Dutch corporate tax regime

 

 

Tax liability for corporate entities

Almost all corporate entities (established and residing in the Netherlands) are subject to Dutch corporate income tax for their worldwide profits. Foreign source income, a tax exemption, or a tax credit may be available to avoid double taxation, as provided by applicable tax treaties or the Dutch unilateral rules for double taxation (if no tax treaty applies).       

Branches of foreign corporate entities are generally only subject to Dutch corporate income tax for specific categories of Dutch source income, such as Dutch real estate or a Dutch permanent establishment.

Tax residence 

Most entities incorporated under Dutch law are automatically treated as tax residents of the Netherlands. Dutch or foreign law provides those corporate entities are to be treated as tax resident of the Netherlands if they can be considered to have their place of effective management in the Netherlands according to the facts and circumstances.    

Most tax treaties provide for a so-called "tiebreaker rule" when a corporation is considered a tax resident of both treaty states (dual tax residence). In most cases, the corporation will, for application of the tax treaty, have to be considered a tax resident of the country where its effective management is situated.  

Tax liability for Dutch branches of non-resident corporations

According to Dutch domestic tax law, a foreign corporate entity doing business in the Netherlands becomes subject to Dutch corporate income tax if and to the extent the foreign corporation can be considered to have a permanent establishment or fixed representative in the Netherlands. 

Under most tax treaties, the tax liability is limited to profits attributable to a qualifying permanent establishment. The tax treaty generally provides for a definition of the concept of "permanent establishment." If a tax treaty applies, the definition of permanent establishment provided by this tax treaty also applies to the application of Dutch corporate tax laws. The Dutch unilateral definition of permanent establishment is only relevant if no tax treaty applies.  

Under most tax treaties, specific activities of an auxiliary, preparatory, or supporting nature are explicitly excluded from the definition of taxable permanent establishment and not subject to Dutch corporate income tax. This includes the representation in the Netherlands of a so-called Representative Office. 

The taxable base and the applicable tax rates for Branches are the same as for Dutch corporations. No special rules apply for the calculation of the taxable profits of permanent establishments; in particular, no special "branch tax" is imposed. There is also no Dutch withholding tax imposed on the remittance of profits by a Dutch Branch to its foreign head office. 

Tax liability for Dutch subsidiaries of foreign corporate entities

Dutch subsidiaries of foreign entities are treated the same way as Dutch-owned corporations.

A Dutch subsidiary will be subject to Dutch corporate income tax on its worldwide profits and capital gains if it is either incorporated in the Netherlands or managed and controlled by the Netherlands.

There are no special tax requirements or restrictions for foreign ownership of Dutch corporations.

Foreign shareholders of a Dutch corporation may be exposed to a Dutch withholding tax on dividends (15%- 2023) unless a lower rate applies instead of a domestic exemption, an exemption provided by an EU Directive, or an applicable tax treaty.  

Corporate shareholders that hold 5% or more of the shares in a Dutch corporation may be eligible for an exemption from the dividend withholding tax under certain conditions. The primary condition to be met for this exemption is that the conditions for applying the Dutch participation exemption have been complied with. Also, specific substance requirements apply to foreign corporate shareholders.        

An overview of the Dutch dividend withholding tax rates under applicable tax treaties is in the  Dutch Tax Treaty Database.  

Group taxation (fiscal unity)

The Dutch Corporate Income Tax Act provides group taxation, referred to as "fiscal unity."

The fiscal unity can include a Dutch parent company with multiple direct and indirect Dutch subsidiaries, whereby the subsidiaries are for the levy of Dutch corporate income tax deemed to be absorbed by the parent company (owning directly or indirectly at least 95% of all of the issued share capital of the subsidiary) and the only remaining entity that is taxed for the consolidated profits, is the parent company (as fiscal unity).

Fiscal unity is optional and must be applied for in advance. Various conditions must be met, of which the most important conditions are: 

• The parent company must hold directly or indirectly at least 95% of the shares in the subsidiary (varieties of "shares" possible), 
• The parent and subsidiary must have the legal form B.V., N.V., mutual insurance society, cooperative, foundation, or association that acts as a housing corporation or have a similar foreign legal status
• The parent company and the subsidiary must apply the same financial years and profit tax regime and have their tax residence in the Netherlands. 

