Tax haven Netherlands

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

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

What exactly is a tax haven?

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

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

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 rate of the taxes for corporate income in the country may be among the lowest in Europe (20% 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, bank account opening, citizenship and residency services, and legal services.

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