Dutch corporate tax regime

 

 

Tax liability for corporate entities

Virtually all corporate entities established and residing in the Netherlands are subject to Dutch corporate income tax for their worldwide profits. For foreign source income a tax exemption or tax credit may be available for the avoidance of double taxation, as provided by applicable tax treaties or the Dutch unilateral rules for the avoidance of double taxation (if no tax treaty applies).       

Branches of foreign corporate entities are in general terms only subject to Dutch corporate income tax for certain categories of Dutch source income, like Dutch real estate or a Dutch permanent establishment.

Tax residence 

Most entities incorporated under Dutch law, are for this reason automatically treated as a tax resident of the Netherlands. In addition the law provides, that corporate entities (incorporated under Dutch or foreign law) are treated as a tax resident of the Netherlands if based on the actual facts and circumstances they can be considered to have their place of effective management in the Netherlands.    

Most tax treaties provide for a so called "tie breaker rule" if a corporation is considered a tax resident by both treaty states (dual tax residence). In most cases the corporation will then for application of the tax treaty have to be considered a tax resident of the country where it effective management is situated.  

Tax liability for Dutch branches of non-resident corporations

According to Dutch domestic tax law, a foreign corporate entity doing business in the Netherlands becomes subject to Dutch corporate income tax, if and to the extent the foreign corporation can be considered to have a permanent establishment or fixed representative in the Netherlands. 

Under most tax treaties the tax liability is limited to profits attributable to a qualifying permanent establishment. The tax treaty generally provides for a definition of the concept "permanent establishment". If a tax treaty applies, the definition of permanent establishment provided by this tax treaty also applies for the application of Dutch corporate tax laws. The Dutch unilateral definition of the term permanent establishment is in essence only relevant if no tax treaty applies.  

Under most tax treaties, certain activities of an auxiliary, preparatory or supporting nature are explicitly excluded from the definition of taxable permanent establishment and are therefore not subject to Dutch corporate income tax. This includes the representation in the Netherlands of a so-called Representative Office. 

The taxable base as well as the applicable tax rates for Branches are in essence the same  as for Dutch corporations. No special rules apply for the calculation of the taxable profits of permanent establishments; in particular no special "branch tax" is imposed. There is also no Dutch withholding tax imposed on the remittance of profits by a Dutch Branch to its foreign head office. 

Tax liability for Dutch subsidiaries of foreign corporate entities

Dutch subsidiaries of foreign entities are treated the same way as Dutch owned corporations.

A Dutch subsidiary will be subject to Dutch corporate income tax on its worldwide profits and capital gains if it is either incorporated in the Netherlands or if it is managed and controlled from the Netherlands.

There are no special tax requirements or restrictions for foreign ownership of Dutch corporations.

Foreign shareholders of a Dutch corporation may be exposed to a Dutch withholding tax on dividends. The rate is (15%- 2023) unless a lower rate applies in lieu of a domestic exemption, an exemption provided by an EU Directive, or an applicable tax treaty.  

Corporate shareholders that hold 5% or more of the shares in a Dutch corporation may under certain conditions be eligible for an exemption of the dividend withholding tax. The primary condition to be met for this exemption is that the conditions for applying the Dutch participation exemption have been complied with. Also specific substance requirements apply for foreign corporate shareholders.        

For an overview of the Dutch dividend withholding tax rates under applicable tax treaties we refer to our Dutch Tax Treaty Database.  

Group taxation (fiscal unity)

The Dutch corporate income tax act provides for the possibility of group taxation, referred to as "fiscal unity".

The fiscal unity can include a Dutch parent company with multiple direct and indirect Dutch subsidiaries, whereby the subsidiaries are for the levy of Dutch corporate income tax deemed to be absorbed by the parent company (owning directly or indirectly at least 95% of all of the issued share capital of the subsidiary) and the only remaining entity that is taxed for the consolidated profits, is the parent company (as fiscal unity).

A fiscal unity is optional and must be applied for in advance. Various conditions must be met, of which the most important conditions are: 

• the parent company must in essence hold directly or indirectly at least 95% of the shares in the subsidiary (varieties on "shares" possible), 
• the parent and subsidiary must have the legal form of a BV, NV, mutual insurance society, cooperative, foundation or association that acts as a housing corporation, or have a foreign legal form that is comparable thereto, 
• the parent company and the subsidiary must apply the same financial years and profit tax regime, and must have their tax residence in the Netherlands. 

A fiscal unity can only be established between Dutch entities, but by virtue of the non-discrimination principles of EU law, the fiscal unity regime can also be obtained between a Dutch company and its Dutch grandparent company, with non-qualifying EU holding company in between, or between two Dutch sister companies below a non-qualifying EU parent company.  

The primary advantage of a fiscal unity is that profits and losses of group companies that form part of the fiscal unity can be offset against each other. This means that transactions between group companies that take place within fiscal unity can be eliminated for Dutch corporate income tax purposes. Within a fiscal unity in essence goods can be delivered and services rendered without being recognized as such for the levy of Dutch corporate tax, and internal reorganizations can be carried through without triggering taxable profits or capital gains for the levy of Dutch corporate income tax, although various anti-abuse provisions will have to be considered.

The fiscal unity concept can also be used to facilitate the leveraged acquisition of a Dutch target company by a Dutch holding company. By having the Dutch holding company enter into a fiscal unity with the target company as from the date of acquisition, it is within certain restrictions possible to offset the interest expenses to be incurred by the holding company on the funding loan against the operating profits of the target company.

The fiscal unity regime only applies for the levy of Dutch corporate income tax. A similar regime can apply for Dutch VAT purposes, but this is a totally different concept, with its own conditions and with a separate application procedure.  

Tax year

The standard tax year is the calendar year, but a deviating financial year is allowed. A company may for instance use its parent's fiscal year or accounting year as its tax year.

The tax year used by a parent and a subsidiary do not necessarily have to coincide (except for some special tax provisions to be invoked).

The tax year must generally coincide with the statutory year of the corporation. Upon incorporation a Dutch corporation can within certain parameters have an extended book year.

Functional currency 

The primary reporting currency for Dutch corporate tax purposes is the EURO. 

However, if the company is allowed to use another reporting for its financial reporting in the Netherlands,  it can upon written request apply the same currency as it reporting currency for Dutch corporate tax purposes.  

Tax rate

We refer to the page "Dutch tax rates for corporations".

Portfolio investment income received by a company that has obtained the status of "Fiscale Beleggingsinstelling" (a so called Fiscal Investment Company) can qualify for a 0% tax rate. In order to qualify for this regime various conditions are to be met with regard to amongst others the shareholders, the activities, the funding and the distributions of profits. It is also noted that despite this 0% rate, the Dutch tax authorities take the standpoint that such a company is subject to tax and as such it should qualify for the benefits (i.e. reduced withholding tax rates) provided for by the Dutch tax treaties.

There is also special tax regime for qualifying portfolio investment companies. Under certain conditions a BV (or similar corporate entity) which main activity consists of managing portfolio investments on behalf of its shareholders may opt for a full exemption of Dutch corporate income tax and dividend withholding tax. This exempt BV is referred to as a "Tax Exempt Investment Company" or "Vrijgestelde Beleggingsinstelling".

A Tax Exempt Investment Company has in essence no treaty access and can thus from the Dutch perspective not enjoy treaty benefits.

Taxable profits

Corporate income tax is assessed on taxable profits.

Taxable profits are determined on the basis of book profits calculated according to Dutch accounting standards adjusted with some adjustments for tax purposes. These adjustments can result in temporary or permanent differences between the book profits and the profits for tax purposes.

In general,  expenses incurred in the ordinary course of business are tax-deductible. Certain costs however are not deductible or only partly tax deductible (including costs of foods, drinks and entertainment, fines and penalties). Regular profit distributions (dividends), corporate income tax and certain profit-sharing payments are also not tax deductible. 

