI number applications for foreign entrepreneurs. Contact us for more information on requesting an EORI number.

EORI number at headquarters and branches
The EORI number is only linked to the head office (legal unit). The business units (branches) do not receive an EORI number. Branches use the EORI number of the head office. This also applies to branches from the other Member States.

EORI number at headquarters in another Member State
A company with a recognized permanent establishment that is not established in the Netherlands can obtain a Dutch EORI number. This should be evident from the fact that the Foreign Department of the Dutch Tax Authorities has assigned a tax number. It is then a self-contained entity.

EORI number at headquarters in a third country
A company established in a third country must have an EORI number if, for example, it wants to make a customs' declaration. The EORI number will also be issued in the Member State where it is intended to do this for the first time.

EORI number and representation
A company established in a third country without a recognized permanent establishment in the Netherlands can have a Customs declaration made in the Netherlands. This can be done by an authorized Customs agent or forwarder based on an Indirect Representation Authorization. The EORI number of this Customs agent or forwarder is mentioned in the declaration.

Considering to start an import or export company in the Netherlands?

Are you interested in opening an import or export company in the Netherlands? Or looking to learn more about the Dutch customs and goods shipment regulations?

The Netherlands is considered as a gateway to Europe, especially for trade and logistics. The Rotterdam Europoort (Gateway to Europe) harbour is one of the largest harbours in the world, and the biggest logistical harbor in Europe.

Our tax specialists in the Netherlands can offer complete accounting services and provide many you other financial solutions, whether a legal entity or a natural person. ICS finance professionals are able to help small businesses, such as sole traders, but they are also able to offer professional accounting and bookkeeping services to multinational corporations. Among the most frequently used accounting services offered by the ICS accounting firm include:

• Assistance with Dutch tax registration and compliance - businesses of all sizes in the Netherlands must be registered for tax purposes and submit various financial documentation, according to their structure as a legal entity;
• Advice on the fiscal framework in the Netherlands
• Filing annual accounts – our tax specialists in the Netherlands can help you gain a full understanding of the timetable for submitting the necessary financial documents and tax returns;
• Payroll and annual statements the Netherlands must submit annual statements;
• Financial advice on the management of a company in the Netherlands – this is a major factor which has a significant influence on the success of a company.

What do I need to know about the Dutch corporate accounting system?

Bookkeeping forms one part of the accounting system in the Netherlands and this broadly refers to the procedure and methods used to register all the necessary financial operations of a business, in accordance with the relevant law. Bookkeeping is a key part of the Dutch accounting system and must be completed with the applicable procedures, and ICS can advise you about these.

People who are interested in starting a business in the Netherlands or those who intend to expand an international company on the local market should be aware that bookkeeping is required to keep track of all the business records that are entered throughout the financial year. This coincides with the calendar year in the Netherlands.

Bookkeeping procedures must follow the International Financial Reporting Standards (IFRS), which acts for accounting procedures adopted at the level of the European Union. However, when it comes to small businesses registered in the Netherlands, accounting principles and bookkeeping procedures can vary to some extent.

A small company in the Netherlands, for example, can opt to comply with the Dutch Civil Code (Book 2), the Dutch Accounting Standards for small entities or medium-sized companies, or the IFRS principles blended with sections of the Dutch Accounting Standards. At ICS, our team of tax specialists can provide advice on the best accounting principles for your business. You should also be aware that the accounting regulations are set out by the Dutch Accounting Standard Board, the primary regulatory organisation in the sector.

How should bookkeeping be done in the Netherlands?

Bookkeeping provides a complete record of the businesses' financial circumstances and, therefore, the methods and procedures used by any accountant should be able to give a coherent picture of the firm’s transactions and its fiscal status at a precise moment. The rules surrounding bookkeeping procedures in the Netherlands stipulate that the financial data submitted by a business must be reliable, clear and comparable - and these are statutory requirements.

Moreover, all bookkeeping documents must be completed in accordance with the accounting principles of this country. Business owners should also be aware that the bookkeeping procedures vary according to the legal entity of the company.

If you are interested in operating a company in the Netherlands and need professional accounting services, contact ICS. Our team of finance specialists is on hand to deliver expert accounting and bookkeeping services in the Netherlands.

