The Dutch newspaper “Het Financiële Dagblad” (The Financial Daily) has recently conducted research showing that the average amount large EU enterprises spend on corporate tax equals 23.3 percent of their profit. The authors analyzed the tax liabilities of 25 companies - the biggest on the Stock Exchange in Amsterdam - including Unilever, Heineken, ING Group and Philips, and reviewed the corporate taxes they pay in various European countries.
The analysis showed that the rates of corporate tax differ significantly among the EU countries. While Maltese, French and Belgian companies pay between 33 and 35 percent tax on their corporate income, the liabilities of Bulgarian, Lithuanian, Latvian and Irish businesses amount to 10 to 15 percent. Some countries outside the European Union, e.g. the United Aram Emirates, Guernsey and the Cayman Islands do not collect taxes on corporate income. According to the newspaper the highest rate of corporate tax (55 percent) applies to companies involved in the gas and oil industry in the United Arab Emirates.
Top 5 of the tax-friendly countries in the EU
The research results show that the top five low-tax destinations for large companies in the European Union are as follows:
1. Bulgaria
For quite some time the country has been popular with its convenient fiscal policies. The corporate income tax flat rate is the lowest in the European Union and is fixed at 10 percent. Personal income is taxed at the same rate. Furthermore, Bulgaria attracts entrepreneurs with its strategic location, developed business infrastructure and low costs for labour. Read here on Bulgarian company types.
2. Ireland
The normal rate of the corporate tax in the country is 12.5 percent on income from trade and 25 percent on income from other sources. The local taxation system is a good example of encouraging competition and boosting of investments. The tax on personal income is progressive in the margins of 20 to 40 percent.
3. The Netherlands - The Western European alternative with a solid reputation
The Netherlands comes in on a respectable 6th place with a corporate tax of 19 percent. (The Dutch corporate tax rate has been lowered in 2021). The Netherlands is known as a global trading hub with an international workforce that is 93% fluent in English. The reputation of the country, combined with its tax treaties, have lead to the biggest firms in the world to establish their headquarters in the Netherlands. Amongst such companies are Apple, Starbucks, Google and many other fortune 500 companies.
The Netherlands is lowering the corporate tax rate in the coming years.
Read more on corporate income tax in the Netherlands.
4. Latvia
The country collects corporate income tax at 15 percent flat rate. In January, 2017 it introduced a lower rate of 12 percent for micro enterprises to support companies with low turnover that meet particular requirements. Latvia also attracts investors with its skilled workforce and developed transport infrastructure. The most popular fields for investment are logistics, transport, IT, life sciences, renewable energy and woodworking. The tax on personal income is 23 percent.
5. Lithuana
A flat tax rate of 15 percent applies for both corporate and personal income generated in the country. Lithuania is considered the second most favourable European state for investors. Also, its economy is rated in the European top 5 for fast growth. Lithuania is popular with its R&D sector, outstanding digital infrastructure, low labour costs and qualified specialists.
The Netherlands is one of the main import/export locations in Europe. With its exceptional infrastructure and major ports, such as those in Rotterdam and Amsterdam, this country is a great place to set up a trading business. Those companies who engage in international trade will have easy access to Europe and the rest of the world because of the Netherlands’ particular geographical and infrastructural advantages.
Trading companies in the Netherlands
Trading companies engage in a wide variety of business activities, including but not limited to importing and exporting; wholesaling; buying and selling; the intermediary sale or purchase of goods; and assisting and counselling other companies in sourcing their supplies.
Dutch trading companies do not have to limit themselves to importing or exporting just one type of item. They can easily diversify their business to suit market conditions anywhere in the world. Trading companies can also specialize in a specific type of product if they desire. Anything from food products to health and beauty items can be traded from a base in the Netherlands.
Trading companies in the Netherlands can also set up their offices in whichever Dutch location they feel would be best for them. They can take advantage of the opportunities in larger cities, like Amsterdam or The Hague. Or, they can set up a shop in one the Netherlands’ smaller cities. All locations will benefit from the same transportation and communication infrastructure that make the Netherlands such a great place to do business.
Setting up a trading company in the Netherlands
An investor who wants to set up a Dutch trading company can either open a branch of an existing international company or create a new legal business entity based in the Netherlands. Opening a branch is easier, but it does not offer as much flexibility as creating a new entity. In terms of potential liability, forming a Netherlands company is also a better option.
Like many other types of businesses, trading companies must also acquire special permits and license in order to operate legally in the Netherlands. There are also rules and regulations regarding the import and export of controlled goods that have been imposed by the Dutch government and must be followed carefully. We can assist you in acquiring all necessary licenses and permits so that your trading company can operate legally. We can also advise you about laws that may affect the types of goods you wish to trade and distribute, and tell you what you must do to follow them.
Our agents in the Netherlands can walk you through the entire process of forming a Dutch trading company. We can assist you in choosing a company name, preparing the necessary documents to form a company, and registering the new business with the Dutch Company Register.
Please contact our Dutch agents to find out how to open a trading company in the Netherlands. We are also happy to discuss with you general details about investments in the Netherlands.
