Corporate - Significant developments

Last reviewed - 02 July 2021

The corporate tax system of the Netherlands contains a number of well-known features providing for an attractive investment climate, such as: the fiscal unity regime with tax consolidation for group companies, a full participation exemption for capital gains and dividends from qualifying participations, and several favourable tax regimes (e.g. for patent income, investment vehicles, and income from ocean shipping activities). Until 2020, there was no withholding taxation on interest or royalty payments made by the taxpayer. However, as of 2021, a withholding tax is due in certain situations (we refer to the section ‘Conditional withholding tax on interest and royalty payments’ below).

Position of the Netherlands on OECD’s Pillars 1 and 2

The Netherlands supports both OECD’s Pillars 1 and 2. In relation to OECD’s Pillar 1, the Netherlands supports the current Blueprint, but emphasises that the further roll-out and implementation should be as simple as possible. Further, the Netherlands will continue to strive for a robust dispute resolution mechanism in cases where countries do not agree on the manner in which Pillar 1 is to be applied. In relation to OECD’s Pillar 2, the Netherlands will pursue a firm minimum level of taxation to ensure that it will be effective in combating tax competition and tax avoidance. As regards the minimum rate, the Dutch State Secretary notes that the 15 per cent mentioned in the G7's commitment is a good starting point. 

Conditional withholding tax on dividends (pending)

Spring 2021, a bill introducing a conditional withholding tax on dividends was submitted to the Lower House of Parliament. The Conditional Withholding Tax on Dividends Act supplements the 2021 Withholding Tax Act (see below paragraph “Conditional withholding tax on interest and royalty payments”) and aims to prevent the untaxed flow of dividends from the Netherlands to low-tax jurisdictions and in abuse situations. Low-tax jurisdictions are countries with a statutory profit tax rate lower than 9% and countries included in the EU list of non-cooperative jurisdictions. The bill is to enter into force on 1 January 2024.


The Dutch ATAD II legislation entered into force on 1 January 2020 (Anti-Tax Avoidance Directive, concerning hybrid mismatches within the EU and with third countries). The legislation largely follows the EU Directive but is stricter in some instances; for example, Dutch taxpayers must document applicability on the neutralising measure for payments, losses, etc. In addition, the Netherlands did not make use of the possibility to delay the application of the ATAD  measures in relation to financial institutions, nor does CFC inclusion always qualify as sufficient inclusion. The tax liability measure (for 'reverse hybrids') is to apply from 1 January 2022.

Beneficial ownership and substance requirements

As of 1 January 2020, Dutch tax authorities are able to tackle abuse more effectively, even in situations where the Dutch substance requirements are met. This also applies vice versa: where a taxpayer does not meet the Dutch substance requirements, they still have the opportunity to prove there is no abuse. The Dutch substance requirements are therefore no longer considered to be a 'safe harbour' for beneficial ownership. The amendments apply in relation to EU member states but also to third states. There are additional substance requirements for financial service companies (intercompany financing / licensing).

Mandatory disclosure (DAC6)

DAC6 requires tax advisers, intermediaries, and in some cases taxpayers to exchange information with the tax authorities on certain structures. The aim is to counter aggressive tax planning, although non-aggressive structures may be impacted as well, as long as there is some connection to the European Union. On 1 January 2021, the 30-day period for the reporting of new cross border arrangements under the DAC6 regime started. This means that as from 1 January 2021, so-called cross-border tax arrangements become reportable within 30 days after the arrangement is made available or ready for implementation or the first step of implementation has been made. Read more on Dutch DAC6 implementation here. 

Treaty developments

The Netherlands pursues an active tax treaty policy in order to maintain and extend its wide tax treaty network. Most Dutch bilateral tax treaties are based on the Organisation for Economic Co-operation and Development (OECD) Model Tax Convention. The government has expressed mid 2020, that treaties with developing countries will be based on the United Nations (UN) Model Convention more often than was the case. The Netherlands has concluded bilateral tax treaties for the avoidance of double taxation on income and capital with over 90 countries worldwide. Per 1 July 2019, the multilateral instrument (MLI) has entered into force for the Netherlands. It first had effect on 1 January 2020.

Amendments to liquidation and cessation loss  rules

As of 1 January 2021, the following regime will apply to Dutch corporate income taxpayers with regard to foreign liquidation losses (in the case of legal entities) and foreign cessation losses (in the case of permanent establishments)

  • The liquidation loss provision would be applicable only:
  1. In EU/EEA situations, and
  2. 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 permanent establishments (within the so-called object exemption) are also only deductible in EU/EEA situations.

