Foreign tax credit
See Foreign income in the Income determination section for a description of the foreign tax credit regime.
There is a system of deductions for small investments, the so-called small scale investment deduction. To calculate this annual deduction, investments of more than EUR 450 each are totaled to determine the percentage of the deduction. The brackets are as follows as of 1 January 2021:
|Total of investments (EUR)||Deduction|
|0 to 2,400||0|
|2,400 to 59,170||28% of the value of the total of small investments|
|59,170 to 109,574||EUR 16,568|
|109,574 to 328,721||EUR 16,568 minus 7.56% of the amount exceeding EUR 109,574|
From 2021 it is clear how to deal with investments of a taxpayer who is a participant of a partnership. First, the investments for the partnership of all the participants and the non-company investments made by the taxpayer concerned shall be added together (‘total relevant investments’). Consequently, the small scale investment deduction for the relevant tax payer shall be the amount of deduction which could be derived from the table above, multiplied by the investment amount made by the taxpayer himself and divided by the total relevant investment.
Investments in energy-efficient assets
For investments in new energy-efficient business assets that meet the Energy List requirements, an additional deduction (EIA) from CIT is available. The minimum investment amount per asset is 2,500 euro. The allowance equals a percentage of the annual amount, with a maximum of 126 million euro (2021), of eligible energy investments. The right to the EIA is declared with the tax return, provided the investment is reported previously in time to the Netherlands Enterprise Agency (www.rvo.nl). An investment can be reported in phases, but the minimum amount for notification is 2,500 euro. In 2021, the allowance amounts to 45.5 per cent.
Investments in environmental assets
For investments in certain new environmental improving assets that meet the Environment List requirements, an additional deduction (MIA) from corporate income is available. The minimum investment amount per asset is 2,500 euro. In 2021, the allowance equals 36 per cent, 27 per cent, or 13.5 per cent (depending on the ministerial classification of the assets) of the annual amount, with a maximum of 25 million euro, of eligible environmental investments. The right to the MIA is declared with the tax return, provided the investment is reported previously in good time to the Netherlands Enterprise Agency (www.rvo.nl). An investment can be reported in phases, but the minimum amount for notification is 2,500 euro.
Conducting certain R&D activities on applied new technology is subsidised by a reduction of wage tax to be paid on wages of employees engaged in R&D of technologically new products. The subsidy accrues to the employer when the employee is credited for the normal amount of wage tax. The subsidy is based on specific legislation (WBSO).
To obtain the relief under the R&D incentive programme, taxpayers must file an electronic/online application with the Netherlands Enterprise Agency (www.rvo.nl). The taxpayer will receive an R&D declaration. The budget for this subsidy is fixed, so the amount of the subsidy is dependent on budget availability. Note that self-developed and utilised software falls within the scope of the R&D incentive under certain conditions.
The WBSO application for R&D includes not only salary costs but also other costs and expenses related to R&D. The benefit of the fiscal scheme is awarded in the form of a wage tax reduction. In 2021, the benefit amounts to 40 per cent of the first 350,000 euro of R&D costs and 16 per cent of the excess (both salary and other costs and expenses). For start-ups, this amounts to 50 per cent of the first 350,000 euro of R&D costs. Note that the maximum benefit cannot exceed the total amount of wage tax due. Instead of applying for the real costs and expenses (non-salary costs), the taxpayer may choose to take into account a fixed amount based on R&D hours. The fixed amount is 10 euro per hour as long as the total R&D hours do not exceed 1,800 and 4 euro for every hour above. Withholding agents are obligated to report the number of hours, costs, and expenses jointly for all R&D statements granted in a calendar year.