Box 2: income from substantial shareholdings

The taxation of income from substantial shareholding (Box 2 income)

If a Dutch resident has a so-called 'substantial shareholding' (in Dutch: 'aanmerkelijk belang') in a qualifying Dutch or foreign corporation, the income out of this shareholding must be included in Box 2 in the Dutch personal income tax return.

If a taxpayer has a direct or indirect substantial shareholding in a corporation, the income derived from a loan to this corporation or the income from putting assets to the disposal of this corporation, constitutes taxable income in Box 1 (income from other labor) in the Dutch personal income tax return.

What qualifies as a substantial shareholding? 

A taxpayer is considered to have a substantial shareholding if the taxpayer, directly or indirectly, owns alone or together with his/her fiscal partner:

• at least 5% of the issued share capital of the company (excluding repurchased shares which are to be cancelled);
  has the right to acquire at least 5% of the aforementioned shares; or
• profit shares (in Dutch: 'winstbewijzen') which give entitlement to at least 5% of annual profits or at least 5% of the liquidation proceeds; or
• at least 5% of the voting rights in a cooperation (in Dutch: 'coöperatie') or a Society on Cooperative basis (in Dutch: 'vereniging op coöperatieve grondslag').

The aforementioned criteria apply to legal ownership, but also to various forms of economic ownership.

An option to acquire shares or profit shares is, in essence is treated the same way as the underlying shares/ profit shares. 

For the application of the rules for substantial shareholdings, a Mutual Fund (in Dutch: 'fonds voor gemene rekening') subject to corporate tax, a cooperation or society on cooperative basis, are in essence treated the same way as corporations.

If a corporation has different classes of shares, the 5% criterion must be applied to each separate class of shares. Special rules apply to determine a class of share.

If a taxpayer is considered to have a direct or indirect substantial shareholding, other shares and profit shares in the subsidiary are considered to belong to this substantial shareholding as well and follow the same regime.

The taxable income for substantial shareholders

The taxable income for substantial shareholders includes the regular income derived from the substantial shareholding (like dividends) reduced with allocable costs, and the income (capital gains) realized with the alienation of shares belonging to the substantial shareholding. This income can be reduced with the personal allowances.

Under certain conditions the income derived from a substantial shareholding acquired as part of an inheritance within the first 2 years can upon request be deducted from the acquisition price of the substantial shareholding.

What we can do for you?

We are professional tax lawyers and we can advise you on your personal tax position and handle the preparation and filing of your annual Dutch personal income tax return and other tax compliance matters on your behalf.

We have very competitive rates for individuals and we can prepare and file your personal income tax return (and take care of other personal income tax compliance) on the basis of fixed prices which are agreed upon with you in advance.

The price for a specific tax return is dependent on your personal circumstances and the service which you wish to receive from us.

Please feel free to use our ONLINE FEE CALCULATOR for determining the fixed fee which you would have to pay us for the preparation of your personal income tax return.