If you operate a business in the Netherlands, there is a strong chance that you will need to submit your annual financial accounts with the Dutch Chamber of Commerce (KVK). You must do so if you are responsible for:

A public limited company (NV);
A private limited company (BV);
A mutual insurance association;
A cooperative association;
A general or limited partnership (VOF or CV resp.) where all the managing directors are foreign nationals;
A foundation that is responsible for one or several companies with a certain amount of turnover.

What are the annual account publishing requirements?

The Dutch authorities take the publishing of annual accounts very seriously and it is essential to meet the deadline. Your annual accounts must be submitted to the Chamber of Commerce (KVK) within 8 working days after they have been formally adopted. If you have been able to adopt the annual accounts in time, it is possible to offer your provisional accounts. Your accountant or auditor will be able to advise you about the deadline as this varies according to the legal set-up of your company, but it will definitely be within a year from the start of the financial year. If you miss the deadline, you will probably have to pay a fine. There is also the chance that you may be held personally liable for company debt in the event of bankruptcy - even if your company is structured to prevent this occurrence.

The way in which you publish your annual accounts largely depends on the size category of your company - micro, small, medium or large. If your company is classed as small or micro you are advised to file your own accounts online which is a straightforward process. If you use an intermediary, they must use the Standard Business Reporting software (SBR) when submitting returns online.

These accounts are public records. If you are interested in viewing any businesses annual accounts, you can order them online via the Chamber of Commerce.

Foreign legal entities

Foreign legal entities are also obliged to submit their annual accounts in the Netherlands:

If they are from countries not part of the EU with a branch in the Netherlands if they are required to submit yearly accounts in the country of domicile.
Foreign legal entities that may be registered in their country of origin but do not have an active relationship with that country and solely operate in the Netherlands.

Circumstances when you do not need to file your annual accounts
There are several situations where you don't need to submit your annual accounts. This mainly applies to daughter companies (subsidiaries) and small private limited companies for the purposes of pensions or annuities. Nonetheless, you will be obliged to publish a declaration of consent or an accountant's report. In extraordinary circumstances, such as bankruptcy, theft or fire, you can ask for an exception to the obligation to file your annual accounts.

Contact our accounting and tax specialists for more information.

Did you know that the Netherlands is one of the five countries in Europe that fall within the world's top fifteen corporate tax havens? And did you know that some of the 2021 changes to the corporate tax rates will make it an even more favourable location for companies? Let's look at what the changes could mean for you and your business.

Changes in corporate tax rates as of 2021

The corporate tax rate on profits onto € 245,000 will remain at 15% in 2021.

Tax rate adjustment
As of January 1, 2020, no corporate tax is charged on corporate income tax if an entrepreneur submits the return for the first day of the sixth month after the period over which the tax is levied (which is usually June 1) and the return filed is correct.

Announced corporate tax measures from 2021
The cabinet also plans to introduce three more measures for corporate tax. These measures will be included in the 2021 Tax Plan.

Increasing the 'rate' of the innovation box
If companies make a profit from certain innovative activities, they have to pay less corporate tax on this profit. The 'rate' of this innovation box is now 7%. This will increase to 9% from 1 January 2021.

Liquidation and strike losses less deductible
Businesses may incur losses if a business operation abroad or a subsidiary ceases. In many cases, they may now deduct these losses from the profit they make in the Netherlands. This so-called liquidation and strike loss scheme is being adjusted. The possibilities for companies to deduct these losses are limited.

No more discount if corporate tax is paid in one go
Companies can now receive a discount under certain conditions if they pay corporate tax in one go. This discount will disappear from 1 January 2021.

Other tax components of the National Climate Agreement are also incorporated in the 2020 Tax Plan. These comprise a rise in tax on fossil fuels such as natural gas but lower taxes on electricity. Moreover, the majority of companies will be subject to a rise in renewable energy surcharge, while private households will enjoy a reduction in this surcharge. Additionally, the time-limited exemption from vehicle purchase tax for electric vehicles, which expires in 2021, is now to stay in place until 2025. However, the private use of electric company vehicle tax will gradually rise from four to eight percent.