Capital gains

Capital gains and losses are treated similarly to other income and are as such to be included in taxable profits.

As a general rule of sound business practice, capital gains are in general not taxed until realized while on the other hand capital losses can be deducted on an accrual basis.

Dutch tax law provides for various possibilities to exempt capital gains or defer taxation over capital gains. See also the following paragraph. 

Depreciation of assets 

For the levy of income tax in the Netherlands, depreciation of tangible and intangible business assets is allowed within certain parameters. As a general rule tax depreciation of asset held as investment is not allowed.  

General tax depreciation regime

The law does not prescribe a particular depreciation method, but instead refers to principles of 'sound business practice'.

The general principle of 'sound business practice' is that annual depreciation should properly reflect the decrease in value of the asset, considering the acquisition price or construction cost, the estimated (economical) life of the asset, and its expected residual value.  This means that virtually all generally applied depreciation methods (straight-line method, declining-balance method, etc.) are allowed, provided that they provide for a reasonable outcome (in accordance with sound business practice) and is consistently applied. The most common applied tax deprecation method is the straight line depreciation method.  

Under certain conditions,  it is possible to apply certain forms of  accelerated depreciation for assets which are important for environmental protection (andlisted as such). Furthermore, special relaxing tax deprecation rules may apply for starting entrepreneurs, sea going vessels , etc.

For certain particular business assets, the Dutch income tax law provides for limitations of the tax depreciation. As such, it is important to deviate between the depreciation terms of the following assets:

• intangible assets
• real estate 
• other business assets

Tax Deprecation Intangible assets

A distinction should be made between acquired goodwill and other intangible assets.

According to Dutch tax law, acquired goodwill may be depreciated over 10 years with a maximum of 10% per year.  For tax purposes, other intangible assets will follow the depreciation rules of other business assets. This implies that the maximum annual depreciation is generally set at 20% of the historic cost price or construction cost. The depreciation may not exceed the aforementioned 20%.

Cost of self-produced intangible assets (with the exception of self-produced goodwill, which is not deductible at all) can as a general rule be depreciated at once.

Tax Depreciation Real estate 

The depreciation of real estate for tax purposes is limited; in practice it is only  possible to depreciate for tax purposes on "buildings in own use", and then only to the extent the remaining book value stays above a certain minimum book value.  For corporate tax payers, the minimum book value is equal to so-called WOZ-value. The WOZ value is the assessed value for the levy of municipal taxes, etc. but also plays a prominent role for the levy of other taxes relating to the ownership of real estate. 

Based on the aforementioned rule, it is not possible to depreciate on buildings in own use for tax purposes, in case the book value of the building drops below 50% of the WOZ- value.

For individual tax payers (subject to personal income tax) the minimum book value for real estate in own use, is 50% of the WOZ-value, and for other real estate (investments), it equals the WOZ-value.   

Outside these parameters, the amount of depreciation of real estate is calculated as follows;  the acquisition value of (the business part of) the real estate or it construction costs  (= A) reduced by (a proportional share of) the value of included land(= G), reduced by the expected residual value of the real estate (= R) and divided by the useful life (say 30 years). The height of the maximum tax depreciation per year is then (A - R - G)/ 30.  

Depreciation other tangible business assets

Assets with a relatively low value of less than € 450 (2023) can be deducted at once in the year of acquisition/ construction.

The maximum annual depreciation is generally set at 20% of the historic cost price or cost of construction. less residual value. The annual tax depreciation may not exceed this 20%.

Accelerated depreciation for environmental friendly investments (VAMIL)

With the VAMIL certain environmentally friendly assets can be freely depreciated for tax purposes up to a maximum of 75% of the purchase value or cost price.

The VAMIL is often applied in combination with the Environmental Investment Deduction (MIA), on the basis of which an additional deduction from taxable profits is permitted for the same environmentally friendly business assets, up to a maximum of 45% of the investment amount.

