Key tax factors for efficient cross-border business and investment involving Netherlands.
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Public company (NV)
Cooperative association (Coop)
The minimum paid-up share capital of an NV is EUR 45,000. There are no minimum share capital requirements for BVs.
A company is considered to be resident in the Netherlands if it is incorporated under Dutch law. Companies incorporated under foreign law are considered to be Dutch residents if they are effectively managed from the Netherlands. Resident companies are taxed on their worldwide income. Non-resident companies are taxed only on their Dutch source income.
Companies must file their tax returns electronically by the date set by the tax inspector. This applies to corporate income tax returns, VAT returns and payroll tax returns. Tax and accounting firms may apply for a special extension of the filing date for their clients. The tax return must be accompanied by copies of documents that may be relevant with respect to preparing an assessment, most notably the annual financial statements for financial reporting purposes and explanatory notes. Accounting records relevant to taxation must be kept for a period of 7 years. They should be maintained in such a way that tax liabilities are easily recognizable. The filing date may not be less than 1 month after the tax inspector has sent the tax return. In general, corporate income tax returns must be filed before June 1 of the year following the tax year (provided that the tax year coincides with the calendar year).
The standard corporate income tax rate is 20 percent on the first EUR 200,000 of taxable profits and 25 percent on the excess.
15 percent. This rate may be reduced to zero under domestic law (payments to qualifying recipients within the EU/EEA) or under applicable tax treaties.
No withholding tax is levied on interest (except on interest on hybrid loans which based on their characteristics are reclassified as equity for tax purposes).
No withholding tax is levied on royalty payments.
Exemption method (100 percent):
In case of a low taxed PIP, a tax credit may apply (set at 5 percent); in the case of profit distributions received from a low taxed PIP resident within the EU or the EEA, the real amount of the underlying tax may be credited upon request and subject to conditions.
Generally taxable, however subject to the participation exemption (same conditions as above with regard to dividend distributions).
Tax losses may be carried forward for 9 years, and carried back for 1 year (up to the taxable profits in those years). A significant change in ownership of the company may prevent losses from being carried forward and/or carried back. Tax losses made by group holding and/or finance companies may only be offset against profits realized from group holding or finance activities.
Yes. A parent company and its 95 percent subsidiaries can apply for treatment as a fiscal unity. As a fiscal unity, the parent company and its subsidiaries can file what is in effect a consolidated tax return. By virtue of CJEU case law in the joined cases of SCA et seq. (C-39/13, C-40/13 and C-41/13) and further to codification of this case law, a fiscal unity between sister companies of a common parent company resident in another EU/EEA Member State is now also possible. The same applies for a Dutch parent company with its sub-subsidiaries held through an intermediate company in another Member State of the EU/EEA (Papillon).
Currently, two cases are pending before the Dutch Supreme Court as to whether or not taxpayers, despite being unable to enter into a fiscal unity with subsidiaries established elsewhere in the EU, are nevertheless eligible for benefits from separate elements of the fiscal unity regime (the 'per element' approach). On February 22, the CJEU decided in a preliminary ruling that not granting these benefits would be in breach of the freedom of establishment. This would have the result that the more favorable treatment by virtue of the consolidation in domestic situations, can also per element be invoked in similar EU situations. The Deputy Minister of Finance has announced emergency remedial measures for domestic situations with retroactive effect until October 25, 2017. These measures will be followed by group rules that are EU-proof in the near future. The consolidation character of the current fiscal unity will probably not be maintained in the new regime.
Transfers of shares in real estate companies may be subject to 6 percent real estate transfer tax depending on the activities of the company, the composition of its balance sheet and the size of its Dutch real estate assets. Exemptions may apply. A reduced rate of 2 percent applies, insofar as the assets of the company qualify as dwellings or holiday homes.
Transfers of Dutch real estate are subject to 6 percent real estate transfer tax; 2 percent for owner-occupied dwellings, rented out dwellings and holiday homes. Exemptions may apply.
Yes, landlord charge on rental dwellings and local tax.
No. However, a shareholding of 25 percent or more in a low taxed PIP should be revalued annually to its market value.
Dutch tax law contains a set of rules that allows for a profit adjustment if transfer prices are not at arm's length. Documentation of how transfer prices are set is required.
Abolished as from January 1, 2013.
Dutch courts may apply the abuse of law doctrine.
Dutch law provides for anti-dividend stripping rules under which a reduction of the Dutch dividend withholding tax rate or the creditability of withholding tax is denied. Deduction of interest may also be denied e.g. if a related party grants a loan with respect to:
As of January 1, 2013, an interest deduction restriction applies to the excessive debt financing of the acquisition of participations. This restriction is intended to prevent the excessive deduction of interest related to the financing of participations. The non-deductible interest, i.e. the excess participation interest, is the interest related to the participation debt. A participation debt is present if the acquisition price of the participation exceeds the equity of the acquiring company. The amount of the excess participation interest is equal to the interest and costs, multiplied by a fraction made up of the average participation debts, divided by the average loans at the beginning and end of the financial year. The first EUR 750,000 of interest is always deductible.
As of January 1, 2016, two new anti-avoidance rules were introduced in order to implement the changes made by the EU in the parent subsidiary directive:
Yes. A company can enter into an Advance Pricing Agreement (“APA”) or an Advance Tax Ruling (“ATR”) with the tax authorities.
The Innovation Box provides for an effective tax rate of 7 percent on qualifying profits from innovative activities for which a patent has been granted and a WBSO payroll tax subsidy is granted (these requirements do not apply to software development). As of January 1, 2017 the modified nexus approach applies.
A transitional regime applies until January 1, 2021 for income from patents obtained before January 1, 2017 or activities performed before that date for which the WBSO payroll tax subsidy was granted.
A special tax regime applies for maritime shipping companies. The tonnage regime is applied upon request.
The standard rate is 21 percent, and the reduced rates are 6 and 0 percent.
Robert van der Jagt
KPMG EU Tax Centre
T: +31 (0)20 656 1356
Paul te Boekhorst
KPMG in the Netherlands
T: +31 (0)20 656 1462