Not only has the tax office changed certain regulations. The Dutch companies have changed as well in tax reporting requirements.

Dutch companies have never been more transparent in tax matters
Major steps have been taken by Dutch companies in the past five years to improve transparency and reporting on such a complex and controversial subject as taxes.

According to PwC's Bob van der Made, the report clearly shows that Dutch companies have never been more transparent in tax matters than they are now. The companies scored an average of 43 percent on the six good tax governance principles and Oikos. This is considerably higher than the measured 25 percent in 2015.

Van der Made said that the Tax Transparency Benchmark has 'undeniably contributed to this result since 2015 through the balanced and objective approach of this annual survey. The ranking has even now been considered by the management of some companies as a useful, annually recurring benchmark for where they stand with regard to tax transparency, sustainability strategy, socially responsible behaviour and tax governance.'

There is a clear need to catch up on country-by-country reporting and third-party tax assurance. In its final verdict, the jury also emphasized that most Dutch companies can still make significant improvements in the country-by-country reporting components (making it clear that the business activities correspond to the tax payments in the relevant countries) and third-party tax assurance. (This involves having the internal processes and implementation of the tax strategy checked by an accountant so that an independent party can supervise it).

According to Van der Made, the report made it clear that country-by-country reporting and third-party tax assurance are not self-evident for most companies. He also drew attention to the special recommendations in the report for various stakeholders, namely: policymakers, politicians and tax authorities, NGOs, tax advisors, investors and universities.

The Netherlands tax office (Dutch source).

On 1 January 2019, the new tax package came into force, including The Netherlands anti dividend stripping legislation. The latter is part of the EU Anti-Tax Avoidance Directive (ATAD 1) and, therefore, applies to all current EU member states.

Just over a year before, the Dutch Senate passed the 2019 tax package which was initially published by the Ministry of Finance with amendments on 15 October 2018. The tax package came into force on 1 January 2019 and comprises several alterations to the existing legislation surrounding Dutch corporate income tax:

Implementation of the EU Anti-Tax Avoidance Directive (ATAD 1), especially the Netherlands anti dividend stripping rule and controlled foreign company (CFC) laws;
A tapered lowering of the corporate income tax rate;
A reduction in the loss carry forward timescale and amendments to the laws concerning the depreciation of buildings.

The original proposals to put an end to the present dividend withholding tax and bring in a withholding tax on intercompany dividend distributions to low-tax jurisdictions and certain other circumstances, such as abusive situations were taken out.

Interest deduction limitation rules
Restrictions on interest deduction rules as called for by ATAD 1 were introduced as suggested in the initial proposal. The directive demands EU member states to launch an earnings stripping rule, under which excess (net) borrowing costs, such as currency exchange results and interest expenditure, will only be tax-deductible up to 30 percent of a taxpayer’s tax-based earnings before tax depreciation, interest, tax, and amortization (EBITDA). Any sum larger than this amount will be classed as nondeductible but may be carried forward to the next financial year, despite the fact that all interest is deductible up to the threshold of EUR 1 million (net). The Netherlands has formerly chosen to apply a EUR 1 million threshold, so that EUR 1 million of interest expense is always deductible, even if the amount is higher than the 30 percent threshold.

The 30 percent EBITDA rule comes into effect on the basis of a fiscal unity and no exception applies to groups. In 2020, a specific minimum capital rule will be introduced for financial institutions, such as insurance companies and banks.

Linked with the introduction of the earnings stripping rule, other rules were simultaneously abolished from 1 January 2019, in particular, the acquisition financing rule and the excessive participation financing rule.

Case study: interest deduction restrictions

My investor in USA is loaning me 100.000 USD for operating my business in Europe? Can I expense the interest payment pre-tax? What are the things to look out for? Any special considerations on interest rate?

With regard to interest deduction restrictions, a new regulation was introduced from 1 January 2019, the EBITDA rule. The EBITDA rule is a so-called generic interest deduction limit. This means that the EBITDA rule does not make a distinction between money borrowed from a third party (bank) or money borrowed from a group company (as is the case with another existing interest deduction limitation, the profit drainage rule is the case). The EBITDA rule limits the deduction of net interest in a financial year to the highest of:

1) 30% of income before deduction of interest, taxes, depreciation of assets and depreciation of loans / goodwill (tax EBITDA); and

2) EUR 1,000,000.

