Corporate - Deductions

Last reviewed - 09 January 2024

Depreciation and amortisation

Generally, depreciation may be computed by a straight-line or a reducing-balance method or, in accordance with any other sound business practice, based on historical cost. Depreciation starts from the date the asset comes into use. Dutch tax law includes specific rules (see below) that potentially either limit or facilitate the depreciation of assets (e.g. immovable property, goodwill, and other fixed assets or environmental investments).

Limited depreciation of immovable property

There are special provisions for depreciation of immovable property. A distinction is made between immovable property held for investment purposes and buildings used in a trade or business.

Investment property cannot be depreciated to an amount lower than the official property’s fair market value for tax purposes, which is known as WOZ-waarde. In other words, a property will not be subject to depreciation unless the carrying amount of the building and the land on which it is located is higher than its value for tax purposes. This value is determined by the municipal tax authorities annually. As this value is based on the assumption that the property is free of lease, the value for tax purposes of commercial real estate may be lower than fair market value.

It should still be possible to devalue immovable property at fair market value if this is demonstrably and lastingly lower than the book value. In addition, anti-abuse measures apply to prevent the division of land and buildings into separate legal entities or to related individuals.

Note that maintenance costs continue to qualify for tax relief and any maintenance-related value increase does not lead to a compulsory upward revaluation of the property. Moreover, a property is not required to be revaluated as its value increases due to market developments.

Depreciation of land is not permitted.

The sale of depreciated assets triggers tax on the difference between the sale price and the depreciated book value unless a reinvestment reserve is set up (see Capital gains in the Income determination section).

Limited amortisation of goodwill and depreciation of fixed assets

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

Accelerated depreciation

The law provides accelerated depreciation of several specific assets. Accelerated depreciation applies to investments in assets that are in the interest of the protection of the environment in the Netherlands and that appear on the so-called VAMIL (Vervroegde Afschrijving Milieu-investeringen) list. The accelerated depreciation facility for investments in environment-improving assets is limited to 75% of the total (investment) costs. 

Accelerated depreciation is also available for certain other designated assets (e.g. investments of starting entrepreneurs).

Investment costs minus residual value of sea-vessels that are operated mainly from the Netherlands may be depreciated straight-line over five years. Instead of accelerated depreciation, these taxpayers may choose immediate taxation (see Tonnage tax regime in the Taxes on corporate income section).

Deductibility limitations regarding interest and loans

Due to existing anti-abuse rules, the deduction for interest paid on intra-group debts relating to certain transactions is disallowed. Transactions that are in scope of these anti-abuse rules are an internal or external acquisition, a dividend payment (distribution of profit), or a capital contribution into an affiliated company (i.e. an interest in the company of at least 1/3). Interest that relates to the financing of such transactions is only deductible if the loan and the underlying transaction are based predominantly on sound business considerations (‘the double business motive test’) or if the interest received is effectively and sufficiently taxed by Dutch standards. As such, under the ‘double business motive test’, it must be substantiated that there are sound business reasons for both the loan and the transaction. When the debt ultimately is financed externally (outside the group) and a direct relationship exists between the internal debt and the ultimate external financing, it can generally be substantiated that there are sound business reasons for the loan. Interest is deemed to be effectively and sufficiently taxed if the interest is effectively subject to a taxation on profits of at least 10% determined according to Dutch standards. The use of tax losses or similar relief claims by the recipient of the inter-company interest affects whether the interest is sufficiently taxed in the hands of the recipient. If the taxpayer makes a reasonable case that the interest is taxable at an effective tax rate of at least 10%, the tax authorities, nevertheless, have the option to substantiate that either the liability or the corresponding transaction is not based on sound business reasons. In mid-2022, the Dutch Supreme Court referred to the European Court of Justice (ECJ) with preliminary questions as to the (in)compatibility of this interest limitation rule with the treaty freedoms, by reference to the ECJ ruling in the Lexel case.

Furthermore, interest paid on certain profit participating loans will be qualified as a dividend and will not be tax deductible. Interest received upon these loans may meet the definitions for the participation exemption if the creditor also holds a qualifying participation in the debtor. Intra-group conduits may be denied a credit of foreign WHT with respect to royalties or interest received if no economic risk is deployed.

The Netherlands applies an earnings stripping rule. This rule limits the deduction of the on balance interest cost to 20% of the taxpayer’s EBITDA, with a threshold of EUR 1 million and a carryforward rule for the (part of the) interest that may not be deductible in a tax year to later tax years without time limitation. The Dutch government has proposed the abolition of the 1 million threshold for real estate companies as effective from 1 January 2025.

