Corporate tax in the Netherlands


Corporate tax in the Netherlands deals with the tax payable in the Netherlands on the profits earned by companies. In general, a Dutch company is subject to between 19 and 25% corporate tax on its worldwide profits. However, certain items of income are exempt from tax and certain costs are non-deductible.

Worldwide profits

A Dutch company is subject to Dutch corporate tax on its worldwide profits, after taking into account tax deductible costs.

Rate

The 2019 Dutch corporate tax rate is 19% of the taxable income up to and including €200,000, above which the rate is 25%. The lower rate will decrease to 16.5% in 2020. The rates will further decrease to 15% and 21.7% respectively in 2021. These tax decreases are measures which have been implemented by the Dutch government to attract foreign businesses.

Exemptions

Certain items of income are exempt from Dutch corporate tax. The most important items of income that are exempt are:
Capital gains, dividends and profit participation loan interest derived from a qualifying subsidiary are fully exempt from corporate tax in the Netherlands. A subsidiary qualifies for the Dutch participation exemption when:
Any income received by a Dutch company from a foreign branch is exempt from Dutch corporate tax, provided such branch is a permanent establishment or representative.

Anti Abuse clause

The Dutch Corporate income tax regulations have included a great many anti-avoidance clauses since 1969, to avoid abuse of the tax rules by corporations. There have been implemented anti abuse clauses for the participation exemption, interest deductions for hybrid loans and recently for the dividend withholding tax act.

Tax haven

The Netherlands has been known internationally, since at least the 1970s, as a tax haven. A political debate about this issue started in 1977, when economist and social-democratic MP Flip de Kam published a book about corporations transferring large sums to Caribbean countries without paying Dutch corporate tax. Minister Van der Stee admitted that the country was internationally known as a tax haven, but refused to act, arguing that the problem could not be solved on a national level alone. The debate raged for years; in 1986, Representative Willem Vermeend estimated that the country's tax service missed some ƒ4 billion per year due to companies such as The Rolling Stones' holding bv's using the "Caribbean route".
Dutch tax laws have brought the country into conflict with the European Union several times, starting with strong criticism in the 1999 Primarolo Report. The Dutch government responded by having a group of high-ranking fiscal experts create a smoke screen, changing the appearance of the fiscal system while leaving its structure intact.
Starting 2009, the "tax haven" label resurfaced and sparked political controversy when the White House issued a press release in which the Netherlands was mentioned as tax haven.
According to various NGO's the Netherlands "can be seen as an intermediary tax haven for foreign corporations". In February 2013, the Dutch House of Representatives accepted a motion calling on cabinet members to "reject, and where possible in discussions to insist on not mentioning" the qualification of the country as a tax haven; the motion was drafted by MP Roland van Vliet, a former tax advisor with Ernst & Young.
Economist estimated that at the time of the motion, the state earned some €1.5 billion in tax from €12 thousand billion being transferred through the country annually.
, the country harbors holding companies for various multinationals, participates in more than a hundred bilateral tax treaties, and the various [|exemptions] facilitate tax avoidance by corporations. A notable example is most of the holdings of the Agnelli family which are incorporated there.
In June 2014 the EU initiated a new investigation relating to the Dutch corporate taxes as part of a State aid case by the Directorate General for Competition. The case was specific to Starbucks.
The investigation ended in October 2015, with the EC ordering Starbucks to pay up to €30 million in overdue taxes. The EC exposed in its decision a legal structure commonly used by companies established in the Netherlands to avoid corporate taxation, the so called Dutch BV-CV structure.
In 2017, the EU initiated another State aid investigation into a special deal on corporate taxation between the Dutch public administration and IKEA.
National and foreign companies known to have special agreements with the Dutch tax service include Starbucks, Microsoft and PostNL. A 2015 FOI request by de Volkskrant to unearth the agreements failed, because these secret agreements are not centrally administered by the Tax and Customs Administration; with even the House of Representatives not having access to them.