A fiscal unity can only be established between Dutch entities, according to the non-discrimination principles of EU law, and obtained between a Dutch company and its Dutch grandparent company, with non-qualifying EU holding companies, or between two Dutch sister companies under a non-qualifying EU parent company.  

The primary advantage of fiscal unity is that profits and losses of group companies that form part of the unity can be offset against each other. This means that transactions between group companies within the fiscal unity can be eliminated for Dutch corporate income tax purposes. Within a fiscal unity, goods and services can be delivered and rendered without being recognized as such for the levy of Dutch corporate tax, and internal reorganizations can be carried through without triggering taxable profits or capital gains for the levy of Dutch corporate income tax, subject to various anti-abuse provisions will have to be considered.

The fiscal unity concept can also facilitate the leveraged acquisition of a Dutch target company by a Dutch holding company. By having the Dutch holding company enter into a fiscal unity with the target company from the date of acquisition, it is within certain restrictions possible to offset the interest expenses to be incurred by the holding company on the funding loan against the operating profits of the target company.

The fiscal unity regime only applies to Dutch corporate income tax. A similar regime can be used for Dutch VAT purposes, but this is a different concept, with its conditions and a separate application procedure.  

Tax year

The standard tax year is the calendar year, but a deviating financial year is allowed. A company may, for example, use its parent's fiscal year or accounting year as its tax year.

The tax year used by a parent and a subsidiary does not necessarily have to coincide (except for some special tax provisions to be invoked).

The tax year must generally coincide with the statutory year of the corporation. Upon incorporation, a Dutch corporation can, within specific parameters, have an extended book year.

Functional currency 

The primary reporting currency for Dutch corporate tax purposes is the EURO. 

If the company has permission to use another reporting for its financial reporting in the Netherlands, it can apply the same currency as its reporting currency upon written request.  

Tax rate

We refer to the page "Dutch tax rates for corporations."

Portfolio investment income received by a company that has obtained the status of a "Fiscale Beleggingsinstelling" (a so-called Fiscal Investment Company) can qualify for a 0% tax rate. To qualify for this regime, various conditions are to be met concerning the shareholders, the activities, the funding, and the distributions of profits, among others. Also note that despite this 0% rate, the Dutch tax authorities take the standpoint that such a company is subject to tax and should qualify for the benefits (i.e., reduced withholding tax rates) by the Dutch tax treaties.

There is also a special tax regime for qualifying portfolio investment companies. A B.V. (or similar corporate entity) that mainly manages portfolio investments on behalf of its shareholders may opt for a complete exemption of Dutch corporate income tax and dividend withholding tax under certain conditions and is cited as a "Tax Exempt Investment Company" or "Vrijgestelde Beleggingsinstelling."

A Tax-Exempt Investment Company has no treaty access and thus cannot enjoy treaty benefits from the Dutch perspective.

Taxable profits

Corporate income tax is assessed on taxable profits.

Taxable profits are determined based on book profits calculated according to Dutch accounting standards and adjusted with some adjustments for tax purposes. Adjustments can result in temporary or permanent differences between the book profits and profits for tax purposes.

In general, expenses incurred in the ordinary course of business are tax-deductible. Certain costs, however, are not deductible or only partly tax-deductible (including costs of food, drinks, entertainment, fines, and penalties). Regular profit distributions (dividends), corporate income tax, and certain profit-sharing payments are not tax deductible. 

Capital gains

Capital gains and losses are treated similarly to other income and are to be included in taxable profits.

As a general rule of sound business practice, capital gains are not taxed until realized, while on the other hand, capital losses can be deducted on an accrual basis.

Dutch tax law provides various possibilities to exempt or defer taxation over capital gains. Please also see the following paragraph. 

Depreciation of assets 

For the levy of income tax in the Netherlands, depreciation of tangible and intangible business assets within specific parameters is allowed. Tax depreciation of assets held as investments is not allowed.  

General tax depreciation regime

The law does not prescribe a particular depreciation method but instead refers to principles of "sound business practice."

The general principle of "sound business practice" is that annual depreciation should reflect the decrease in value of the asset, considering the acquisition price or construction cost, the estimated (economic) life of the asset, and its expected residual value.  This means that virtually all generally applied depreciation methods (straight-line method, declining-balance method, etc.) are allowed, provided that they provide a reasonable outcome (per sound business practice) and are consistently applied. The most common tax deprecation method is the straight-line depreciation method.  

