The taxation of companies in the Netherlands is based on residency, meaning that a company must have a registered office in this country in order to be applied to corporate tax on the income earned at global level. In the case of foreign companies, they will also be taxed, but only on the incomes generated in the Netherlands.
The most popular type of company in the Netherlands is the private limited liability company (BV) which is also why many its taxation is of great interest for foreign investors. Below, our Dutch company formation advisors explain how the taxation of a BV occurs.
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The taxes paid by Dutch BVs
Private companies in the Netherlands are subject to the following taxes:
- – the corporate tax is a direct tax and it is calculated and applied based on income tax returns filed by the company representative with the tax authorities;
- – the value added tax is an indirect tax which is applied to all companies selling goods o products in the Netherlands;
- – the dividend tax if the BV decides to distribute profits to the shareholders in the company;
- – the withholding tax on royalty payments which is levied on Dutch BVs only id such payments are registered.
An advantage of the Dutch BV from a taxation point of view is that it is not subject to taxes on interest payments, no matter if its shareholders are local or foreign. Speaking about tax advantages, the private limited liability company is one of the most important tax minimization tools when registered as a Dutch holding company.
Our company registration agents in the Netherlands can help investors who want to set up holding companies.
Tax rates applicable to private companies in the Netherlands
When it comes to the taxation of a Dutch BV, the shareholders must pay attention to the income assessed by the authorities when it comes to the corporate tax. This is because there are two rates under this tax. The corporate tax rates are listed below:
- the corporate tax rate of 20% for taxable income of maximum 200,000 euros;
- the corporate tax rate of 25% for taxable income above 200,000 euros;
- the dividend tax which is applied at the standard rate of 15% or a reduced rate of 0%
- the VAT which has the standard rate of 21% and two reduced rates of 6% and 0%.
For full information on the taxation of a Dutch BV or assistance in setting up such business, please contact our company formation consultants.