Corporate tax in the Netherlands: A Comprehensive Guide

The Netherlands has a corporate tax system that's designed to encourage entrepreneurship and innovation. The standard corporate tax rate in the Netherlands is 19.2%.

To qualify for this rate, companies must meet certain requirements, such as having a permanent establishment in the country and conducting business activities that are subject to taxation. This can include activities like manufacturing, trading, and providing services.

The Netherlands also offers a number of tax incentives to encourage companies to invest in research and development. For example, companies can claim a tax credit of up to 15% on research and development expenses.

Curious to learn more? Check out: What Is Dutch Currency

The Dutch Administration is quite straightforward and efficient. The Dutch Tax and Customs Administration (Belastingdienst) is in charge of administrating the Netherlands' tax system, operating through a network of regional offices and centralized information centers.

Qualifying corporate taxpayers can participate in a horizontal monitoring program, which is a cooperative compliance program. This program allows taxpayers to discuss any concerns with the Dutch tax inspector in advance and provides more certainty about their tax situation.

A covenant is reached between a taxpayer and the Dutch tax authorities under the horizontal monitoring program, in which the taxpayer pledges to providing information proactively. The goal is to give the taxpayer more certainty about their tax situation in the Netherlands.

You'll also need to register your business with the Dutch Chamber of Commerce (‘KvK’) upon incorporation. If you're a foreign company with a branch in the Netherlands, you're responsible for registering it with the Chamber of Commerce yourself.

Here are some details you'll need to register your business:

Information on your business will be automatically shared with the Dutch Tax Authorities when you register with the Chamber of Commerce. This means that your business will be automatically registered in the Dutch Tax Authorities’ systems.

Explore further: Venmo Will I Receive 1099-k for Personal Account

The corporate tax rate in the Netherlands has been steadily decreasing over the years, from 48% in 1982 to 19% for profits up to €200,000 in 2024. The corporate tax rate dropped massively from 35% to 29.5% in 2006, and further to 25.5% in 2007.

The Dutch government has lowered the corporate tax rate to stimulate a competitive tax environment for international businesses. The standard corporate tax rate in 2024 is 19% for profits up to €200,000 and 25.8% for anything above that.

Certain items of income are exempt from Dutch corporate tax, including capital gains and dividends derived from qualifying subsidiaries, income attributable to a foreign business enterprise, and taxable profits that do not exceed €15,000 or €75,000 over four years. This means that some businesses may not have to pay corporate tax in the Netherlands.

Here is a summary of the corporate tax rates in the Netherlands:

Foundations, non-profit associations, and similar organizations are tax-exempt if their profit in any year does not exceed €15,000, or if their profit is higher than €15,000 but does not exceed €75,000 over four years.

Consider reading: Investment Interest Expense Does Not Include

In the Netherlands, certain types of income are exempt from corporate tax. This means that your company won't have to pay tax on these specific types of income.

Foundations, non-profit associations, and similar organizations are exempt from paying corporate income tax if their taxable profit in any single year does not exceed €15,000. If their profit is higher than €15,000, they can still be exempt if their combined profit from the previous years does not exceed €75,000.

Fiscal investment funds can also benefit from exemptions from the Dutch corporate tax, including a 0% CIT rate if they distribute their profits to shareholders and certificate holders within eight months after the year-end.

Subsidiaries in the Netherlands qualify for the participation exemption (and are thus exempt from corporate tax in the Netherlands) if they are active companies and if the Dutch parent company holds an interest of at least 5% in the company.

Here are some key exemptions to keep in mind:

The Dutch Rates are quite straightforward, but it's essential to understand them to avoid any tax surprises. The corporate income tax rate in the Netherlands is 25.8% for annual profits over EUR 200,000 and 19% for any profits below EUR 200,000.

Intriguing read: Excess Profits Tax

You can find the corporate income tax rates on the Netherlands Tax Administration website, but it's worth noting that the rates have been decreasing over the years. In 2021, the top Dutch corporate tax rate remained stable at 25%, but the lower rate decreased to 15% for taxable income up to €245,000.

Here are the Dutch tax rates in a nutshell:

The Dutch government has been lowering the corporate tax rates to stimulate a competitive tax environment for international businesses. As of 2022, the corporate tax rate stands at 15% for income below €395,000, above which the rate was 25.8%.