Under certain conditions, application for certain forms of accelerated depreciation to assets important for environmental protection (and listed as such) is possible. Furthermore, special relaxing tax deprecation rules may apply for starting entrepreneurs, sea-going vessels, etc.

For particular business assets, the Dutch income tax law provides for limitations on tax depreciation. As such, it is essential to deviate between the depreciation terms of the following assets:

• Intangible assets
• Real estate 
• Other business assets

Tax Deprecation Intangible assets

A distinction should be made between acquired goodwill and other intangible assets.

According to Dutch tax law, acquired goodwill may be depreciated over ten (10) years with a maximum of 10% per year.  For tax purposes, other intangible assets will follow the depreciation rules of other business assets. This implies that the maximum annual depreciation is, generally, at 20% of the initial or construction cost. The depreciation may not exceed 20%.

The cost of (self) produced intangible assets (except self-produced goodwill, which is not deductible) can generally be depreciated at once.

Tax Depreciation Real estate 

The depreciation of real estate for tax purposes is limited; in practice, it is only possible to depreciate for tax purposes on "buildings in own use," and then only to the extent the remaining book value stays above a definite minimum book value.  The minimum book value is (equal to) the so-called WOZ value for corporate taxpayers. The WOZ value is the assessed value for the levy of municipal taxes, etc., but plays a prominent role in the levy of other taxes relating to (the ownership of) real estate. 

Based on the rule mentioned above, depreciation of buildings for their use for tax purposes in case the book value of the building drops below 50% of the WOZ- value is not possible.

For individual taxpayers (subject to personal income tax,) the minimum book value for owner-occupied real estate is 50% of the WOZ value, and for other real estate (investments,) it is equal to the WOZ value.   

Outside these parameters, the amount of depreciation of real estate is calculated as follows: the acquisition value of (the business part of) the real estate or its construction costs (= A) reduced by (a proportional share of) the value of included land (= G), minus the expected residual value of the real estate (= R) and divided by the useful life (say 30 years). The height of the maximum tax depreciation per year is then (A - R - G)/ 30.  

Depreciation of other tangible business assets

Assets with a relatively low value of less than € 450 (2023) can be deducted at once in the year of acquisition/ construction.

The maximum annual depreciation is generally set at 20% of the initial or construction costs with less residual value. The tax depreciation may not exceed 20%.

Accelerated depreciation for environmentally friendly investments (VAMIL)

With VAMIL, certain environmentally friendly assets can be freely depreciated for tax purposes up to 75% of the purchase value or cost price.

VAMIL is often applied with the Environmental Investment Deduction (MIA), based on which an additional deduction from taxable profits is permitted for the same environmentally friendly business assets, up to a maximum of 45% of the investment amount.

The MIA and VAMIL are two different schemes that could be applied in combination with each other, and both schemes have a joint list for qualifying business assets (called the Environmental List), which is updated from year to year.

In essence, any company that is subject to Dutch corporate income tax can qualify for the VAMIL, but the investment must meet the following conditions:

• The asset is on the environmental list.
• The asset is new or almost new and has not been used before (special rules apply to cars).
• The investment must relate to the purchase and production costs of the assets.
• The number of environmental investments must be at least € 2,500 per asset.
• Unless explicitly stated otherwise on the Environmental List, a maximum of € 25 or € 50 million is eligible per taxpayer per year (depending on the type of business asset).
• Within three (3) months after the investment, this must be reported to the Netherlands Enterprise Agency (RVO), which will issue a confirmation to that effect.

The VAMIL must be applied in the corporate income tax return of the year in which the accelerated depreciation deduction has been processed.

Accelerated depreciation for certain business assets in 2023

In addition to the free depreciation of environmentally friendly assets (VAMIL), a new one-off free tax depreciation scheme for 2023 has been introduced.

According to this new facility, the taxpayer may claim tax depreciation for 2023, up to a maximum of 50%. The remaining value should be depreciated according to the standard tax depreciation rules.

This new facility only applies to investments in new business assets purchased or produced in the calendar year 2023 and are put into use before January 1, 2026.

The following business assets are explicitly excluded from the 2023 free tax depreciation scheme:

• Buildings
• Ships
• Aircraft
• Mopeds and motorcycles
• Passenger cars that are not intended for professional transport
• Cars without CO2 emissions are eligible for arbitrary depreciation.
• Intangible assets such as permits and goodwill
• Animals
• Assets that are mainly intended for rental
• Roads and paths open to public traffic, including bridges, viaducts, culverts, and tunnels
• Assets that are already freely depreciated under another special tax regime.

