Netherlands

In general, a Dutch resident company is subject to CIT on its worldwide income. However, certain income can be exempted or excluded from the tax base. Non-resident entities only have a limited tax liability with regard to income from Dutch sources.

Standard corporate income tax (CIT) rate

The standard CIT rate is 25.8%. There are two taxable income brackets. A lower rate of 19% (15% in 2022) applies to the first income bracket of EUR 200,000 (EUR 395,000 in 2022). The standard rate applies to the excess of the taxable income.

Fiscal investment fund regime

In general terms, under the existing fiscal investment fund regime, the CIT rate for fiscal investment funds is 0%, provided that their profit is made available to the shareholders and holders of certificates of participation no later than eight months after year-end.

Fiscal investment funds may also invest in real estate development (or redevelopment) activities, provided that these activities take place through a subsidiary subject to Dutch CIT and the development (or redevelopment) activities are exercised for the benefit of real estate that is (or will be) forming part of the fund’s own portfolio, an affiliated fiscal investment fund’s portfolio, the portfolio of a company in which the fund or the affiliated fund has a substantial interest, or for the benefit of the subsidiary’s own portfolio ('project development' subsidiary). Fiscal investment funds that invest in real estate are allowed to hold a taxable subsidiary that provides customary services in relation to the real estate held by the Dutch real estate investment trust (REIT). Examples are conference facilities or the exploitation of an in-house restaurant.

As of 1 January 2025, a measure will become effective on the basis of which fiscal investment funds are no longer able to invest directly in Dutch real estate (real estate measure). The real estate measure is intended to ensure that profits earned from Dutch real estate can, in all cases, be taxed with CIT and that an effective levy is guaranteed, including, for example, in all cases in which foreign investors invest in Dutch real estate. No change will be made for fiscal investment funds investing in securities.

Exempt investment fund regime

The exempt investment fund regime exists next to the fiscal investment fund regime described above. In order to be eligible for the exempt investment fund regime, the investment fund has to fulfil the definition of the Dutch Financial Supervision Act (Wet op het financieel toezicht), which means that its investments are limited to financial instruments such as shares, bonds, options, and futures traded on qualifying stock markets (e.g. Euronext, FTSE, Nasdaq, Dow Jones). Apart from the exempt status for CIT purposes, the exempt investment fund is not required to withhold dividend WHT with regard to profit distributions to its shareholders. Please note that from 1 January 2025, access to the exempt investment fund regime is only open to regulated institutions within the framework of the Dutch Financial Supervision Act.

Innovation box regime

Taxpayers are eligible to apply the innovation box to qualifying income from qualifying self-developed intangible assets. These intangible assets qualify in case they are developed by the taxpayer in the course of an S&O-project (i.e. Dutch wage tax incentive for research and development [R&D] activities). The qualifying R&D income is effectively subject to a tax rate of 9%. This lower tax rate only applies to positive income.

The innovation box has two entry tickets, namely:

1. The possession of an intangible asset that has resulted from activities for which a so-called ‘R&D certificate’ (WBSO) has been issued.
2. The possession of a so-called ’legal access ticket‘, such as a patent or plant breeder right.

Smaller companies only have to meet the first entry ticket. Larger companies that are part of a group with a consolidated turnover of at least EUR 50 million or a gross income from innovations of at least EUR 7.5 million in that current year and the four preceding years must adhere to both entry tickets.

Application of the innovation box introduces more extensive administration obligations. One requirement is that the taxpayer must report information detailing which technical innovation have been produced, as well as a specification of expenditure per innovation and how the benefits for each intangible asset or group of related intangible assets are determined (‘tracking and tracing‘). The fact that more detailed tracking and tracing needs to take place as mentioned above also means that attention is required on ensuring the correct determination per technical innovation or group of related innovations (‘aggregation levels’). This effectively means analysing which intangible asset originates from which R&D-project and links to which product group. Next to that, for large taxpayers, a legal access ticket should be linked to the product.

The innovation box is only applicable to ’qualifying benefits‘, as it can only be applied on activities with adequate substance. In this regard, only self-developed innovations (designated with a more technical term as ‘intangible assets’) can qualify for the innovation box. Therefore, purchased intangible assets do not qualify for use of the innovation box. Also, subcontracted development activities (not self-development) are subject to the nexus fraction. A 30% uplift is allowed to subcontract development activities. After exceeding this uplift, the applicability of the innovation box decreases due to the effects of the nexus fraction.

The Dutch innovation box regime is aligned with the modified nexus approach as described in the OECD report on Action 5 and is considered as non-harmful by the EU Code of Conduct Group.

For more information on the innovation box, see Innovation Box in a Nutshell.

Tonnage tax regime

In order to stimulate entrepreneurs engaged in ocean shipping, a favourable regime (known as the Dutch tonnage tax regime) may be available to certain shipping companies. Under this regime, the taxable profit of a sea-going vessel is based on its registered net tonnage multiplied by a fixed amount of deemed profit per ton instead of the actual profits from the exploitation. The regime only applies to the calculation of the profit related to the qualifying shipping activities. These activities include operating vessels in international traffic (including transportation for the purpose of the exploitation of natural resources at sea), cable and pipe-laying activities at the bottom of the sea, and towing and dredging and connected activities. The profits from the qualifying activities are taxed at a deemed tonnage profit according to a five bracket regressive scale system. The tonnage tax regime applies upon request and for a fixed period of ten years or multiples of the ten-year period.

There is a ceiling for ships subject to a time or voyage charter that do not fly an EU/EEA flag. When a ship is put into service on or after 1 January 2020, at least one ship in the fleet will have to fly an EU/EEA flag, and a flag requirement will be introduced for ship managers. In addition, there is a profit ceiling for non-transportation activities of a maximum of 50% of the annual profit (this is, for example, relevant for cruise ships).

Local income taxes

There are no provincial or municipal corporate income taxes in the Netherlands.