If you are planning to establish a branch office in the Netherlands or are otherwise interested in starting a Dutch company, you will need to follow some standard steps in order to realize this goal. One of these steps entails registering your company or branch office with the national tax authorities. This will enable you to send invoices to customers, pay and receive VAT and all other financial activities that are tied to owning a business. You can find some interesting facts about the Dutch Tax Authorities in this article, as well as practical information about the registration procedure and Dutch taxes.
The Dutch tax system
The Netherlands is well known for being a country with a very competitive tax system, that actively stimulates (foreign) entrepreneurship and investors. Especially globally trading multinationals, since the Dutch tax regime allows for a smooth transition into doing business with the entire European Union. Even though the tax rates and obligations concur with the standards of the EU, the Dutch are nevertheless known as competitive innovators that always try to facilitate healthy business opportunities. Thus, the corporate tax rates are relatively low compared to many neighboring countries.
Next to the national tax regime, the Netherlands is also part of a very large tax treaty network. The country has bilateral tax treaties with a staggering amount of more than 90 different countries. This provides Dutch tax residents with an extensive amount of benefits, since it makes it much easier to do business internationally and especially within the European Union. Due to the fact that the Netherlands is an EU Member State, you enjoy the perks of free trade and movement within all Member States.
Benefits and features of the Dutch tax system
The Dutch tax system offers several positive features for your business abroad, such as:
- The aforementioned EU membership including free international trade of goods and services
- In the case of the absence of a tax treaty with a certain country, you benefit from unilateral taxation relief
- There is no withholding tax on royalty payments and outbound interest
- The participation exemption regime
- The fiscal unity regime
- The so-called Dutch ruling practice, which allows for certainty in advance regarding future investments and transactions
- Certain facilities for loss compensation in the case of tax losses
Which taxes do you have to pay in the Netherlands?
If you plan to set up a business in the Netherlands, you will have to pay taxes just like in any other country. In Holland you pay tax on income, assets and wealth. In the Dutch tax system the different types of income are divided into three separate boxes with their own specific rates:
- The taxable income from profits, employment and owning real-estate, such as wages, pensions, social benefits and the ‘WOZ’ value of your home
- The taxable income from substantial interest
- The taxable income from savings and investments
If you happen to be a non-resident taxpayer, then you might be eligible to claim a basic allowance in Box 3 when you determine the benefits from certain investments and savings that are based in the Netherlands. This might lower the tax rate in specific situations. In the Netherlands, taxes are withheld every month from the salaries of all employees. Once a year ends, tax returns are filed in order to declare the exact amount of income and assets. Any discrepancies are then cleared up, and you receive a final tax notice with the amount you either have to pay or receive. Often the amount that was withheld during the previous year is mostly correct.
Various federal taxes in the Netherlands
In the Netherlands, the national tax legislation is in the hands of the Ministry of Finance. The Dutch Tax Authorities levies and collects all obligated taxes. This includes income tax, corporate tax, inheritance tax, gift tax and transfer tax. Next to charging individuals directly, the Dutch government charges various indirect taxes too:
- Environmental taxes
- Consumption taxes
- Value-added tax
- Import tax
- Excise duty
- Taxes for legal transactions such as buying property
- Taxes on cars and motorcycles
- Tax on heavy goods vehicles
Dutch VAT (BTW)
BTW (which means Belasting Toegevoegde Waarde) is the Dutch equivalent of value-added-tax (VAT). This sales tax always applies when you sell or buy services or goods. The Dutch VAT system has three preset tariffs:
- The general rate of 21%, which is also named the high tariff and applies to almost all regular services and activities
- The low tariff of 9%, which applies to the sale of most common products such as food, books, medicine etc. You can find a more extensive list in this article
- The 0% rate, which applies to certain goods and services that are completely exempt from tax. This can entail international activities within the EU for example and other activities related to cross-border transactions.
Who needs to pay taxes in the Netherlands?
In general, all Dutch residents are obligated to pay taxes. This includes employees, company owners and investors. Your personal circumstances can tell you whether you qualify as a Dutch resident or not, so you will need to define your position in the Netherlands if you want to know the exact amount of taxes you need to pay. This can include whether you are residing in the country or not, where you work and where your home and family is situated. There are roughly four categories you can fall under, which we will describe below.
1. Resident taxpayers
If you can be considered as a resident taxpayer in Holland, then you will have to pay taxes on your entire worldwide income. Hence, it doesn’t really matter where your income comes from in this case; all taxes should be paid to the Dutch Tax Authorities. All varieties of income (such as employment, business income and investments) are seen as taxable.