Interest deduction 

The Dutch tax law provides various limitations for tax of interest expenses depending on the specific situation.

As a general rule, the capitalization of a Dutch company should be in line with standard business practice and thus be per the "at arm's length principle."

As of 2019, an earning stripping rule was introduced in the context of (the implementation) of ATAD 1: the 1st EU Anti-Tax Avoidance Directive. The earning stripping rules limit the deductibility of ‘excess’ net interest expenses.

The Dutch earnings stripping rule essentially applies to all Dutch corporate taxpayers in which it provides that any excess interest costs (i.e., the balance of interest costs and interest income, including foreign exchange results on the loans) are only deductible up to 20% (2023) of the earnings before interest, taxes, depreciation and amortization (EBITDA). The earnings stripping rule contains a threshold of € 1,000,000 (2023), deemed "excess" interest expenses up to and including €1,000,000, and is not restricted by this measure.

The non-deductible interest affected by this measure can be carried forward indefinitely (i.e., deducted from future profits but only so far as the interest does not exceed the earnings stripping rule in the respective years). However, anti-abuse change-of-control rules have been introduced that limit the carry forward in abusive situations.

The new earnings stripping rules will be applied to standalone taxpayers. In the case of a group (i.e., Dutch fiscal unity), the rule will be applied at a group level (and the fiscal unity will thus not be disregarded for purposes of this rule).

The law also provides interest deduction limitation rules for specific situations of alleged abuse, which typically apply to (specific) transactions through which debt is created, for instance. 

• Internal or external acquisitions of shares in subsidiaries,
• Dividends declared,  
• capital contributions into subsidiaries. 

The interest expenses resulting from these kinds of "tainted" transactions, as defined by law, are only tax deductible if the transaction and the creation of the related loan are based predominantly on sound business considerations (double business motive test) or if there is a reasonable (at least 10%) taxation of the corresponding interest income in the hands of the recipient. 

Tax exemptions

The Dutch corporate tax system provides for various income exemptions, either in the form of a permanent exemption or a temporary exemption in the form of a rollover relief (deferral of taxation).

Permanent exemptions do (among others) include the exemption of:

• dividends received from and capital gains realized on the shares in qualifying Dutch or foreign subsidiaries (the Dutch participation exemption)
• interest on certain profit-participating loans granted by a parent to a subsidiary
• Specific categories of foreign source income under applicable tax treaties or the Dutch unilateral rules for the avoidance of double taxation
• the profits arising as a consequence of the waiver of debt (under certain conditions)

Temporary exemptions include a rollover concerning:

• The profits and capital gains from qualifying legal mergers, de-mergers, spin-offs, share mergers (share for share), or business mergers (assets for shares)
• The replacement of certain business assets, including real estate ("replacement reserve")
• The conversion of a particular Dutch legal form into another specific legal form (for example, a B.V. into an N.V. or a Foundation into an Association)

Dutch participation exemption

Dutch corporate tax law provides for an exemption of dividends and capital gains on shares in qualifying subsidiaries. 

The main conditions to be met are:

• Ownership of at least 5% of the issued share capital of (or similar ownership rights in) the subsidiary
• The subsidiary has equity divided into share capital
• The shares in the subsidiary are not held as "a portfolio" investment"

A lower percentage of ownership (than the previously mentioned 5%) can suffice in specific situations.

The participation may not be held as a "portfolio investment" primarily tied to the nature of the subsidiary's activities. A taxpayer's motive is also a relevant, although arbitrary, factor. Dutch law offers two ways out if a subsidiary qualifies as a portfolio investment company: the participation exemption applies if either an "asset test" or a "subject-to-tax test" is met.

The assets of the participation should not consist of more than 50% of free passive portfolio investments (e.g., investments that do not have a business function). Participations of less than 5% are considered portfolio investments.

As far as the subject-to-tax test is concerned, the participation exemption is always applicable if the subsidiary is taxed at a realistic corporate income tax rate, which is defined as a regular statutory tax rate of at least 10% unless the taxable base differs significantly from the tax base according to Dutch standards, which could, for example, be the case when a special tax regime applies to the subsidiary.

