Corporate tax in the Netherlands

The Netherlands is no longer the tax haven it used to be. The tax experts from Blue Umbrella explain how corporate tax works in the Netherlands. 

Internationally, the Netherlands has been considered a tax haven. However, times have changed and both public and private companies need to pay a relatively high percentage of corporation tax on their profits in this country. There are some exceptions, such as tax investment institutions, which do not pay corporation tax. If you are a self-employed person, you will pay tax on your profits through income tax.

The tax advisors from Blue Umbrella are more than happy to give you more insight into the complex world of corporate tax in the Netherlands.

Corporation tax rates

In the Netherlands, we call the Corporation Income Tax (CIT) "vennootschapsbelasting". If you have a Dutch company, operating worldwide, you pay tax to the Dutch government on your worldwide profits. To be able to calculate how much tax you have to pay on your profits as a corporation, you must know the taxable amount. This is the taxable profit in a year, deducted from the deductible losses.

The tax experts of Blue Umbrella can help you calculate your company's taxable amount. Please note:

• If the taxable amount is less than 200.000 euros, the tax rate is 20%.
• If the taxable amount is 200.000 euros or more, the tax rate is 25% (standard).

The new government in the Netherlands has expressed the intention to reduce both the lower and the standard corporate income tax rate as of 2019.

Exempt from Dutch Corporate tax

There are certain items exempted from Dutch corporate tax. "Participation exemption" and the "permanent establishment" are the most common exemptions.

Participation exemption

Participation exemption is the capital gains, dividends and profit participation loan interest derived from a qualifying subsidiary. These are fully exempt from corporate tax in the Netherlands. A subsidiary only qualifies for the Dutch participation exemption when the company who receives said subsidiary is an active company, and the Dutch parent company holds at least five percent interest in such a company.

Permanent establishment

If your Dutch company has a foreign branch, any income from this foreign branch is exempt from Dutch corporate tax. This only applies if the branch is a permanent establishment or representative.

Corporate tax-deductible losses

In the Netherlands, businesses are allowed to deduct certain necessary business expenses. A lot of these expenses are corporate tax-deductible. Expenses needed to keep the corporation running are called "current expenses", and are fully tax deductible. Capital expenses such as investments and real estate are also deductible if purchased to generate income for the company.

There are a lot of corporate tax deductions. Blue Umbrella has summarised the most common ones below:

• Operating expenses such as payroll, rent and office supplies
• Employee expenses such as health benefits and employee salaries
• Insurances
• Travel expenses related to local and long-distance travel for business purposes
• Advertising costs associated with business cars, yellow pages ads and other promotional materials

The tax experts of Blue Umbrella

Would you like to know more about corporate income tax and how to manage your corporate income tax return? Contact Blue Umbrella: