Taxes

In the Netherlands the main taxes relating to businesses are (corporate) income tax, payroll tax, dividend withholding tax and VAT.

Corporate income tax

Businesses may be liable to pay corporate income tax (vennootschapsbelasting) if they conduct business in the Netherlands via a company or a branch of their company. Corporate income tax is levied on the profit made by a private limited company (BV) or a public limited company (NV), for example. If the Dutch Tax and Customs Administration regards a certain foundation (stichting) or association (vereniging) as an enterprise then it also has to pay corporate income tax. Companies registered abroad deriving their income from the Netherlands may also be liable to pay corporate income tax. The current corporate tax rate is 20% for results up to EUR 200.000 and 25% for results over EUR 200.000. Losses cannot be carried back more than one year. Losses cannot usually be carried forward more than nine years.

Income tax and health care insurance premium

Businesses holding a permanent branch in the Netherlands are legally obliged to pay income tax in the Netherlands. In some cases, this obligation also applies to foreign businesses deriving income from the Netherlands. if your business is based outside the Netherlands, but you do have income in the Netherlands. 

Businesses liable for income tax in the Netherlands must file a tax return. Timing and means of such return may vary depending on the business location. The tax is imposed on three types of income categories (‘Boxes’), each with its own rate:

• Box I: taxable income from employment and home ownership;
• Box II: taxable income from business ownership (including partial business ownership);
• Box III: taxable income from savings and investments. 

The rate for Box I is an incremental rate with four brackets ranging 33.1% - 52.00% . Box II carries a rate of 25% and Box III a 1.2% rate. 

Turnover tax (VAT) 

Businesses operating in the Netherlands have to pay turnover tax (i.e. VAT, known in Dutch as ‘omzetbelasting’ or ‘BTW’) on their turnover. This also applies to companies that have a permanent establishment in the Netherlands which operates independently. The legal form (e.g. private limited company or public limited company) is irrelevant in respect to payment of VAT. 

The VAT collected from clients must be forwarded to the Tax and Customs Administration. The VAT paid to suppliers can be deducted from the VAT collected. In essence business pay VAT over the difference between purchase price (including cost) and selling price. The VAT must be calculated for all payments and all additional costs. This also includes dispatch costs, travel expenses, telephone costs, packaging costs (except deposit money) and suchlike.

Dividend tax

If a public limited company (naamloze vennootschap (NV)) or a private limited company (besloten vennootschap (BV)) makes a profit, it may distribute part of that profit to the shareholders. This distribution normally takes the form of dividend. A company distributing dividend must withhold dividend tax and pay that tax to the Dutch Tax and Customs Administration. The dividend tax rate is currently 25% however many exemptions such as the EU parent-daughter directive may apply.

Payroll tax

Companies that employ staff and have their registered office in the Netherlands deduct payroll tax from their salaries. In some cases companies are obliged to deduct payroll tax even its registered office is located in another country. Payroll tax consists of income tax and social insurance contributions.

Submitting tax returns

Every business in the Netherlands is obliged to submit returns regularly online for one or more taxation types. Income tax and corporate income tax returns on an annual basis the first before 30 April, the latter before 1 June. For turnover tax businesses must submit a tax return on an annual, monthly or quarterly basis. Employers are obliged to submit a tax return for payroll tax.

Businesses can submit tax returns online through the Tax and Customs Administration website. The required logon data will be issued shortly after registration with the Chamber of Commerce. 

In case a business foresee that its tax return cannot be submitted in time, it may ask for a deferment. This has to be done before the last submission date. Failure to submit on time or at all will lead  to a fine.

We would be happy to assist you in any way regarding your taxes and tax returns. Call us or contact us to learn more about our services.