The MIA and VAMIL are two different schemes but can be applied in combination with each other, and both schemes have a joint list for qualifying business assets (called the Environmental List), which is updated from year to year.

In essence, any company that is subject to Dutch corporate income tax can qualify for the VAMIL, but the investment must meet the following conditions:

• the asset is on the environmental list.
• the asset is new or almost new and has not been used before (special rules apply to cars).
• the investment must relate to the purchase and production costs of the asset.
• the amount of environmental investments must be at least € 2,500 per asset.
• a maximum of € 25 or € 50 million is eligible per taxpayer per year (depending on the type of business asset), unless explicitly stated otherwise on the Environmental List.
• Within 3 months after the investment, this must be reported to the Netherlands Enterprise Agency (RVO), which issues a confirmation to that effect.

The VAMIL must be applied in the corporate income tax return of the year in which the deduction for the accelerated depreciation has been processed.

Accelerated depreciation for certain business assets in 2023

In addition to the free depreciation of environmental friendly assets (VAMIL),  in 2023 a new one-off free tax depreciation scheme for 2023 has been introduced.

According to this new facility, the taxpayer is allowed to claim tax deprecation in 2023 up to a maximum of 50%. The remaining value needs to be depreciated according to the normal tax depreciation rules.

This new facility only applies to investments in new business assets that have purchased or produced in the calendar year 2023, and are put into use before January 1, 2026.

The following business assets are explicitly excluded from the 2023 free tax depreciation scheme:

• buildings
• ships
• aircraft
• mopeds and motorcycles
• passenger cars that are not intended for professional transport
• Cars without CO2 emissions are eligible for the arbitrary depreciation.
• intangible assets such as permits and goodwill
• animals
• assets that are mainly intended for rental
• roads and paths open to public traffic, including bridges, viaducts, culverts and tunnels
• assets that are already freely depreciated under another special tax regime.

Interest deduction 

Dutch tax law provides for various limitations for tax deduction of interest expenses depending on the concrete situation.

As a general rule, the capitalization of a Dutch company should be in line with normal business practice, and thus be in accordance with the "at arm's length principle". 

As per 2019 an earning stripping rule was introduced in the context of the implementation of ATAD 1: the 1st EU Anti-Tax Avoidance Directive. The earning stripping rules are measure that limit the deductibility of ‘excess’ net interest expenses.

The Dutch earnings stripping rule in essence applies to all Dutch corporate tax payers, and provides that excess interest costs (i.e. the balance of interest costs and interest income, including foreign exchange results on the loans) are only deductible up 20% (2023) of the earnings before interest, taxes, depreciation and amortization (EBITDA). The earnings stripping rule contains a threshold of € 1,000,000 (2023); deemed "excess" interest  expenses up to and including € 1,000,000 euro are not restricted by this measure.

The non-deductible interest affected by this measure can be carried forward indefinitely (i.e. deducted from future profits but only in so far the interest does not exceed the earnings stripping rule in the respective years). However, anti-abuse change-of-control rules have been introduced that limit the carry forward in abusive situations.

The new earnings stripping rules will be applied to standalone taxpayers. However, in case of a group (i.e. Dutch fiscal unity) the rule will be applied at group level (and the fiscal unity will thus not be disregarded for purposes of this rule).

The law also provides for interest deduction limitation rules for specific situations of alleged abuse. These limitations typically apply to certain specific transactions through which debt is created, like for instance, 

• internal or external acquisitions of shares in subsidiaries,
• dividends declared,  
• capital contributions into a subsidiaries. 

The interest expenses resulting from these kind of "tainted" transactions as defined by law are only tax deductible if the transaction and the creation of the related loan are based predominantly on sound business considerations (double business motive test) or if there is a reasonable (at least 10%) taxation of the corresponding interest income in the hands of the recipient. 