Losses up to the amount of 5 million euro will remain deductible without above-mentioned limitations (this also applies to interests of 5 per cent or more and also for non-EU/EEA interests). In addition, the liquidation or cessation loss can only be taken into account if the liquidation or cessation is completed within three years of the activities stopped or the decision to stop them. This restriction applies regardless of the amount to be deducted. There is a  three-year transitional period for unrealised liquidation losses incurred before 1 January 2021.

Conditional withholding tax on interest and royalty payments

Up to and including 2020, interest and royalty payments made by Dutch entities resident in the Netherlands were not subject to withholding tax in the Netherlands. As of 1 January 2021, a new conditional withholding tax on interest and royalty payments to affiliated companies in designated low-tax jurisdictions will be levied in certain situations. The withholding tax is, in principle, levied from the Dutch resident entity that makes interest or royalty payments at a rate equal to the highest rate of Dutch Corporate Income Tax in the current tax year. For 2021 this rate is 25 per cent. The withholding tax rate may however be reduced by a tax treaty.

This new withholding tax will only be levied on payments between affiliated companies. For purposes of this new withholding tax, an affiliated company is one that can - directly or indirectly - exercise a decision-making influence, in any event, if the shareholder has more than 50 per cent of the voting rights). 

Apart from direct payments made to affiliated companies in Listed Countries, the withholding tax may also apply to abusive situations (situations where artificial structures are put in place with the main purpose or one of the main purposes to avoid the Dutch withholding tax).

Moreover, Dutch government is proposing to expand this tax type to dividend payments as of 2024, superseding any tax treaty. This proposal is to be on top of regular withholding tax on dividends and is currently in consultation only.

Emergency Measure for the Continuation of Jobs (NOW: Noodmaatregel Overbrugging Werkgelegenheid)

In order to prevent mass unemployment due to the COVID-19-pandemic, the Dutch government has introduced a wage cost subsidy under the name of NOW. Employers with Dutch employees can request this subsidy in order to maintain employment. The amount of subsidy mainly depends on the decrease in turnover. The higher the amount of subsidy received, the stricter the third party assurance protocols are in effect. Employers who have received subsidy, and their (internationally registered) related parties, are in many cases not allowed to pay bonuses or dividends nor to buy back their own shares for a certain period in time. The Dutch Covid-19 support measures, including the NOW, have been extended till the end of September 2021.

Job-related investment discount cancelled (BIK: Baangerelateerde Investerkingskorting)

With this investment discount, both private and corporate entrepreneurs would have been able to, under certain conditions, offset part of their investments against their payroll taxes. For investments up to and including 5 million euro, 3.9 per cent of the investment couldbe deducted from the payroll taxes. For larger investments this deduction would be 1.8 per cent for the part above 5 million euro. Investments fully paid for in 2020 were excluded from this discount. 

However, the Job-related investment discount was cancelled in retrospect due to a possible incompatibility of the measure with EU law. Instead, the Dutch government proposed to use the budget of EUR 4 billion that was reserved for the BIK (in principle, EUR 2 billion in 2021 and EUR 2 billion in 2022) to reduce the employer’s General Unemployment Fund contributions in 2021. Through a reduction in the employer’s General Unemployment Fund contributions, the Dutch cabinet aims to support the business community in a different way.

For more COVID-19 related measures, please see here.

Refund of dividend tax to companies resident in the EU/EEA 

Following the Sofina judgment (C-575/17), the Dutch government announced on Budget Day that it intends to limit the offsetting of dividend tax and gambling tax against corporate income tax as of 1 January 2022. Until that time, the policy decision was made according to which the inspector "may, in certain situations, grant a refund of dividend tax and gambling tax to entities established outside the Netherlands" under the following conditions:

  1. the non-resident company should be a resident in an EU Member State/EEA country or a state designated in Article 1c of Dividend Tax Implementation Order 1965 with which the Netherlands has concluded an arrangement that provides for the exchange of information for the levying of dividend tax or gambling tax, and
  2. the portfolio investments can be regarded as investments under Article 63 TFEU, and, in relation to third countries, do not constitute direct investments or are related to the provision of financial services within the meaning of Article 64 TFEU (the grandfathering clause).