Netherlands

In the Netherlands, corporate residence is determined by each corporation’s facts and circumstances. Management and control are important factors in this respect. Companies incorporated under Dutch law are deemed to be residents of the Netherlands (although not with respect to certain provisions, such as the participation exemption and fiscal unity).

Permanent establishment (PE)

Non-resident companies are liable to CIT only with respect to Dutch-source income, like profits from a PE or income from real estate located in the Netherlands.

Since 2020, the term ‘permanent establishment’ has been defined in the CIT law (‘Wet Vpb 1969’). This legal concept of the term ‘permanent establishment’ applies mutatis mutandis to personal income tax (‘Wet IB 2001’) and wage tax (‘Wet LB 1964’), and to the unilateral measures to prevent double taxation (‘Bvdb 2001’).

For treaty situations, the definition of the term ‘permanent establishment’ follows the definition in the applicable tax treaty. For non-treaty situations, the definition of the term ‘permanent establishment’ follows the definition of this term in Article 5 of the OECD Model Convention 2017.

The reason why the term 'permanent establishment' is defined in (CIT) law is due to the application of the MLI to Dutch tax law. The MLI, which entered into force in the Netherlands on 1 July 2019 and which applies from 1 January 2020, contains several provisions relating to the term ‘permanent establishment’.