Tax exemptions

The Dutch corporate tax system provides for various income exemptions, either in the form of a permanent exemption or as a temporary exemption in the form of a roll-over relief (in fact deferral of taxation).

Permanent exemptions do amongst others include exemption of:

• dividends received from and capital gains realized on the shares in qualifying Dutch or foreign subsidiaries (the Dutch participation exemption)
• interest on certain profit participating loans granted by a parent to a subsidiary
• certain categories of foreign source income by virtue of applicable tax treaties or the Dutch unilateral rules for the avoidance of double taxation
• the profits arising as a consequence of the waiver of debt (under certain conditions)

Temporary exemptions do amongst others include a roll-over in relation to:

• the profits and capital gains in relation to qualifying legal mergers, de-mergers, spin-offs, share mergers (share for share) or business mergers (assets for shares)
• the replacement of certain business assets, including real estate ("replacement reserve")
• the conversion of a certain Dutch legal form into a certain another legal form (for instance a BV into an NV, or a Foundation into an Association)

Dutch participation exemption

Dutch corporate tax law provides for an exemption of dividends and capital gains on shares in qualifying subsidiaries. 

The most important conditions to be met are:

• ownership of at least 5% of the issued share capital of (or similar ownership rights in) the subsidiary
• the subsidiary has an equity divided into share capital
• the shares in the subsidiary are not held as "a portfolio investment".

In certain specific situations, a lower percentage of ownership than the aforementioned 5% can suffice.

The participation may not be held as a "portfolio investment", which primarily ties in to the nature of the activities of the subsidiary. The motive of the tax payer is also a relevant, although arbitrary, factor. The law offers two escapes; if a subsidiary qualifies as a portfolio investment company, the participation exemption still applies if either an "asset test" or a "subject-to-tax test" is met.

As the asset test is concerned; the assets of the participation should not consist for more than 50% of free passive portfolio investments (e.g. investments which do not have a business function). Participations of less than 5% are considered to be portfolio investments.

As the subject to tax test is concerned; the participation exemption is always applicable if the subsidiary is taxed at a realistic corporate income tax rate, which is defined as a regular statutory tax rate of at least 10% unless the taxable base differs significantly from the tax base according to Dutch standards, which could for instance be the case when a special tax regime applies to the subsidiary.

If the participation exemption does not apply because the subsidiary is regarded as a (low taxed) portfolio investment participation, the Dutch corporate tax payer will be taxed for the income out of the shares, but it may still be eligible for a (limited) credit for the underlying corporate income tax incurred by the subsidiary.

The participation exemption applies to dividends and capital gains, and possibly also currency exchange and hedging results as well as the interest income on certain categories of profit participating loans.

When the participation exemption applies, losses in relation to the participation are in general not tax deductible, with the exception of "true" liquidation losses.

Under the Dutch participation exemption rules, a Dutch (intermediate) holding company is allowed to deduct all costs and expenses (not only general and administrative expenses but also interest expenses related to acquisition financing unless limited under earnings stripping rules) incurred in connection with its subsidiaries. However, expenses incurred with regard to the purchase or sale of a shares in a qualifying subsidiary are no longer deductible. 

Controlled Foreign Corporations (CFC) rules 

Dutch tax law provides for a CFC-regime which aims to deny the participation exemption for majority (more than 50%) shareholdings in a foreign subsidiary or foreign permanent establishment with certain categories of passive income which is established in a black listed low-taxed jurisdiction (with a rate of less than 9%) or a non-cooperative state.

Based on ATAD 1 (the 1st EU Anti-Tax Avoidance Directive), as from 2019 the Dutch corporate tax act contains so-called CFC (controlled foreign company) rules. 

Briefly summarized, these CFC rules apply if a Dutch corporate taxpayer has a direct or indirect interest of more than 50% in a low-taxed foreign subsidiary or has a low-taxed permanent establishment which has certain non-distributed passive income categories.   

