Companies that are established in the Netherlands, i.e. companies whose management is located in the Netherlands or that are incorporated under Dutch law, are liable to tax in the Netherlands. Generally, their worldwide profits are subject to taxation. If you are a foreign company doing business in the Netherlands, you may also be confronted with Dutch taxation. This is the case if, for example, you have a permanent establishment in the Netherlands. In this article our experts discuss some of the main points of Dutch corporate income tax.
Registration of Dutch establishment
Dutch legal forms are automatically registered with the Dutch Chamber of Commerce (‘KvK’) upon incorporation. If you are a foreign company and have a branch in the Netherlands, you are responsible for registering it with the Chamber of Commerce yourself. Check with your advisor whether you have a permanent establishment and determine Dutch your tax position.
When you register a business with the Dutch Chamber of Commerce, its details are passed on to the Dutch Tax Authorities. This means that the business is automatically registered in the Dutch Tax Authorities’ systems.
Obligation to file a tax return
Companies subject to corporate income tax need to file an annual corporate income tax return. This must be submitted to the Dutch Tax Authorities within five months of the end of the financial year. It is possible to apply for an extension to this period. The tax return may be compiled in a currency other than the euro. To do so, you must first apply for a functional currency decision (‘beschikking functionele valuta’).
Please note: although the Dutch Tax Authorities receive information from the Chamber of Commerce, your company’s activities determine whether you are liable to pay corporate income tax. Registration with the Chamber of Commerce is not decisive in this respect, so make sure your tax position is clear.
Participation exemption
Almost all of a Dutch entity’s income is subject to corporate income tax, including dividends and capital gains.
An exception may apply if the participation exemption is applicable. A shareholding may qualify as a participation if an entity holds an interest of at least 5% in another company and meets a number of conditions. As a result of the participation exemption, dividend distributions by a participation are not subject to Dutch corporate income tax at the level of the holding company. This means that dividend distributions from a subsidiary to a holding company may take place without taxation. Capital gains from the sale of shares in a participation also fall within the scope of the participation exemption.
Other aspects to keep in mind
Tax rates
Corporate income tax (2024) is levied at a rate of 19% on the taxable profit up to € 200,000 and at 25.8% on the taxable profit exceeding that amount.
Taxable profit
Generally, capital gains are taxed unless a specific exemption applies. Dividends and capital gains received by Dutch companies are taxed unless the participation exemption applies.
Offsetting losses
Under Dutch loss relief rules, losses may be offset against profits from certain other years. Losses from 2013 or later years may generally be carried back to the preceding year, or offset against future profits. There is a limit to loss relief. Profits up to and including €1,000,000 may be offset in full. Fifty percent of the profits exceeding this amount are eligible for offsetting against losses. Loss relief may be limited further under certain circumstances.
Interest deduction restrictions
There are several interest deduction restrictions in Dutch corporate income tax law. If a restriction applies, the deduction of interest paid may be limited in full or in part. Read more about the tax treatment of interest here.
More on Dutch corporate income tax
Dutch corporate income tax is a broad topic. You may be interested in reading our articles on downstream structuring in the Netherlands and upstream group and shareholder interests.
Contact
If you have any questions or would like to learn more, please contact our advisors. We would be happy to provide you with more information on Dutch corporate income taxation and discuss your tax position.
The legislation and regulations in this area may be subject to change. We recommend that you discuss the potential impact of this with your Baker Tilly advisor.
