Corporate income tax
As of 1January 2006, the standard rate of corporate income tax (CIT) in the Netherlands is 29.6% with the first €22,698 being taxed at 25.5% (previously 31.5% and 27% respectively). From 1 January 2007, it is proposed that the standard CIT rate will be further reduced to 26.9%. Dutch CIT is payable by Dutch-resident entities as well as by non-resident entities which trade through a branch, agency in the Netherlands or hold property held in the Netherlands. CIT is reportable to the tax authorities on an accounting year basis.
CIT is charged at 0% for specifically defined (real estate) investment institutions (REITs) provided certain strict conditions are met.
Capital gains
Capital gains are generally chargeable to CIT at the standard rate. However, taxation of capital gains realised on the disposal of certain fixed assets such as real estate can be deferred by forming a tax-free reinvestment reserve. Such a reserve generally requires the replacement within 3 years of the disposed asset by an asset with a similar economic function.
The Dutch participation exemption, effectively exempts capital gains derived from a sale of shares in a qualifying subsidiary.
Property tax
Property tax is charged annually by the local authorities in the Netherlands on ownership or use of property and is based on the market value of the property. Typical rates of property tax are generally between 0.1% and 0.3% for both the owner and the user of a property.
Transfer tax
Real estate transfer tax (RETT) is charged on the acquisition of Dutch real estate at 6% on the higher of the fair market value and the purchase price of the property. The acquisition of shares in an entity owning Dutch property can under circumstances be qualified as a deemed acquisition of property and thus be subjected to transfer tax at 6% of the market value of the underlying property, although exemptions may apply.
Capital tax
Capital tax at 0.55% is due on capital contributed to a Dutch resident entity, although this can be substantially reduced by effective planning.
VAT
VAT is generally due at the standard rate of 19% on any supply of goods and services in the Netherlands and the import of goods into the Netherlands. VAT registration is compulsory for any VAT taxable person (i.e. an individual or entity which independently carries on a business activity) irrespective of their residence, making VAT taxable supplies in the Netherlands. However, for foreign suppliers certain exceptions may be applicable whereby the customer has to self-account for the VAT due. As a result, the foreign supplier does not have to register in the Netherlands.
The sale and the lease of real estate is VAT exempt. However, if certain conditions are met, the supply and the lease of real estate can become taxable.
For certain services and supplies a lower rate of 6% or an exemption may apply VAT returns should generally be filed monthly and payment of VAT should generally be made on the last day of the month following.
The above is for general information purposes only. It is not intended to be comprehensive or to provide any specific tax advice.