Under the CFC rules, an entity or permanent establishment is considered as low-taxed if it is:

• tax resident in a jurisdiction without corporate income tax or with a statutory corporate income tax rate lower than 9 % or;
• tax resident of a jurisdiction included in the EU list of non-cooperative jurisdictions (EU Blacklist).

In case these requirements are met, undistributed tainted passive income (such as dividend, interest, royalties, benefits from the sale of shares, benefits from financial leasing and other financial/banking/insurance activities) of the CFC has to be included in the Dutch corporate taxpayer’s taxable income. This income in essence needs to be recognized on an accrual basis.  

The CFC rules do not apply if the CFC performs an economic activity of substance in its country of establishment. The CFC is deemed to perform an economic activity of substance if it fulfills a number of substance requirements which include a wage costs criterion of at least EUR 100,000 and having own office space available for a period of at least 24 months.

Investment deductions

For certain investments, the taxpayer is allowed to an extra tax deduction on top of normal depreciation. This includes the:

Small investment deduction (KIA)

Companies are offered the possibility to deduct a percentage of the total amount of investments made in a year, insofar the total amount of investments exceed an amount of EUR 2,400 (2023) and do not exceed an amount of EUR 353,973 (2023).

The percentage (2023) varies (in brackets) from 28% for investments between EUR 2,400 and EUR 63,715, an additional fixed amount of EUR 17,841 for investments up from EUR 63,715 up to EUR 117,991 and for investments between EUR 117,991 and EUR 353,973 an amount of EUR 17,841 plus 7.56% of the part of the investment exceeding EUR 117,991 but no more than EUR 353,973. No investment deduction is provided for investments in excess of EUR 353,973. 

Energy Investment Deduction (EIA)

For investments in qualifying energy saving assets an additional tax deduction is available. 

The deductible percentage in a tax year can amount up to 45.5%. The investment threshold is € 2,500 and no investment allowance is granted for investments exceeding EURO 136,064,000 (2023) in a tax year.

The asset meets the requirements of the so-called "Energy List". It must be a newly acquired asset (and not used before) or a self fabricated asset. The Energy List is updated every year, and published by the end of the tax year as an amendment of the '2001 Energy Investment Allowance Implementation Regulation'.

The EIA must be claimed in the annual corporate tax return, but must be preceded by an advance clearance procedure with the Netherlands Enterprise Agency (RVO). The tax payer must report the EIA investment with the RVO no later than three (3) months after the tax payer entered into the investment obligation for the asset. If the tax payer produced the asset itself, the tax payer must report the production costs within three (3) months after the end of the calendar quarter in which the  production costs were incurred/paid. 

Environmental Investment Deduction (MIA)

For investments in qualifying environmental-friendly assets an additional tax deduction is available. 

The deductible percentage in connection with qualifying investments in environmental-friendly assets amounts to 27%, 36% or 45% (2023) depending on the exact nature of the asset. The investment threshold is € 2,500. The  maximum amount of eligible investments in environmental-friendly assets is € 25,000,000. 

The asset meets the requirements of the so-called "Environmental List". It must be a newly acquired asset (and not used before) or a self fabricated asset. The Environmental List is updated every year by the Ministry of Infrastructure and Water Management in collaboration with RVO. In order for an asset to be admitted to this list it should have a considerable environmental benefit in the Netherlands compared to the usual alternative in the relevant industry,  and be more expensive than the less environmentally friendly alternative. Furthermore, the (further) market introduction of the asset must be desirable.  

The MIA must be claimed in the annual corporate tax return, but must be preceded by an advance clearance procedure with the Netherlands Enterprise Agency (RVO). The tax payer must report the MIA investment with the RVO no later than three (3) months after the tax payer entered into the investment obligation for the asset. If the tax payer produced the asset itself, the tax payer must report the production costs within three (3) months after the end of the calendar quarter in which the  production costs were incurred/paid. 

