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.
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 20 percent for yearly profits up to EUR 200 000. Income exceeding this amount is taxed at 25 percent.
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 percent. 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 percent 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.