2. Non-resident taxpayers
If you are not a resident taxpayer, you will not have to pay taxes on all income, just the income that can actually be levied in the Netherlands. This can include income from employment, if your employer is a Dutch company. But also business profits, certain benefits, being part of a shareholding and also income from owning Dutch real estate. In some cases, income that you earned outside the country may also be taxable.
3. Qualifying non-resident taxpayers
You fall under this category if you don’t live in the Netherlands, but pay taxes on most of your annual income. This generally applies if you are a resident of an EU country, an EEA member state, one of the oversees municipalities of the Netherlands or Switzerland. In this case you are obligated to pay Dutch taxes on more than 90% of your total worldwide income. The beneficial part is that this also allows you to enjoy benefits such as tax deductions and tax-free allowances.
4. Partial non-resident taxpayers
You can be considered a partial non-resident taxpayer if you come to live and work in the Netherlands and are also eligible for the 30% ruling benefit for incoming employees. In this case the Dutch Tax Authorities will see you as a non-resident taxpayer regarding income tax. If you choose this option, you will have to pay less taxes in the Netherlands. This will exclude you from certain benefits though. To be 100% sure about your situation, we advise to ask a specialist about the best option for you. Intercompany Solutions can tell you everything you need to know.
Corporate tax rates in the Netherlands
All companies established in the Netherlands are subject to Dutch corporate tax. Since 2021 a rate of 15% applies if the yearly taxable amount is 245.000 euros or less. If you make more profit than 245.000 euros, a corporate tax rate of 25% applies. In some cases, you can apply for an exemption in order to be able to access lower tax rates. Non-resident companies have a limited tax liability regarding income from Dutch sources. If you also supply goods or services from the Netherlands, you will have to charge VAT as well. You will have to declare the VAT charged four times per year (quarterly) whereas the corporate tax declaration is sent once per year.
Import and export of goods in the Netherlands
If you choose to establish a company or subsidiary in the Netherlands that imports and exports goods from all over the world, you will need to take into account that you will have to pay both import duties as well as VAT. This is especially so when you are importing goods from outside the EU. In special cases, you might also have to pay several other levies such as consumption tax and excise duty.
Import duties are taxes that are levied on goods that are imported into the Netherlands. The Dutch Tax Authorities collect this duty and the transfer the collected sums to the EU. The Member States can also retain a part of the import duties, in order to cover the costs for collection. If you import goods from a Member State, then you don’t have to pay import duties. You will still have to pay VAT though. The VAT rate in this case will be the same as the Dutch VAT rate that applies for the specific services or goods.
If you choose to import or export excise goods, then you will have to pay excise duty. Excise goods are products such as tobacco and alcoholic beverages. If you import non-alcoholic beverages, you will have to pay consumption tax. There are some other extra levies that prevent certain products coming on the European market for very low prices, this entails (amongst others) levies on certain industrial and agricultural products.
Tax liability in the Netherlands
If you own a corporate entity that is established in the Netherlands and also resides there, you will basically always be subject to Dutch corporate income tax. If you own a branch office in the Netherlands of an otherwise foreign company, then you will also be subject to corporate income tax as your company has an establishment in the country. Non-resident corporations that have branches in the Netherlands don’t fall under any special rules, nor is there any special tax assigned to these. There is however no Dutch tax imposed on the remittance of profits by the branch office to its head office in the country of origin.
The tax liability is limited to profits made by a branch office that qualifies as a permanent establishment. This means, that activities of a more supporting or auxiliary nature are exempt from the definition of a permanent establishment. Thus, these are not subject to Dutch corporate income tax. Therefore, Dutch branch offices and subsidiaries are inherently treated the same as any other Dutch owned company. Your Dutch branch office will be subject to all taxes on your worldwide profits and other capital gains, if it is either incorporated in the Netherlands or controlled from the Netherlands.
As a foreigner, it can be quite complicated to simply dive into all the tax rules and regulations in the Netherlands. It is always best to seek help from a professional in order to know exactly where you stand and what your obligations are. If you don’t pay taxes, file incorrect declarations or withhold information, this can result in very hefty fines for you and your company. We therefore always advise to seek professional assistance when you are planning on establishing a Dutch company, subsidiary or branch office. Intercompany Solutions can help you during every step in the entire process.
Intercompany Solutions can register your company in the Netherlands
If you want to register your company with the Dutch Tax Authorities, you will first need to register your company at the Dutch Chamber of Commerce. We follow a fixed procedure for every new company, you can find more information about the way we work in this article. Once your company has a Chamber of Commerce number, you will automatically be registered with the Dutch Tax Authorities as well. If you have any questions or would like to receive more information, please don’t hesitate to contact us.