Netherlands

2012 Tax rate of Netherlands

Corporate tax

Rate

The corporate tax rate of Netherlands is 20% for the first EUR 200,000 on taxable profits. Profits exceeding EUR 200,000 is taxed on a rate of 25%.

Corporate tax is imposed on company profits. Company profits consist of all types of income. In general all costs relating to company’s business may be deducted. Residents are taxed on their worldwide income, whereas nonresidents are taxed only on their Netherlands income.

Taxation of dividends

Dividends from a resident corporation, are tax exempt if the participation exemption applies.

Capital gains

If the capital gains are derived from sale of a participation, it’s exempt when participation exemption applies. Gains not exempt are taxed at a flat rate of 25%. Certain cases when a merger arises, it may be exempt if certain requirements are met.

Losses

Losses can be carried forward for up to 9 years and carried back 1 year. Years ranging between 2009 to 2011 may be carried back 3 years, but on request. If this rule applies, carry forward is limited to up to 6 years. Companies in finance or certain holding activities, certain restrictions may apply.

Withholding tax

Dividend is taxed at 15% if there is no participation exemption, which in this case the dividends are tax exempt. If any tax treaty is in effect, the rate is usually lowered.

There is no taxation levied on interest in Netherlands, nor is there any withholding tax on royalties or any technical fees.

 

Individual tax

General

Individuals living in Netherlands is taxed on their worldwide income. Non resident individuals are taxed only on Netherlands-source income. In certain cases can a foreigner with income sourced from Netherlands apply for a limited national taxpayer status, in which they are taxed on their Netherlands-source income but are entitled to certain deductions. Resident status is based upon certain factors such as employment, family, etc.

Taxable income

Netherlands has a system of the personal taxable income known as “box system”. The system contains 3 boxes. Box 1 is considered to be income from work and home from it’s main residence. Box 2 is taxable income from substantial interest in companies with limited liability(BV, NV). Box 3 is income from savings and investments.

Rates

Box 1, tax rate is progressive rate up to 52%.

Taxable income in Euro’s under age 65

EUR 0 – 18,218 is 33.45%

EUR 18,218 – 32,738 is 42.00%

EUR 32,738 – 54,367 is 42.00%

Over EUR 54,367 is 52.00%

Taxable income in Euro’s above age 64

EUR 0 – 18,218 is 15.55%

EUR 18,218 – 32,738 is 24.05%

EUR 32,738 – 54,367 is 42.00%

Over EUR 54,367 is 52.00%

Box 2, tax rate is 25%.

Box 3, tax rate is 30%.

Capital Gains

In general capital gains are taxed at the progressive Box 1 level. In certain cases if the gains are related to a substantial interest, Box 2 level of 25% is levied. There is no capital gains tax on dwellings.

Deductions

Expenses necessary for the purpose of acquiring income may be deducted from taxable income in Box 1 and Box 2 level. In very special cases when there is a mixed of these it might not be deducted due to certain limits.

Personal circumstances however, certain expenses are deductible on Box 3 level. There is a personal allowance (by tax credits) dependent on individual circumstances.

Real Estate

Municipalities impose tax at varying rates on owners of real property in their municipality on an annual basis. Real property tax is not deductible for individual income tax purposes.

Net Worth Tax

There exist no net worth tax in Netherlands.

Inheritance Tax

The inheritance tax rate ranges from 10% and 40%. The tax is levied and is due on inheritance received from Dutch residents. Dutch residency is considered even up t 10-year period after emigration.

Social Security

Employed resident individuals contributes to the social security. Additional social security contributions are also possible and payable by employees and the self-employed.

VAT

VAT applies to all sales of goods, services and imports. The VAT is 19%. A lower rate of 6% is taxed for certain goods and services such as food, books and newspapers. Also a zero-rate exist applied on international trade so that goods can be exported free of VAT.

 

Other

Tax year. Calendar year.

Tax treaties. Netherlands currently has 80 treaties.

Filing requirements. Netherlands applies a monthly, quarterly or annually filing for VAT returns depending on the amount of VAT payable.

Registration (for VAT purpose). There is no registration threshold in Netherlands.

 

Links

Tax authorities. Belastingdienst

Consulate

Local Tax Resources

Chamber of commerce

(Online realtor/stock exchange)