If the participation exemption does not apply (because the subsidiary is regarded as a (low-taxed) portfolio investment) the Dutch corporate taxpayer will be taxed for the income out of the shares but may still be eligible for a (limited) credit for the underlying corporate income tax incurred by the subsidiary.

The participation exemption applies to dividends, capital gains, and possibly currency exchange and hedging results and the interest income on specific categories of profit-participating loans.

When the participation exemption applies, losses concerning the participation are generally not tax deductible, except "true" liquidation losses.

Under the Dutch participation exemption rules, a Dutch (intermediate) holding company may deduct all costs and expenses incurred in connection with its subsidiaries (not only general and administrative expenses but also interest expenses related to acquisition financing unless limited under earnings stripping rules.) Expenses incurred concerning the purchase or sale of shares in a qualifying subsidiary are no longer deductible. 

Controlled Foreign Corporations (CFC) rules 

Dutch tax law provides for a CFC regime, which aims to deny the participation exemption for majority (more than 50%) shareholdings in a foreign subsidiary or foreign permanent establishment with particular categories of passive income which is established in a blacklisted low-taxed jurisdiction (with a rate of less than 9%) or a non-cooperative state.

Based on ATAD 1 (the 1st EU Anti-Tax Avoidance Directive), as of 2019, the Dutch corporate tax act contains so-called CFC (controlled foreign company) rules. 

In summary, these CFC rules apply if a Dutch corporate taxpayer has a direct or indirect interest of more than 50% in a low-taxed foreign subsidiary or a low-taxed permanent establishment with specific non-distributed passive income categories.   

Under the CFC rules, an entity or permanent establishment is considered as low-taxed if it is:

• A tax resident in a jurisdiction without corporate income tax or with a statutory corporate income tax rate lower than 9 % or;
• A tax resident of a jurisdiction included in the EU list of non-cooperative jurisdictions (EU Blacklist).

In case these requirements are met, undistributed tainted passive income (such as dividends, interest, royalties, benefits from the sale of shares, benefits from financial leasing, and other financial/banking/insurance activities) of the CFC has to be included in the Dutch corporate taxpayer’s taxable income which needs to be recognized on an accrual basis.  

The CFC rules do not apply if performed as an economic activity of significance in its country of establishment. The CFC is deemed to execute an economic activity of significance if it fulfills several substance requirements, including a wage criterion of at least EUR 100,000 and having its office space available for at least 24 months.

Investment deductions

The taxpayer is allowed an extra tax deduction over the standard depreciation for certain investments that include:

Small investment deduction (KIA)

Companies can deduct a percentage of the total amount of investments made in a year up to the total amount of investments of EUR 2,400 (2023) and not exceed an amount of EUR 353,973 (2023).

The percentage (2023) varies (in brackets) from 28% for investments between EUR 2,400 and EUR 63,715, an additional fixed amount of EUR 17,841 for investments up from EUR 63,715 up to EUR 117,991, and for investments between EUR 117,991 and EUR 353,973 an amount of EUR 17,841 plus 7.56% of the part of the investment exceeding EUR 117,991 but no more than EUR 353,973. There is no investment deduction provided for investments over EUR 353,973. 

Energy Investment Deduction (EIA)

For investments in qualifying energy-saving assets, an additional tax deduction is available. 

The deductible percentage in a tax year can amount to 45.5%. The investment threshold is € 2,500, and no investment allowance is granted for investments exceeding EURO 136,064,000 (2023) in a tax year.

The asset meets the requirements of the so-called "Energy List." It must be a newly acquired asset (not used before) or a self-fabricated asset. The Energy List is updated annually and published by the end of the tax year as an amendment of the '2001 Energy Investment Allowance Implementation Regulation'.

The EIA must be claimed in the annual corporate tax return but should be preceded by an advance clearance procedure with the Netherlands Enterprise Agency (RVO). The taxpayer must report the EIA investment with the RVO no later than three (3) months after the taxpayer entered into the investment obligation for the asset. If the taxpayer produced the asset itself, the taxpayer must report the production costs within three (3) months after the end of the calendar quarter in which the production costs were incurred/paid. 

Environmental Investment Deduction (MIA)

For investments in qualifying environmentally-friendly assets, an additional tax deduction is available. 

The deductible percentage in connection with qualifying investments in environmental-friendly assets amounts to 27%, 36%, or 45% (2023) based on the exact nature of the asset. The investment threshold is € 2,500. The maximum number of eligible investments in environmentally friendly assets is € 25,000,000. 

