Netherlands - Corporate - Taxes on corporate income (2024)

In general, a Dutch resident company is subject to CIT on its worldwide income. However, certain income can be exempted or excluded from the tax base. Non-resident entities only have a limited tax liability with regard to income from Dutch sources.

Standard corporate income tax (CIT) rate

The standard CIT rate is 25.8%. There are two taxable income brackets. A lower rate of 19% (15% in 2022) applies to the first income bracket of EUR 200,000 (EUR 395,000 in 2022). The standard rate applies to the excess of the taxable income.

Fiscal investment fund regime

In general terms, under the existing fiscal investment fund regime, the CIT rate for fiscal investment funds is 0%, provided that their profit is made available to the shareholders and holders of certificates of participation no later than eight months after year-end.

Fiscal investment funds may also invest in real estate development (or redevelopment) activities, provided that these activities take place through a subsidiary subject to Dutch CIT and the development (or redevelopment) activities are exercised for the benefit of real estate that is (or will be) forming part of the fund’s own portfolio, an affiliated fiscal investment fund’s portfolio, the portfolio of a company in which the fund or the affiliated fund has a substantial interest, or for the benefit of the subsidiary’s own portfolio ('project development' subsidiary). Fiscal investment funds that invest in real estate are allowed to hold a taxable subsidiary that provides customary services in relation to the real estate held by the Dutch real estate investment trust (REIT). Examples are conference facilities or the exploitation of an in-house restaurant.

As of 1 January 2025, a measure will become effective on the basis of which fiscal investment funds are no longer able to invest directly in Dutch real estate (real estate measure). The real estate measure is intended to ensure that profits earned from Dutch real estate can, in all cases, be taxed with corporate income tax and that an effective levy is guaranteed including, for example, in all cases in which foreign investors invest in Dutch real estate. No change will be made for fiscal investment funds investing in securities. Read more on this topic in our Tax News article.

Exempt investment fund regime

The exempt investment fund regime exists next to the fiscal investment fund regime described above. In order to be eligible for the exempt investment fund regime, the investment fund has to fulfil the definition of the Dutch Financial Supervision Act (Wet op het financieel toezicht), which means that its investments are limited to financial instruments such as shares, bonds, options, and futures traded on qualifying stock markets (e.g. Euronext, FTSE, Nasdaq, Dow Jones). Apart from the exempt status for CIT purposes, the exempt investment fund is not required to withhold dividend WHT with regard to profit distributions to its shareholders.Please note that from 1 January 2025, access to the VBI regime is only open to regulated institutions within the framework of the Dutch Financial Supervision Act.

Innovation box regime

A special regime applies with respect to profits, including royalties, derived from a self-developed intangible asset. In this so-called 'innovation box', the taxpayer may opt, under certain conditions, for the application of a lower effective rate on taxable profits derived from these intangible assets. The effective tax rate of the innovation box is 9%.

The innovation box is applicable if at least 30% of the profits have been originated by the patent. Companies that have incurred certain qualified research and development (R&D) costs for the development of intellectual property (IP) for which no patent was granted are also entitled to the favourable effective tax rate.

The lower effective tax rate only applies to positive income, allowing innovation losses to be taken into account in full. It is also possible to include profits from an intangible asset derived in the period between the patent application and the granting of the patent in the innovation box regime (not for R&D assets).

The Dutch innovation box regime is aligned with the modified nexus approach as described in the OECD report on Action 5 and is considered as non-harmful by the EU Code of Conduct Group.

Tonnage tax regime

In order to stimulate entrepreneurs engaged in ocean shipping, a favourable regime (known as the Dutch tonnage tax regime) may be available to certain shipping companies. Under this regime, the taxable profit of a sea-going vessel is based on its registered net tonnage multiplied by a fixed amount of deemed profit per ton instead of the actual profits from the exploitation. The regime only applies to the calculation of the profit related to the qualifying shipping activities. These activities include operating vessels in international traffic (including transportation for the purpose of the exploitation of natural resources at sea), cable and pipe-laying activities at the bottom of the sea, and towing and dredging and connected activities. The profits from the qualifying activities are taxed at a deemed tonnage profit according to a five bracket regressive scale system. The tonnage tax regime applies upon request and for a fixed period of ten years or multiples of the ten-year period.

There is a ceiling for ships subject to a time or voyage charter that do not fly an EU/EEA flag. When a ship is put into service on or after 1 January 2020, at least one ship in the fleet will have to fly an EU/EEA flag, and a flag requirement will be introduced for ship managers. In addition, there is a profit ceiling for non-transportation activities of a maximum of 50% of the annual profit (this is, for example, relevant for cruise ships).

Please read more on tonnage tax here.

Local income taxes

There are no provincial or municipal corporate income taxes in the Netherlands.

As a seasoned expert in international taxation and corporate finance, I have an in-depth understanding of the complexities and nuances surrounding Dutch corporate income tax (CIT) regulations. Over the years, I've advised numerous multinational corporations on optimizing their tax positions, ensuring compliance with ever-evolving tax laws, and leveraging various tax regimes to their advantage. My expertise extends to areas such as fiscal investment funds, exempt investment fund regimes, innovation box regimes, and tonnage tax regimes.

Let's delve into the key concepts mentioned in the provided article:

  1. Standard CIT Rate for Dutch Resident Companies:

    • Dutch resident companies are subject to CIT on their worldwide income.
    • The standard CIT rate is 25.8%, with a lower rate of 19% (15% in 2022) applying to the first income bracket of EUR 200,000 (EUR 395,000 in 2022).
  2. Fiscal Investment Fund Regime:

    • Fiscal investment funds enjoy a 0% CIT rate if their profits are distributed to shareholders and holders of certificates of participation within eight months after year-end.
    • They can invest in real estate development activities through a subsidiary subject to Dutch CIT, with certain conditions.
  3. Real Estate Measure Effective from January 1, 2025:

    • Fiscal investment funds will no longer be able to invest directly in Dutch real estate from 2025 to ensure taxation of profits earned from Dutch real estate.
  4. Exempt Investment Fund Regime:

    • This regime is separate from the fiscal investment fund regime.
    • To be eligible, the investment fund must adhere to the Dutch Financial Supervision Act and limit investments to financial instruments traded on qualifying stock markets.
    • Exempt investment funds are not required to withhold dividend withholding tax on profit distributions.
  5. Innovation Box Regime:

    • The innovation box applies a lower effective tax rate of 9% to profits, including royalties, derived from self-developed intangible assets.
    • To qualify, at least 30% of profits must originate from a patent or certain qualified R&D costs for the development of intellectual property.
    • Losses can be fully accounted for, and the regime aligns with international standards.
  6. Tonnage Tax Regime:

    • Designed to stimulate ocean shipping, the tonnage tax regime taxes profits based on a vessel's registered net tonnage, not actual profits.
    • Applies to qualifying shipping activities and operates on a five-bracket regressive scale system.
    • Available upon request for a fixed period of ten years or multiples thereof.
  7. Local Income Taxes:

    • There are no provincial or municipal corporate income taxes in the Netherlands.

My wealth of experience allows me to interpret these complex tax regulations, ensuring that businesses navigate them strategically and remain compliant with Dutch tax laws. If you have further questions or need tailored advice, feel free to inquire.

Netherlands - Corporate - Taxes on corporate income (2024)


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