For the application of the rules on ‘the deduction of interest on loans that are directly or indirectly granted by a group company in order to finance an acquisition or capital contribution deduction’ and on the ‘deduction of excess interest on debts that are deemed to be related to the financing of participations’, the Dutch legislator has ‘switched off’ the fiscal unity (see the Group taxation section). Please note, however, that the Dutch fiscal unity maintains its normal effect in relation to the earnings stripping rule.

Provision for bad debt

It is possible to make a provision for future expenses with a cause existing on the balance sheet date (during the financial year) of the tax year in question.

Charitable contributions

Charitable contributions are deductible if certain conditions are met. The gift must be documented in writing and contributed to a qualifying charity (ANBI or supporting foundation [SBBI]). The deductible amount may not exceed 50% of the taxable profits, with a maximum of EUR 100,000.

Gifts in kind with value of more than EUR 10,000 per calendar year are only eligible for deduction if the value can be substantiated with invoices or valuation reports that meet certain standards. In this respect, the waiver of receivables are also considered as gifts in kind.

Donations to a cultural organisation may be multiplied by 1.5 in respect of the CIT deduction for gifts, subject to a maximum of EUR 2,500. This multiplier may be applied to a maximum of EUR 5,000 for cultural gifts.

A favour or contribution in cash does not qualify for the gift deduction.

Limited deductibility of costs relating to remuneration by way of shares

Any remuneration by way of shares, profit-sharing certificates, option rights on shares, or similar rights is not deductible.

Costs related to so-called stock appreciation rights for employees that earn an income that exceeds EUR 636,000 (2024 amount) are not deductible.

Fines and penalties

Most criminal fines and penalties are not tax deductible. This applies, for instance, to fines imposed by a Dutch criminal judge, administrative fines, disciplinary fines, and penalties from a European institution.


Certain taxes, such as the tax on insurance transactions, are deductible. Tax paid on the transfer of immovable property must be included in the cost price and taken into account in the course of normal depreciation. The CIT itself is not deductible.

Other significant items

Deduction of certain expenses (e.g. costs for food, drink, and entertainment) paid by employers for employees are not deductible, in part. These costs are often referred to as mixed costs. The non-deductible portion is 0.4% of the total taxable wages of all employees but never less than EUR 5,100 per year (2024 amount). Alternatively, the employer may choose to deduct only 73.5% of the actual expenses.

Net operating losses

From 1 January 2022 onwards, an indefinite loss carryforward applies. Yet, losses (both carryforward and carryback) can only be fully deducted up to an amount of EUR 1 million taxable profit. If the profit in a year exceeds EUR 1 million, the losses are only deductible up to 50% of the higher taxable profit minus an amount of EUR 1 million. For the carryforward of losses, losses incurred in financial years that started on or after 1 January 2013 also fall under the new scheme that comes into effect on 1 January 2022, so these losses will be indefinite.

These rules also apply to start-up losses.

Liquidation and cessation loss rules

Dutch CIT payers can take foreign liquidation losses (in the case of legal entities) and foreign cessation losses (in the case of PEs) into account, subject to strict limitations.

Losses arising from both EU/EEA and non-EU/EEA interests up to the amount of EUR 5 million will remain deductible. However, the liquidation or cessation loss can only be taken into account if the liquidation or cessation is completed within three years after the activities stopped or after the decision to stop them has been made.

Losses exceeding the EUR 5 million mark are subject to the following limitation:

  • The liquidation loss provision would be applicable only:
    • in EU/EEA situations and
    • with regard to interests giving rise to decisive influence on the participation’s activities (generally in case of ownership of more than 50% of the voting rights).

Cessation losses of PEs (within the so-called 'object exemption') exceeding EUR 5 million are also only deductible in EU/EEA situations.

Payments to foreign affiliates

A Dutch corporation can generally claim a deduction for royalties, management service fees, and most other charges paid to foreign affiliates, to the extent that the amounts are not in excess of what it would pay an unrelated entity (i.e. arm’s-length principle). Dutch companies are obligated to produce transfer pricing documentation describing the calculation of the transfer price and the comparability of the transfer price with third-party prices.

According to Dutch case law, payments that are not at arm’s length or the absence of at arm’s-length payments in intra-group relations need to be adjusted, meaning that payments have to be imputed or disregarded for the purposes of income determination depending on the situation at hand. If, however, such an adjustment would lead to an additional cost or the recognition of less income deviating from the contractual provisions (an adjustment minus), this minus will only be taken into account if and insofar at the counterpart a corresponding plus is to be taken account for profit tax purposes. The burden of proof in this respect lies with the taxpayer.