The asset meets the requirements of the so-called "Environmental List." It must be a newly acquired asset (not used before) or a self-fabricated asset. The Environmental List is updated annually by the Ministry of Infrastructure and Water Management in collaboration with RVO. For an asset to be admitted to this list, it should have a considerable environmental benefit in the Netherlands compared to the usual alternative in the relevant industry and be more expensive than the less environmentally friendly alternative. Furthermore, the (further) market introduction of the asset must be desirable.  

The MIA must be claimed in the annual corporate tax return but should be preceded by an advance clearance procedure with the Netherlands Enterprise Agency (RVO). The taxpayer must report the MIA investment with the RVO no later than three (3) months after the taxpayer entered into the investment obligation for the asset. If the taxpayer produced the asset itself, the taxpayer must report the production costs within three (3) months after the end of the calendar quarter in which the production costs were incurred/paid. 

Special tax regimes  

The Dutch tax law provides special tax regimes for qualifying R&D activities conducted and shipping activities in the Netherlands. Both regimes are optional and must be applied for. There is also a facility allowing accelerated tax depreciation for certain assets.   

R & D - wage tax cost (WBSO)

The Dutch Act for the Promotion of Research and Development Activities (or WBSO) provides a credit of wage taxes due on wages relating to qualifying R&D projects. 

The credit amounts to a percentage of recognized R&D costs (salary + other expenses) and a percentage of the excess.  For qualifying start-ups, a higher percentage for the first bracket applies. The credit may not exceed the total amount of wage tax due. Instead of the credit based on R&D costs and expenses, the taxpayer may claim a fixed amount based on the forecasted and recognized R&D working hours.

To qualify for the WBSO, the R&D project should take place in the European Union, concerning the development of new software, a (tangible) product, or production process, or it should concern technical-scientific research. Self-developed software does usually qualify for the WBSO, and investments in trade names and brands typically do not. 

To qualify for the WBSO, an application in advance is required with the Netherlands Enterprise Agency (RVO), which should contain a clear description of the project and a forecast of the hours to be worked on this project by employees of the applicant in the Netherlands, and expenses to be incurred. When the project and forecast are accepted by the RVO, a so-called "WBSO Declaration" will be issued, which specifies the details of the project, the accepted R & D working hours, and expenses.

For more detailed information about the WBSO tax credit facility and the current amounts, rates, and percentages, please consult our publication: Incentive for Research and Development Costs in the Netherlands (WBSO).

R & D - 9% corporate tax rate (Innovation Box)

The so-called Innovation Box regime allows the income derived from qualifying R & D activities to be taxed against a reduced rate of 9% (2023). 

Access to this facility requires a WBSO Declaration specifying the details of the project and the accepted R & D working hours and expenses. 

For more detailed information about the Innovation Box and the current amounts, rates, and percentages, please consult our publication, The Innovation Box Tax Regime in the Netherlands for R & D activities.

Tonnage taxation for shipping companies

Shipping companies operating out of the Netherlands can conditionally be taxed based on the net tonnage of the vessels owned (tonnage taxation) rather than based on the taxable profits.

For more detailed information about the Dutch Tonnage Tax Regime and the current amounts, rates, and percentages, please consult our publication, The Favorable Dutch Tax Regime for Shipping Companies.

Tax losses

In 2022, the rules for carrying forward tax losses have changed significantly. 

The maximum term for the carry forward (was 6 or 9 years, depending on the year's origin) has lapsed; tax losses can, in principle, be carried forward indefinitely, but a maximum set-off per year applies if the annual profit exceeds an amount of € 1 million. In this case, no more losses may be set off than €1 million, plus 50% of the profit above €1 million. 

A loss that cannot be carried forward or back in a year due to the cap may be carried forward to future years within the same limitation. 

There is no transitional provision for pre-2021 losses, which means that the new rules apply to losses originating from financial years from January 1, 2013. The losses incurred before this date remain covered by the old rules. Due to the (old) term of nine and six years, these losses were either compensated or evaporated by December 31, 2021, at the latest.

The maximum term for carryback is one (1) year (unchanged).

Specific anti-abuse rules are provided for in legislation that aims to prevent the "trade" in tax losses. There is an overkill in the legislation so that it can also catch genuine business transactions.  

Transfer pricing

Dutch corporate tax law provides that intra-company pricing for goods and services must be at arm's length. Also, specific rules apply concerning the documentation of intra-group transactions.

We refer to our publication, Transfer Pricing in the Netherlands, for more detailed information about the Dutch transfer pricing regime.

Guidelines for inter-company pricing are given by extensive policy. In general, it is possible to obtain advance tax rulings on transfer pricing issues, referred to as Advance Pricing Agreements or APAs. 

Special rules and guidelines are provided for intra-group financial services companies, which include group financing and royalty companies.

For more detailed information about the possibility of obtaining advance tax rulings in the Netherlands, we refer to our publication, The Advance Tax Ruling (ATR) and Advance Pricing Agreement (APA) in the Netherlands.

Withholding taxes on outbound payments

Under Dutch domestic tax law, no withholding tax is levied on (genuine) outbound interest and royalty payments unless these payments are made to corporations established in countries that are on the Dutch blacklist of low-tax countries or the EU blacklist of non-cooperative states.

Dividend distributions are (in principle) subject to a 15% Dutch dividend tax at source. However, under applicable tax treaties, the rate for inter-company dividends is often reduced to even nil percent. Within the EU, a 0% rate applies. As of 2024, an additional withholding tax on dividends is levied from dividend payments to corporate shareholders established in countries that are on the Dutch blacklist of low-tax countries or the EU blacklist of non-cooperative states.

For more detailed information about the Dutch withholding taxes, we refer to our publication Withholding taxes in the Netherlands on outbound dividends, interest, or royalty payments. 

Furthermore, the extensive treaty network provides low withholding taxes on dividends, interest, and royalties payable to a Dutch company. An indirect tax credit may be available for the Dutch withholding tax due on account of the re-distribution of foreign dividends.

For more information about withholding tax rates under applicable tax treaties, please consult our online Dutch Tax Treaty Database. 

Tax treaties

The Netherlands has concluded tax treaties with more than 90 countries worldwide.

With this extensive treaty network, the Netherlands is preferred to establish internationally operating trading, holding companies, finance companies, and IP/ licensing companies.

For more information about the Dutch tax treaties, please consult our online Dutch Tax Treaty Database. 

Foreign tax credits

The extensive Dutch tax treaty network often provides for low or zero withholding taxes on dividends, interest, and royalties payable to a Dutch company.

If foreign withholding taxes are incurred, a Dutch resident taxpayer can, under applicable tax treaties or the Dutch unilateral rules on double taxation, in many cases, claim a tax credit for foreign withholding taxes. Such a tax credit allows the taxpayer (under certain conditions) to reduce the Dutch corporate income tax imposed on the grossed-up income with the amount of foreign withholding tax incurred. Upon election of the taxpayer, foreign withholding taxes may be treated as a tax-deductible item instead.

Under certain conditions, a Dutch branch of a foreign corporation (non-resident for Dutch tax purposes) can claim the tax credits provided for in Dutch tax treaties.

Tax rulings

The Netherlands has an extensive, efficient, and reliable advance ruling practice, providing for the possibility to obtain the Dutch tax implications of a particular structure of activity, the so-called Advance Tax ruling (or "ATR "), or transfer pricing related issues, the so-called Advance Pricing Agreement, or "APA" in advance.

These rulings are legally binding agreements between the tax office, the taxpayer, and, in some cases, the fiscal representative of the taxpayer concerning the Dutch tax consequences of specific structures, activities, or transactions based on the facts presented by the taxpayer and described in the agreement.   

An APA provides certainty in advance regarding the arm's length pricing of cross-border inter-company transactions, including financing or licensing activities and the provision of services (this relates to, among others, the tax treatment of Foreign Sales Corporations, foreign finance branches, cost contribution arrangements, and cost-plus activities in general).

An APA can either be unilateral (between the taxpayer and Dutch tax authorities), bilateral (the Netherlands and another State), or even multilateral (involves more than two States.)

An ATR provides certainty regarding the tax consequences of particular international structures and, or transactions in advance. An ATR application can be requested for (amongst others):

• The application of the participation exemption for intermediate holding companies or top holdings;
• International structures in which hybrid financing forms or hybrid legal forms are involved;
• The (non) existence of a permanent establishment in The Netherlands.

For more information about the possibility of obtaining a tax ruling in the Netherlands, please consult our publication, The Advance Tax Ruling (ATR) and Advance Pricing Agreement (APA) in the Netherlands. 

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