Special tax regimes  

Dutch tax law provides for special tax regimes for qualifying R & D activities conducted in the Netherlands, and for qualifying shipping activities. Both regimes are optional and must be applied for. There is also a facility allowing accelerated tax depreciation for certain assets.   

R & D - wage tax cost (WBSO)

The Dutch Act for the promotion of Research and Development Activities (or WBSO) provides for a credit of wage taxes due on account of wages relating to qualifying R & D projects. 

The credit  amounts to a percentage of recognized R&D costs (salary + other expenses), and a percentage of the excess.  For qualifying start-ups, a higher percentage for the first bracket applies. The credit may not exceed the total amount of wage tax due. Instead of applying for a credit based on the aforementioned percentages of R& D costs and expenses, the taxpayer may also choose to claim instead, a fixed amount based on the forecasted and recognized R&D working hours.

In order to qualify for the WBSO, the R&D project should take place in the European Union, concern the development of new software, a (tangible) product or production process, or it should concern technical-scientific research. Self-developed software does usually qualify for the WBSO, and investments in trade names and brands typically not. 

In order to qualify for the WBSO an application in advance is required with the Netherlands Enterprise Agency (RVO), which should contain a clear description of the project and a forecast of the hours to be worked on this project by employees of the applicant in the Netherlands, and expenses to be incurred. When the project and forecast is accepted by RVO, it will issue a so-called "WBSO Declaration" specifying the details of the project and the accepted R & D working hours and expenses.

For more detailed information about the WBSO tax credit facility, and the current amounts, rates and percentages, please consult our publication Incentive for Research and Development Costs in the Netherlands (WBSO).

R & D - 9% corporate tax rate (Innovation Box)

The so-called Innovation Box regime allows the income derived from qualifying R & D activities, to be taxed against a reduced corporate tax rate of 9% (2023). 

For getting access to this facility a WBSO Declaration specifying the details of the project and the accepted R & D working hours and expenses is required. 

For more detailed information about the Innovation Box, and the current amounts, rates and percentages, please consult our publication The Innovation Box Tax Regime in the Netherlands for R & D activities.

Tonnage taxation for shipping companies

Shipping companies operating out of the Netherlands can under certain conditions choose to be taxed on the basis of the net tonnage of the vessels owned (tonnage taxation), rather than on the basis of the taxable profits actually made.

For more detailed information about the Dutch Tonnage Tax Regime, and the current amounts, rates and percentages, please consult our publication The favorable Dutch Tax Regime for Shipping Companies.

Tax losses

In 2022 the rules for the carry forward of tax losses have changed significantly.

The maximum term for the carry forward (was 6 or 9 years, depending on the year origin) has lapsed; tax losses  can, in principle, be carried forward indefinitely, but a maximum set-off per year applies if the annual profit exceeds an amount of € 1 million. In that case no more losses may be set off than  €1 million, plus 50% of the profit above €1 million. 

A loss that cannot be fully carried forward or back in a year due to the cap may be carried forward to future years, within the same limitation. 

There is no transitional provision for for pre-2021 losses. This means that the new rules apply to losses originating  from financial years from January 1, 2013. Losses incurred before this date remain covered by the old rules. Due to the (old) term of nine and six years respectively, these losses were either compensated or evaporated by 31 December 2021 at the latest.

The maximum term for carry back is 1 year (unchanged).

Certain anti-abuse rules are provided for in legislation which aim to prevent the "trade" in tax losses. There is a certain overkill in the legislation so that it can also catch genuine business transactions.  

Transfer pricing

Dutch corporate tax law provides that intra-company pricing for goods and services must be at arm's length. Also specific rules apply with regard to the documentation of intra-group transactions.

For more detailed information about the Dutch transfer pricing regime, we refer to our publication Transfer pricing in the Netherlands. 

Guidelines for inter-company pricing are given by extensive policy. In general it is possible to obtain advance tax rulings on transfer pricing issues, also referred to as Advance Pricing Agreements, or APA's. 

Special rules and guidelines are provided for intra-group financial services companies, which include group financing and royalty companies.