If you're considering not claiming an exemption for your company, you must send a letter to your tax office before your corporation tax return for the first year of the five-year period is processed. This allows you to offset a loss.

You might want to reject an exemption if your company's taxable profit in a single year doesn't exceed EUR 15,000, making you eligible for exemption. However, if your profit is higher, you can still be exempt if your combined profit from the previous years doesn't exceed EUR 75,000.

Additional reading: What Happens If a Business Doesn't Pay Taxes

Here are some key points to consider:

If you fail to pay your corporate tax bill on time, you'll have to pay interest on the late payment, which starts from the day after the payment is due. This interest can be significant, so it's essential to stay on top of your tax payments.

A 4% interest fee is usually charged to payments made after the due date, but this rate can change biannually. Here's a table illustrating the interest percentages determined by the tax authority:

You can apply for a filing extension (a delay) at the Dutch Tax Office website, which will give you a standard extension of five months. However, interest on late payments is usually charged at 3%, so it's essential to pay your taxes on time.

Fiscal unity is a way for companies to be treated as a single taxpayer, allowing them to share losses and profits. This can be beneficial for companies with subsidiaries or sister companies.

To form a fiscal unity, a parent company and its subsidiaries must meet certain requirements, including owning at least 95% of the subsidiary's shares and holding at least 95% voting rights in the subsidiary.

Here are the specific situations where a fiscal unity can be formed with non-Netherlands entities: A parent company based in the Netherlands can form a fiscal unity with a sub-subsidiary established in the Netherlands while the sub-subsidiary's shares are owned by an intermediate company based in another EU.Sister companies based in the Netherlands can form a fiscal unity when the shares are owned by the same top company based in another EU.

Registration of a Dutch establishment is also a crucial step, and it's automatically done for Dutch legal forms with the Dutch Chamber of Commerce.

Here's an interesting read: Does S Corp Pay Corporate Taxes

Fiscal unity is a concept that allows companies to be treated as a single taxpayer for corporate income tax purposes. This can be beneficial for companies with multiple subsidiaries.

To form a tax group, the parent company must have significant control over its subsidiary. This means owning at least 95% of the subsidiary's shares and holding at least 95% voting rights.

The parent company and subsidiary must also have the same financial year, apply the same accounting policies, and be established in the Netherlands. This ensures consistency and simplifies tax reporting.

There are specific situations where fiscal unity can be formed with non-Netherlands entities. For example, a parent company based in the Netherlands can form a fiscal unity with a sub-subsidiary established in the Netherlands, even if the sub-subsidiary's shares are owned by an intermediate company based in another EU country.

Here are the specific requirements for forming a fiscal unity:

These rules highlight the importance of considering the structure and ownership of a company when exploring fiscal unity options.

Registering a Dutch establishment is a straightforward process. Dutch legal forms are automatically registered with the Dutch Chamber of Commerce upon incorporation.

If you're a foreign company with a branch in the Netherlands, you'll need to register it with the Chamber of Commerce yourself. This includes determining whether you have a permanent establishment and understanding your Dutch tax position.

The registration process with the Dutch Chamber of Commerce automatically passes your business's details to the Dutch Tax Authorities. This means your business will be registered in the Dutch Tax Authorities' systems.

You should check with your advisor to ensure you're meeting the necessary requirements for registration.

In a fiscal unity, all financial activities are centralized, making it easier to manage and track expenses. This is in contrast to a decentralized system where financial activities are handled separately by each individual or entity.

Having a single, unified system for financial management also reduces the risk of errors and discrepancies. For example, in a decentralized system, it's possible for multiple entities to have different financial records, leading to confusion and potential financial losses.

Check this out: Allmerica Financial Corporation

A fiscal unity can provide a sense of security and stability, as all financial transactions are accounted for and easily accessible. This can be especially important for individuals or businesses that are just starting out and need to keep track of their finances.

In a fiscal unity, all financial transactions are recorded and updated in real-time, providing a clear and accurate picture of one's financial situation. This can be a huge relief for those who are used to dealing with outdated or inaccurate financial records.

Explore further: Regions Financial Corporation