Tax rates in the Netherlands

Company Tax

Tax Rate For Foreign Companies

Dutch companies are taxed on their worldwide income; however, certain types of income are eligible for tax exemption or can be excluded from the tax base. Non-resident companies are only taxed on their Dutch-sourced income. There are no special tax rates for foreign companies.

Capital Gains Taxation

Capital gains are generally included in taxable profits and taxed at the corporate rate. Participation exemption is provided for qualifying dividends and capital gains from the sale of shares in a company. The firm investing in a subsidiary must meet the following requirements: (a) maintain a minimum 5% ownership of the subsidiary; (b) the subsidiary is not held as a portfolio investment or the subsidiary is subject to a reasonable corporate tax rate in its country of residence; or (c) the share of "dormant" assets (such as portfolio investment) of the subsidiary does not exceed 50% of the total.

Main Allowable Deductions and Tax Credits

Business expenditure is generally tax-deductible, including costs incurred in setting up a business; reserves kept for certain types of future spending and book profits; rents, royalties and interest payments on corporate debt; remuneration of members of the managing and supervisory boards; bad debts; capital losses; pension plan contributions; commissions; bonuses paid to employees through an internal profit-sharing plan; gifts to contributions to religious, social, charitable and other institutions (up to 50% of taxable income or EUR 100,000, whichever is lower); and many types of taxes, including foreign taxes if not already benefiting from a tax treaty (but not corporate income tax). An additional standard allowance is provided for investment in fixed assets. Certain expenses such as fines are non-deductible.

With regard to goodwill, the amortisation for tax purposes is limited to 10% of the purchase price per annum, and the tax depreciation of other fixed assets (i.e. inventory, equipment) is limited to 20% of the purchase price or production costs each year.

Capital losses are deductible unless attributable to the disposal of a shareholding qualifying for the participation exemption. Tax losses can be carried forward up to six years and back for one year. For losses incurred in fiscal year 2020 as a result of the COVID-19 pandemic, companies may create a reserve with respect to their 2019 corporate income tax return. The losses may not exceed the total losses expected for 2020 or exceed the profits for 2019 (prior to the reserve), and the reserve must be released with respect to the 2020 corporate income tax return.

Other Corporate Taxes

A real estate transfer tax is levied on the acquisition of property in the Netherlands at a rate of 8% of the market value of the property, or 2% for private residences.

Insurance tax at a rate of 21% is levied on insurance premiums, excluding life, accident, medical, invalidity, disability, unemployment and transport insurance, which are exempt.

Landlords in the regulated sector that rent out more than 50 houses are subject to a specific tax. The taxable base consists of the total value of the houses (capped at EUR 315,000 per house) minus 50 times the average value. The tax rate is 0.526% for 2021, and it is charged on the average value of the houses.

Various environmental taxes are levied, including a coal tax, energy tax on the supply of electricity and natural gas, tap water tax, waste tax on the disposal of waste and a motor vehicle tax.

From 2021, a unilateral air passenger tax is imposed by airport operators. The rate is EUR 7.845 for each passenger departing from a Dutch airport (an exemption applies to transfer passengers and children under the age of two). Moreover, a national CO₂ levy applies to industrial production and waste incineration.

Municipalities levy an additional annual real estate tax at varying rates, which is deductible for corporate tax purposes.

The total aggregate rate for social security contributions is 27.65%, calculated on the first EUR 35,129 of each employee’s gross salary (2021).

Companies annually bringing 50,000 or more kilograms of packing material on the market must pay a ‘waste management contribution’ (rates vary according to various parameters).

Other Domestic Resources

Belastingdienst - Dutch Tax Administration

Consult Doing Business Website, to obtain a summary of the taxes and mandatory contributions.

Tax Rate

Allowable Deductions and Tax Credits

Deductions are available for (i) (Box 1) homeownership and employment income: charity donations, life annuity premiums and mortgage interest on an owner-occupied home (0.50% of the value of the property is generally taken into account), childcare, alimony, and medical treatment expenses; (ii) (Box 2) enterprise income from shareholdings of a company: losses; (iii) (Box 3) savings and investment income: each taxpayer is allowed a tax-free capital threshold of EUR 50,000 (2021). Certain assets are exempted from box 3, including assets that are already taxed in box 1 or box 2, movable property for personal use, investments in forests and nature, objects of artistic or scientific nature (when they are not used as an investment), environmentally friendly investments (capped at EUR 60,429/person).

Under the work-related cost scheme, the employer may reimburse expenses tax-free, up to 1.7% for the first EUR 400,000 of the total fiscal wages and 1.2% on the excess part. If the 1.2% budget is exceeded, the employer has to pay wage tax in the form of a final levy of 80% on the amount in excess of the budget.
Personal deductions include: alimonies, charitable contributions, education expenses, medical and disability expenses, life annuity premiums, mortgage interest payments related to the primary residence.

Special Expatriate Tax Regime

Residents are taxed on worldwide gross income while non-residents are taxed only on certain Dutch-sourced income (returns from immovable property located in the Netherlands and profit-sharing rights on net profits of resident companies, employment and business income).
Under the provisions of the "30% ruling", employees who are considered as resident taxpayers may opt to be treated as partial non-residents for five years, which means they will be treated as residents for box 1 and as non-residents for box 2 and 3 purposes, while they are entitled to personal deductions and tax credits.