For more detailed information about the possibility of obtaining advance tax rulings in the Netherlands, we refer to our publication The advance tax ruling (ATR) and advance pricing agreement (APA) in the Netherlands.

Withholding taxes on outbound payments

Under Dutch domestic tax law no withholding tax is levied on (genuine) outbound interest and royalties payments, unless these payments are made to corporations established in countries which are on the Dutch black list of low tax countries, or the EU blacklist of non-cooperative states.

Dividend distributions are in principle subject to 15% Dutch dividend tax at source. However, under applicable tax treaties, the rate for inter-company dividends is often reduced, in many cases even to nil percent. Within the EU conditionally a 0% rate applies. As from 2024 an additional withholding tax on dividends is levied from dividend payments to corporate shareholders established in countries which are on the Dutch black list of low tax countries, or the EU blacklist of non-cooperative states.

For more detailed information about the Dutch withholding taxes, we refer to our publication Withholding taxes in the Netherlands on outbound dividends, interest or royalty payments. 

Furthermore, the extensive treaty network provides for low withholding taxes on dividends, interest and royalties payable to a Dutch company. For the Dutch withholding tax due on account of the re-distribution of foreign dividends, an indirect tax credit may be available.

For more information about the withholding tax rates under applicable tax treaties, please consult our online Dutch Tax Treaty Database. 

Tax treaties

The Netherlands have concluded tax treaties with more than 90 countries worldwide.

With this extensive treaty network, the Netherlands is a preferred location to establish internationally operating trading,  holding companies, finance companies and IP/ licensing companies.

For more information about the Dutch tax treaties, please consult our online Dutch Tax Treaty Database. 

Foreign tax credits

The extensive Dutch tax treaty network often provides for low or zero withholding taxes on dividends, interest and royalties payable to a Dutch company.

If foreign withholding taxes are incurred, a Dutch resident taxpayer can by virtue of applicable tax treaties or the Dutch unilateral rules for the avoidance of double taxation, in many cases claim a tax credit for foreign withholding taxes incurred. Such a tax credit allows the taxpayer (under certain conditions) to reduce the Dutch corporate income tax imposed on the grossed up income with the amount of foreign withholding tax incurred. Upon election of the taxpayer, foreign withholding taxes may be treated as a tax deductible item instead.

Under certain conditions a Dutch branch of a foreign corporation (non-resident for Dutch tax purposes) can claim the tax credits provided for in Dutch tax treaties.

Tax rulings

The Netherlands has an extensive, efficient and reliable advance ruling practice, providing for the possibility to obtain certain in advance with regard to the Dutch tax implications of a certain structure of activity, the so-called Advance Tax ruling (or "ATR "), r transfer pricing related issues, the so-called Advance Pricing Agreement, or "APA" .

These rulings are in essence legally binding agreements between the tax office, the tax payer and in some cases the fiscal representative of the tax payer, with regard to the Dutch tax consequences of certain structures, activities or transactions on the basis of the facts presented by the tax payer and described in the agreement.   

An APA provides certainty in advance regarding the arm's length pricing of cross border inter-company transactions, including financing or licensing activities and the provision of services (this relates to amongst others the tax treatment of Foreign Sales Corporations, foreign finance branches, cost contribution arrangements, and cost-plus activities in general).

An APA can either be unilateral (between tax payer and Dutch tax authorities), bilateral (Netherlands and another State) or even multilateral (involves more than two States).

An ATR provides certainty in advance regarding the tax consequences of certain international structures and/ or transactions. An ATR can be requested for amongst others:

• the application of the participation exemption for intermediate holding companies or top holdings;
• international structures in which hybrid financing forms or hybrid legal forms are involved;
• the (non) existence of a permanent establishment in The Netherlands.

For more information about the possibility to obtain a tax ruling in the Netherlands, please consult our publication The advance tax ruling (ATR) and advance pricing agreement (APA) in the Netherlands. 

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