Value-added tax (VAT)
VAT, known in Dutch as the Belasting over de Toegevoegde Waarde or BTW, is payable on the supply of goods and services rendered in the Netherlands as well as on the importation of goods and on the ‘intra-European’ acquisition of goods. There are three VAT rates, which are 21, 9, and 0 per cent.
The main VAT rate is 21 per cent.
The reduced 9 per cent VAT rate is applicable on certain prime necessities, on certain energy-saving insulation activities on houses, and (from 2020) also on certain e-publications.
The special 0 per cent VAT rate is applicable mainly to intra-EU supplies, exports, imports stored in bonded warehouses, services rendered in connection with the above, and certain other services.
Effective 1 January 2020, EU member states, including the Netherlands, are required to implement the ‘four Quick Fixes’ aiming to improve the day-to-day functioning of the VAT system for EU cross-border B2B trade. These quick fixes concern the use of the VAT identification number, call-off stock, proof of transport, and chain transactions. The changes have consequences for the administrative systems, VAT registrations, contracts, (electronic) documents, and invoices of entrepreneurs.
The following domestic transactions are exempt from VAT:
- The supply of immovable property two years after putting it into use and lease. However, if the lessee’s use of the immovable property is 90 per cent or more for input VAT-deductible purposes, the lessor and lessee may opt to be subject to VAT on rent, in which case the lessee may deduct the VAT charged in respect of the property.
- Medical, cultural, social, and educational services.
- Services provided by banks and other financial institutions in connection with payment transactions and the granting of credit facilities.
- Insurance transactions.
- Transactions in shares by controlling active parent companies or commercial share dealers.
- Certain goods (0 per cent) and services (exempted) required to combat the Corona crisis (temporary approval). VAT deduction can be made in accordance with the normal rules.
Customs and excise tax
Many goods imported to the Netherlands from outside the European Union are subject to customs and excise duties. The tariffs and rates that apply to the different goods vary widely and change regularly.
An excise tax is levied on certain consumer goods (e.g. cigarettes, cigars, mineral oils, alcoholic products). If the goods are used solely as raw materials, no excise tax is levied. The excise tax is refundable if the article is exported.
CO2 levy for industry
A national CO₂ levy exists per 1 January 2021 for industrial production and waste incineration. This levy is to be introduced alongside the existing system for the pricing of CO₂ at EU level (EU-ETS). The ETS indirect emission costs subsidy scheme ends this year. Companies will be eligible for an exemption (which will decrease over time) on part of their emissions (dispensation rights), so that they can change their operations in order to reduce their CO₂ emissions. There are possibilities for using a surplus of dispensation rights for set-off and transfer purposes. You can find more about the Dutch CO₂ levy for industry and the PwC level playing field assessment published on 15 September 2020 in our article ‘Legislative proposal CO₂ levy for industry’.
Aviation Tax Act
The Coalition Agreement states that, as from 2021, a national aviation tax is to be introduced if the European route (adoption of EU harmonized pricing of environmental damage caused by air traffic) does not generate enough effect (or does not do so quickly enough).
In the case of passenger flights departing from the Netherlands, a levy of EUR 7,845 per departing passenger will be imposed. The levy will not be imposed on transit passengers.
Immovable property tax
Municipalities impose an annual immovable property tax on the owners of immovable property. The rates depend on the municipality. The taxable basis is the market value of the immovable property. Please note that the (assessment of the) value is also of importance for CIT, as depreciation might be limited based on this value (see Limited depreciation of immovable property in the Deductions section).
Transfer tax on immovable property
Acquisition of economic or legal ownership of immovable property in the Netherlands is subject to a transfer tax over its market value. The general tax rate of the transfer tax increased from 6 to 8 per cent as of 1 January 2021. Furthermore, as of 2021 there is a new differentiation in the tax rate. Now, it is relevant whether the buyer will actually live in the property on a long-term basis (so no holiday homes or buy-to-let properties) to be eligible for the lower tax rate of 2 per cent or the new tax exemption for starters under 35. Otherwise, the general transfer tax rate of 8 per cent will be applicable. Before, the requirement was whether the property could serve as a house to apply for the lower tax rate.
Young first-time buyers on the housing market are eligible for a new transfer tax exemption once. Someone will qualify as a first-time buyer if they are at least 18 years old but under the age of 35 when they purchase their first house (after introduction of this rule). Buyers aged 35 and over, and buyers younger than 35 who already used the exemption once, will pay the transfer tax at the reduced rate of 2 per cent when buying a home. From 1 April 2021 there will be a maximum housing value limit of 400,000 euro for the one-off exemption, which will be indexed annually. This limit applies to the entire dwelling and not to the value of the part of the dwelling acquired. Starters who buy a more expensive house pay 2 per cent transfer tax on the entire amount of the property just like other home buyers.
Transfer tax on acquisition of shares in a real estate entity
The acquisition of shares in an entity that owns real estate may also be subject to transfer tax if that entity is characterised as a so-called real estate entity. The threshold for qualifying as a real estate entity is met if more than 50 per cent of the assets of the entity consist of real estate and at least 30 per cent consist of Dutch immovable property.
There are no stamp duties in the Netherlands.
The Netherlands do not levy capital tax on capital transactions (e.g. issue or increase of capital).
Employers must withhold wage tax from the employee’s gross salary and transfer the amount to the tax authorities. Employees may treat the withheld wage tax as an advance levy of income tax. The income tax due is settled with the withheld wage tax. The tax tables applicable to individuals are provided in the Taxes on personal income section of the Netherlands Individual tax summary.
Social security contributions
Employers must withhold national insurance contributions from the employee’s salary at an aggregate rate of 27.65 per cent (2021) calculated on the first EUR 35,129 (2021) of each employee’s gross salary and transfer the amount to the tax authorities. The employer bears the burden of the employee’s insurance contributions, which are also calculated by reference to the employee’s salary. Under circumstances, it may be required to pay or withhold a contribution based on the Health Care Insurance Act.
An insurance tax is payable on insurance premiums if the insured is a resident of the Netherlands or if the insured object is in the Netherlands. The insurance tax rate is 21 per cent. Several exemptions are available (e.g. insurances of ships and aircraft operated in international traffic are exempt from insurance tax). In certain situations, an insurer outside the European Union may be required to take on a tax representative in the Netherlands.
Waste management contribution
Companies annually bringing 50,000 or more kilograms of packing material on the market must pay a ‘waste management contribution’ (Afvalbeheersbijdrage). The amount payable varies to the total weight and type of packaging. The contribution aims to cover the costs of recycling package materials. As of 1 January 2018, companies that are not resident in the Netherlands but sell to Dutch consumers, are also liable to the waste management contribution, subject to the threshold of 50,000 or more kilograms.
Producers and importers of packaging expecting to exceed the threshold must register with the Packaging Waste Fund (Afvalfonds Verpakkingen) upfront. In the current year, they must file an estimation of the expected total volume of packing material. The contribution is then provisionally calculated. Before 1 April of the next calendar year, the actual amount and type of packaging must be reported. The actual contribution payable is recalculated accordingly.