Tax Environment

"The Netherlands’ favorable tax structure and relative lack of bureaucratic red tape is critical.” Fritz Meijaard, CFO for EMEA and General Manager for the headquarters office, NetApp

Profitability is your company's first priority. You'll find the Netherlands' corporate tax structure advantageous to achieving your goals. The Dutch tax system has a number of features that may be very beneficial in international tax planning.

Here is a brief overview of those tax advantages:

“Working on Profit” Corporate Income Tax Rate

The "Working on Profit" legislation which went into effect in 2007, includes a 25.5% corporate income tax rate. This rate considerably improves the investment climate for medium to large foreign firms, and is lower than the national average of the EU-15 (26.9%). For smaller firms, even a lower rate applies -- 20% for the first € 200,000 of taxable profits.

A Wide Tax Treaty Network

The Netherlands has tax treaties with many nations and in particular, a strong bilateral agreement with the US. The treaties avoid double taxation on income and capital, and reduce withholding taxes on dividends -- often to 0%.

The Advance Tax Ruling Practice

This covenant between Dutch tax authorities and the taxpayer, agreed to in advance, ensures they view a company's tax situation in a certain way in cross-border situations. It allows companies to obtain a pre-determined tax ruling regarding what will be taxed. Armed with this knowledge; companies have certainty about their future tax position for a specified number of years.

The Participation Exemption

This feature exempts from Dutch corporate income tax any and all benefits related to a qualifying shareholding -- such as cash dividends, dividends-in-kind, bonus shares, hidden profit distributions and capital gains.

The ‘Innovation Box’

In a move to boost technical research and development, the Netherlands introduced the ‘Innovation Box’ – a special 5% tax regime for income in relation to innovation-related self-developed intangible assets like a patent obtained or certified research and development activities. 

Tax Break for Expatriates

The Netherlands allows a tax-free reimbursement of 30% of the employee's salary, provided that the employee has been recruited or assigned from abroad and has specific expertise scarce in the Dutch labor market.

Lowered Corporate Tax Rate

In the case of a branch of a foreign entity, corporate income tax may be avoided if the activities in the Netherlands do not constitute a permanent establishment or permanent representative.

Business Losses

These may be carried back one year and carried forward nine years to offset against profits of subsequent years.

Withholding Tax

The Netherlands assesses no withholding tax on outgoing interest and royalty payments.