The Netherlands has a large network of agreements for avoidance of double taxation providing tax advantages to international investors establishing companies there. Among these agreements is the treaty with the USA. The first convention for the avoidance of double taxation between Holland and the USA was signed in 1992. Its first amendment dates from 1993.

Our local consultants specializing in company establishment can provide you with additional information about the Dutch tax system.

Scope of the double tax treaty between the Netherlands and the USA

The convention for avoidance of double tax between Holland and the USA covers:

• taxes on income, salaries, corporate profit and dividends in Holland;
• income and excise taxes with respect to insurances imposed to Dutch insurance agents established in the United States.

Dutch foundations working in the United States are subject to special provisions that are also included in the double taxation treaty. These concern the US excise tax. Furthermore, the convention covers similar taxes applicable in both Holland and the USA.

The double tax treaty provisions apply on the basis of tax residency.

Taxation of natural persons in accordance with the double tax avoidance treaty between the Netherlands and the USA

In the Netherlands, residents pay income tax and local companies are liable for corporate tax. For the purposes of double taxation avoidance, all treaties concluded by the Netherlands include provisions covering corporate and income taxes.

International entrepreneurs establishing companies in Holland have the option to choose their tax residency, i.e. pick the country that will hold them liable for tax payment. Foreign taxpayers can choose to pay taxes in accordance with the agreement between Holland and the USA for the avoidance of double taxation or take advantage of the Unilateral Double Tax Avoidance Decree of 2001. The double tax avoidance treaty with the US stipulates that US residents who earn income in Holland shall benefit from credit with respect to taxation of interests, royalties and dividends.

Taxation of businesses in accordance with the double tax avoidance treaty between the Netherlands and the USA

Regarding the tax regime for US companies operating in Holland and vice-versa, the double tax avoidance treaty provides for permanent establishment status that covers:

• branches;
• workshops;
• factories;
• mines/exploitation sites
• other offices and places of management;

The agreement for double tax avoidance is valid for facilities already established for 12 or more months.

Double taxes are avoided through reduction of the tax liabilities of Dutch companies in the US. On the other hand, Holland grants tax deductions to US companies operating simultaneously in the two countries.

Our Dutch consultants on company establishment can provide further information regarding the methods to avoid double tax by virtue of the Holland – USA treaty.

Amendments relevant to the double tax avoidance treaty between Holland and the USA

The double tax agreement between the two countries was amended in 2004 to include new provisions for pensions, dividends, alimony and branches. According to them, taxes on dividends transferred to a resident of Holland by a company in the US can be levied in the Netherlands. The rates for taxation of dividends are as follows:

• five percent of the dividend amount (gross) if the beneficiary owns no less than 10 percent of the votes in the corporation transferring the dividends;
• fifteen percent in all other cases.

Dutch and US branch offices are taxed by the country of registration of their permanent establishment. As regards annuities, alimony and pensions, persons with such income are liable for income tax only in their country of residence.

Free advice for corporate taxes

If you are looking for advice for your corporate taxes, look no further. We provide an initial free consultation for all starting entrepreneurs in the Netherlands.

ICS has been inspired by the work of The Kansas tax aide organisation. Kansastaxaide made an initiative to help individuals that do not have the means to make a proper account filing.

If taxes are filed wrongly, persons may be fined or even criminally liable. To prevent a too high administrative burdon, Kansas tax aide helped lower and middle income Kansans with the nationwide AARP-tax-aide program.

The AARP Foundation tax aide program is ideal for bringing finacially literate retired individuals, such as former tax accountants, lawyers, bookkeepers, government workers and entrepreneurs, together with people in need. Such as, single mothers who are in need for state funding to finance the education of their children.

We at Intercompany Solutions share the AARP philosophy and feel everyone, whatever the budget, has the right to a tax consultation. Even if we cannot assist with the matter at hand, we will be happy to introduce you to the right party for your specific question.

We are experienced tax experts from the Netherlands, with a specialization in all entrepreneurial matters. From corporate income tax, to Value Added tax to private tax filings of entrepreneurs. If you have a question, don't hesitate to contact us.

We firmly believe that bringing prosperity to others, will eventually bring prosperity to us.

Contact us

If you need comprehensive information regarding the amendments to the treaty for avoidance of double taxation with the US, do not hesitate to contact our Dutch agents specializing in company formation.

Guidelines for US Entrepreneurs: How to Start a Netherlands Company

Holding companies are among the most advantageous business entities in the Netherlands due to the beneficial tax regime they are under. Furthermore, Dutch holdings are globally recognized for the conveniences they offer to both foreign and local shareholders.

Investors should keep in mind that holdings are established in order to gather diverse assets of separate companies under a common umbrella. Our Dutch specialists in company formation are ready to assist international entrepreneurs planning to incorporate local holding companies.

Corporate tax and the 'participation exemption' applicable to holding companies

Dutch holding companies are taxed in the same way as other corporate entities in Holland. They need to pay 19% corporate tax on profits up to EUR 200.000 and 25.8% above this margin (2024).

The so-called “participation exemption” is among the advantages of Dutch holding companies, as it provides for full tax exemption on capital gains and dividend payments. Shareholders of Dutch holding companies are eligible for this exemption if they hold no less than 5% of the capital and meet one or more of the requirements below:

• The holding’s parent company should generate higher returns on investments in comparison to the profit arising from the holding’s asset management;
• All assets in the holding company should include less than 50% passive assets, subject to lower tax rates;
• Appropriate taxes, in accordance with the national legislation, are already levied on the holding company.

Our Dutch specialists can provide you with more details regarding the requirements to qualify for a participation exemption. Read more on the Dutch participation exemption.

Other tax benefits relevant for Dutch holding companies

Dutch holdings offer a number of advantages with regard to taxation. They include:

• free profit repatriation allowed by the tax authorities;
• numerous treaties for avoidance of double taxation: Holland has concluded 80+ treaties on double tax;
• advance rulings issued by the tax authorities are an option for all foreign companies operating in Holland;
• interest payments, dividends and royalties are subject to various tax exemptions and deductions.

The Dutch tax regime with respect to holding companies is among the most advantageous in Europe. This is why the Netherlands is an attractive destination for international investors planning to set up holdings. If you need assistance in establishing a holding and further information regarding its taxation, do not hesitate to contact our Dutch consultants specializing in company registration.

Establish a holding company in the Netherlands

Historically, The Netherlands has been known as a European trade centre and as the maritime link between the Old Continent and North and South America, Asia, and Africa. In order to maintain its status, the country has been working to achieve an even better, friendlier business climate and attract international investors. The efforts are paying off, as currently Holland is the EU base of 2100+ companies from North America, and counting. Why is Holland such an attractive country for doing business? The reasons are many and one of them is the tax system, offering various incentives.

The 10 advantages of the Dutch tax system:

1. The law in the Netherlands provides reductions of the withholding tax on dividends, royalties and interests paid to local companies and excludes from taxation the majority of capital gains obtained from share sales in source jurisdictions.
2. Holland’s investment treaty network is among the most extensive in the world. It includes 96 jurisdictions and Dutch limited liability companies have access to it. The network protects investors from expropriation and guarantees that they will be treated in the same way as domestic or third country investors. In any corporate structure, a Dutch entity can provide protection from foreign government interventions through clauses for settlement of disputes that allow international arbitration using the Dutch judicial system.
3. EU Directives provide a reduction of withholding tax on transactions between related firms.
4. Full tax exemption for income coming from foreign subsidiaries that meet the regulatory requirements. The so-called participation exemption allows tax waiver for eligible capital gains and dividends if a local holding owns at least five percent interest and meets one of two requirements:
   a) The subsidiary’s consolidated assets include <50 percent low-taxed passive investments.
   b) By making investments in the respective subsidiary, the company aims to get a return, greater than the anticipated from the regular management of assets.
   The subsidiary has to pay realistic taxes in accordance with Dutch standards (no less than 10 percent). The law also provides a tax exemption for income, coming from international permanent offices of Dutch companies and tax-effective profit repatriation.
5. Special tax regime for innovation where profits from qualifying intangible assets are taxed at a rate of 5 percent.
6. IP arrangements and financing (inclusive of hybrid debt) without retentions on royalty payments, interest and services, even if paid to a tax haven.
7. Support for Dutch holdings establishing businesses on the territory of the EU.
8. Deferred taxes for corporate restructuring.
9. Option to establish a consolidated group/fiscal unity (if particular requirements are met for direct subsidiaries of companies incorporated in the Netherlands) allowing consolidated taxation.
10. Possibility to defer taxes on gains from conversion or sale of intangible or tangible business assets, excluding passive investments.

Are you looking for tax advantages and exclusive benefits with respect to tax planning? The Dutch entities have plenty to offer. Furthermore, Holland is becoming an attractive jurisdiction for holdings. Learn about the opportunities the country offers by contacting our specialists in incorporation.

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 has decided to support a new policy on taxes proposed by Menno Snel, State Secretary of Finance and to take action with respect to the first priority on the agenda: stop tax evasion and avoidance.

For the coming years, the policy includes 5 priorities:

1. to stop tax evasion and avoidance;
2. to reduce the taxes on labour;
3. to promote a competitive tax climate for real activities in the economy;
4. to make the system for taxation greener,
5. and more workable.

According to Snel these five priorities constitute a big step towards an improved tax system. He adds that the new system is still incomplete. This and the next government need to put continuous efforts in pursuing a more comprehensible, workable, fairer and simpler tax system in order to ensure unbiased taxation for businesses and individuals alike.

Stopping tax evasion and avoidance

The State Secretary’s policy to tackle tax evasion and avoidance includes two pillars: to promote integrity and transparency and to protect the tax base.

Introducing a withholding tax system

In 2021 Holland plans to adopt a withholding tax system with respect to royalty and interest flows to jurisdictions with low taxes and cases of abusive arrangements for taxes. In this way, Holland will no longer be a channel to low-tax countries. Mr. Snel makes it clear that he aims to stop tax evasion and avoidance and to end the image of Holland as a state that facilitates tax avoidance by multinationals. The good investment climate is threatened by this impression.

Treaties

It is the government’s aim to provide Holland and its partners with efficient tools to counter tax avoidance. Therefore, the government is adding more provisions than numerous other countries to stop abuse in its treaties for tax by virtue of the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting. This action is aimed at preventing improper use of the extensive Dutch system of tax-related treaties.

Building on the European tax avoidance directives

Holland will adopt more stringent measures in the implementation of the two EU directives preventing tax avoidance (ATAD1 and ATAD2) than foreseen in these directives., e.g. no group exemption regarding the rule for earnings stripping. Furthermore, no stand-still clauses will be applied with respect to existing loans and the maximum threshold shall be decreased from 3M to 1M Euros.

Holland will introduce a rule for minimum capital for insurance companies and banks to promote more equivalent treatment of equity and debt for all sectors. This action is expected to result in a healthier economy and greater company stability.

Non-disclosure right and public announcement of fines

Transparency is very important in tackling tax evasion and avoidance. The general policy aims in this aspect are inherited by the previous government. Holland shall clarify the non-disclosure right for notaries and lawyers. Culpable negligence fines will be announced publicly so that these providers of financial services become more accountable in giving advice on planning taxes.

Financial market integrity

The Dutch government is preparing legislation for the creation of a registry for ultimate owners. The legislation regulating trust offices will become more stringent.

European initiatives for culture change

The Dutch government approves the proposals of the EC to increase transparency. The Commission has proposed a mandatory disclosure directive requiring financial intermediaries (lawyers, tax advisers, trust offices, notaries, etc.) to inform the authorities of possibly abusive cross-border schemes for tax planning. The legislation proposed regarding the reports of multinational enterprises for tax jurisdictions will show the extent of compliance with tax obligations.

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.