The corporation tax rate in the Netherlands depends on the taxable amount.
The taxable amount is the taxable profit less deductible losses.
The tax rate is 20% if the taxable amount is less than €200,000.
The tax rate is 25% if the taxable amount is equal to €200,000 or higher. (government)
A parent company can form a tax group, a so-called fiscal unity, with one
or more of its subsidiaries, which allows the group to deduct a loss incurred
by one company from the profits generated by another.
The establishment of a tax group is only possible under certain conditions. The
main condition is that the parent company holds at least 95% of the shares in
Aside from this, all potential group members must have the same financial
year, apply the same accounting policies and be established in the Netherlands.
Asset Investment Tax Relief
Investments in certain types of assets can qualify for
a special deduction in calculating taxable profits. This relief is in addition
to the usual depreciation and is computed as a percentage of the qualifying expenditure.
The available deductions fall into the three
Small-scale investment deduction
This deduction applies to investments in business
assets of 2,300€ up to
calendar year. The deduction amounts to 28% for investments from 2,300€ up to 56,024€. The maximum possible deduction is 15,687€ for investments of 56,024€ up to 103,748€. The relief gradually decreases to zero when
the investment reaches 311,242€
Energy investment allowance (EIA)
This deduction applies to investments in qualifying
new energy-saving assets. The maximum investment qualifying for relief is 120
million Euros. The relief amounts to 58% of the investment if it exceeds 2,500€ per calendar year.
Environmental investment allowance (MIA)
This deduction applies to investments in qualifying
new assets contributing to environment protection. The relief provided is 36%,
27%, or 13.5%, depending on the type of asset and whether the investment
exceeds 2,500€ per
calendar year. (KPMG)
Research and Development Act (WBSO)
Certain R&D activities (development of technically new physical products,
production processes, or software) qualify
for a payroll tax reduction (WBSO).
The reduction amounts to 32% (40 percent for start-ups)
of the relevant payroll costs relating to R&D (R&D payroll costs, but also
other R&D costs and R&D investment expenditures), up to a maximum of 350,000€, and 16% for any excess.
The Innovation Box
To stimulate R&D activity in the Netherlands, a
special elective regime known as the “Innovation Box” is available for income from
self-produced qualifying intangible assets.
Under this regime, qualifying income is taxed at an
effective rate of 5 percent, which is achieved by way of an 80 percent
reduction of the income derived from the qualifying assets.
Broadly speaking, intangible assets will qualify for
the regime if they are patented or derived from R&D activities that benefit
from the R&D incentive regime referred to as WBSO (see above). The
Innovation Box may also apply to certain software, production methods, product
development or improvement. It does not apply to marketing intangibles such as
trademarks and logos. Subject to certain conditions, assets that are partially
derived from outsourced R&D may also qualify.
The Innovation Box regime covers all income
attributable to qualifying assets, including capital gains. In the case of
patents, the regime covers not only licensing income but also income derived
from the sale of products or services based upon the innovations. The election
is made per asset, but, once elected, all assets and related income are pooled.
There is no cap to the income that can benefit from
this regime, but it generally only covers income in excess of related
development costs in the pool. Losses in respect of assets covered by the
innovation box are also effectively deductible against corporate income at the
regular tax rate.
Deductible and Non-Deductible
The main rule is that all expenses incurred for the
purposes of carrying on a business are deductible when calculating taxable
Non-deductible expenses include:
• Dutch corporate income tax and, if a double taxation
relief provision applies or the income is exempt from Dutch tax, foreign taxes
on income or profits
• boats used for business entertainment, such as
• certain fines and penalties imposed under Dutch or
European law (including tax penalties and traffic fines).
Also non-deductible is 0.4 percent of the total wage
bill, with a minimum amount of 4,500€. Alternatively, 26.5% of certain expenses
• food and drink
• business entertainment
• conferences, staff excursions, and similar
Corporate income tax deductions for equity-settled
awards such as shares, stock options, warrants, restricted shares, and
restricted share units generally are not applicable in the Netherlands. The
costs associated with cash settled awards can be deducted at the moment of
payment, provided the employee is not obliged to convert the cash payment into
company shares. Stock appreciation rights are not deductible when granted to employees
with an annual salary of EUR 556,000 or more. The development costs for
in-house developed intangible assets may be deducted in the year the
development costs are incurred. A number of other, primarily anti-avoidance,
provisions specifically restrict the deduction of certain expenses, including
Tax Treatment upon Cessation of
Liquidation means that the company ceases to exist.
Once the liquidation is settled, there is no longer a corporate income tax
liability. The company must prepare a final balance sheet for tax purposes at
the time of liquidation, reporting its assets and liabilities at their fair
market value. This ensures that all benefits not yet reported for tax purposes
are included in the profit for the final financial year. Any distribution in
excess of the average paid-in capital (i.e. the liquidation distribution) is
considered a dividend for dividend withholding tax purposes and subject to 15
percent withholding tax. Exemptions or applicable double tax treaties may
reduce this withholding tax.
Bankruptcy is unlikely to result in a corporate income
tax charge. Specific case law regarding liabilities must be taken into account.
The company’s directors must fulfil special reporting requirements to avoid
personal liability, especially for wage tax and VAT.
Emigration and cross-border asset transfers
Exit tax may arise if the company relocates abroad, except
to the extent that assets are retained by a Dutch permanent establishment. Exit
tax also applies on the transfer of assets to a foreign head office and on the
closure of a permanent establishment. In both cases the exit tax is normally
computed by reference to a deemed gain in respect of the assets transferred,
including any untaxed gains and reserves and provisions. Exit tax is not
usually payable on the transfer of assets from a Dutch head office to a foreign
permanent establishment (although the untaxed gains and reserves will
effectively be taxed in subsequent years due to a lower exemption applying to
the profits of the permanent establishment).
Parties that are residents of an EU Member State or an
European Economic Area Member State may not have to pay the full amount of exit
tax in one go. The exit tax rules allow taxpayers to choose between immediate
taxation, a deferral until subsequent realisation and payment in ten annual
instalments. Unless the taxpayer opts for immediate taxation, interest will be
payable on the deferred tax, and the tax authorities will require collateral.
Under Dutch law, a bank guarantee will often be the preferred form of
collateral. However, according to recent case law of the CJEU a requirement to
provide a bank guarantee for exit tax may only be imposed on the basis of the
individual actual risk of non-recovery of the tax. If the taxpayer opts for
deferral until realisation it will also have to provide an annual balance sheet
and income statement drawn up in accordance with Dutch tax law so the Dutch tax
authorities can determine whether there has been a realisation.