 Net interest is the interest costs and equivalent costs of the taxpayer minus the interest income and equivalent income. The amount not deductible in a year can be used in later years if there is room for that in that year. There is no time limit for the utilization of these losses.

 So if you have a loan of EUR. 100.000,- the interest will never be higher the EUR 1.000.000, so the interest will normally be deductible.

There could me other limitations for interest deductions, but for that it is important to know if your investor has shares in de Dutch BV (and if so which percentage%). Also, it can be important what you will do with the loan.

The Netherlands offers different type of foundations, the ANBI foundation is the foundation (Dutch: Stichting) most commonly used for non profit organisations. ANBI stands for: 'Algemeen Nut beogende instelling', an entity serving a general purpose.  Non profit organisations are also referred to as 'NGO' or Non Governmental Organisation.

What is an ANBI?

ANBI stands for algemeen nut beogende instelling, in English a charitable institution. But in The Netherlands not every charitable institution can call its self an ANBI. An institution can only be an ANBI if it is almost entirely committed to the public benefit (algemeen nut). Associations (such as sports, personnel, singing, harmony or drama associations) and hobby clubs are usually not ANBI.

The tax-inspector grants the ANBI-status to a charity if it applies for that status and the charity meets these requirements.

 Why an ANBI?

An ANBI fiscal advantages compared to charitable institution that does not possess that status. An ANBI has tax benefits, such as:

In short an ANBI is exempted from inheritance and gift taxes. Donors may deduct their donations to an ANBI from income or corporation tax. In order for an institution to get the status as an ANBI it needs to meet a number of conditions.

What conditions must an ANBI meet in general?

In order to be designated as an ANBI, the institution must meet all of the following conditions:

What conditions must an ANBI meet? in detail

A face-determining person is a person who is seen as a representative of the ANBI. He or she does not need to have legal ties to the institution, such as employment. Think, for example, of an ambassador of an institution.

The condition is that the deceased or donor has determined that the donated or bequeathed capital must be maintained, or that it has been determined that only the return from that capital is used to pursue the purpose of the ANBI. This is also referred to as 'stem power'. Often the donor or deceased stipulates in a will that the estate must retain its value due to inflation by means of an annual adjustment. The ANBI must take this into account when spending the available returns.

For example, the business premises or the wn storage facility for relief supplies.

It is mostly advised to publish the policy plan on the website of the ANBI. In this way one informs sympathizers and donors and one immediately complies with the publication obligation that applies to ANBIs. Publishing the policy plan is not mandatory. One does need to highlight a number of information from the policy plan on the website.

 Transparency of an ANBI via the internet

An ANBI is obliged to publish data on its own website, or on a joint website. Since January 1, 2021, large ANBIs are obliged to use standard forms for the publication of the data. Large ANBIs are:

If the  institution not a large ANBI, then one can use the standard form, but there is no obligation to do so. Usage of the standard form can be an easy way out.

If one chooses not use the form, the following information must published:

Content of a policy plan of your ANBI?

The backbone of your ANBI is its policy plan. An ANBI is obliged to have a policy plan. One is also obliged to include and explain the following information in the policy plan:

The institution's objective and work to be performed:

Describe in the policy plan as specifically as possible what the institution wants to achieve, in the form of a clear objective.

In addition, indicate how you will implement the objective, such as which activities the institution carries out and will carry out in order to achieve the stated objective. An example could be providing emergency aid during disasters or establishing schools in developing countries.

Is your institution committed to the interests of a specific target group? Describe this target group as clearly as possible.

The method of acquiring income
Describe in the policy plan how your ANBI will raise income.

The management and use of the institution's assets
Finally, describe in the policy plan how the assets are managed. This differs per institution. Explain not only the management of the assets, but also the use of the collected funds and goods. If money is reserved for spending in future years, this must be explained in the policy plan.

Optional data

In addition to processing the aforementioned data, a policy plan is free of form. You are free to include further information in the policy plan that will increase your transparency towards sympathizers and donors, such as:

(FAQ) ANBI Stichting

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