Corporate income tax is levied on income and capital gains at a maximum rate of 25% for more than €245,000 in taxable income. A reduced rate of 15% applies to taxable income up to €200,000. There are no provincial or municipal taxes on income.
The following entities are subject to Dutch corporate income tax:
Companies incorporated under Dutch law are deemed to be residents of the Netherlands (pursuant to the so-called the “incorporation theory”). This fiction applies to most corporate income tax provisions and for dividend withholding tax as well as interest and royalty withholding tax purposes (we refer to section 10 below).
Should such company also be regarded as a resident of another jurisdiction and should a tax treaty be applicable, then the company’s place of residence will be determined on the basis of all applicable facts and circumstances on a case-by-case basis. This also applies to companies not incorporated under Dutch law.
A Dutch tax resident company is taxed on its worldwide income. A non-resident company is subject to Dutch corporate income tax only in respect of Dutch source income (e.g. income derived trough a Dutch permanent establishment or permanent representative as well as immovable property and natural resources located in the Netherlands). These taxing rights may be, however, limited under an applicable bilateral tax treaty.
Profits and losses attributable to a foreign permanent establishment or representative, are excluded from the company’s Dutch corporate income tax base. Any overall tax losses realised during the existence of the permanent establishment may be taken into account in the Netherlands at its termination (stakingsverlies), but only to the extent that:
The following tax incentives may be available for taxpayers:
The participation exemption regime prevents economic double taxation by exempting dividends received by Dutch corporate taxpayers from a qualifying subsidiary and capital gains realized on the sale of an interest (e.g. shares) in such qualifying subsidiary from Dutch corporate income tax. Losses (including foreign exchange losses) incurred on the disposal of an interest in a qualifying shareholding are also non-deductible. An exception is provided for liquidation losses (liquidatieverlies), which can be deducted under certain circumstances. Additionally, costs relating to the acquisition or sale of a qualifying interest may fall within the scope of the regime and may therefore be non-deductible.
Dutch tax law provides for a group tax consolidation regime whereby taxpayers that are resident in the Netherlands, or have a permanent establishment in the Netherlands to which the shares in a Dutch resident company can be allocated, can form a fiscal unity (fiscale eenheid). Companies included in a fiscal unity are allowed to file a single (consolidated) corporate income tax return. Intercompany transactions are generally ignored for corporate income tax purposes to the extent that they are entered into between members of the fiscal unity (please note that exceptions may apply). Additionally, the transfer of assets within the fiscal unity is, in principle, not treated as a taxable event. As a result, any hidden reserves (including goodwill) are not taxed. Furthermore, losses of one member of the fiscal unity can be offset against profits of other fiscal unity members.
Dutch subsidiaries that are held by a Dutch parent company through a qualifying EU or European Economic Area (“EEA“) subsidiary can also be included in the fiscal unity. In addition, Dutch sister companies with a joint EU or EEA parent company that satisfies the aforementioned requirements, can also form a fiscal unity. Due to EU case law (Groupe Steria case), new rules have been introduced. As a result thereof, certain anti-abuse provisions that applied to non-resident taxpayers and their Dutch resident subsidiaries will now also apply to fiscal unities on a standalone basis for the subsidiaries that they include.
The Dutch legislator is currently working on a proposal for a new group system that is sustainable (and in line with EU law) for the future. Details have not yet been disclosed.
A CFC-regime has been introduced as of 1 January 2019, where certain non-distributed income from a low-taxed foreign subsidiary – in which the taxpayer directly or indirectly owns more than 50% of the shares – or a low-taxed permanent establishment is included in the taxable income of the Dutch corporate taxpayer. The CFC rules aim to combat tax evasion through the use of low-tax jurisdictions.
An entity or permanent establishment is considered to be low-taxed if it is:
In case a CFC is deemed present, certain non-distributed income is included in the taxable income of the Dutch corporate taxpayer. CFC income is defined as:
Any related expenses may be deducted. CFC-income should only be taken into account to the extent that the balance of benefits (i.e. income less expenses) is a positive amount and to the extent that this balance, by the end of the financial year, has not been distributed by the CFC.
An exception to the CFC rules is available in case the listed items of passive income derived by the subsidiary make up less than 30% of the total income or in case the subsidiary carries out substantial economic activities in its country of establishment.
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Last updated September 2021
