Corporate Income Tax
What is Corporate Income Tax in The Netherlands?
Corporate Income Tax (CIT) is a tax that companies pay on their profits. The tax is typically paid after the end of the (fiscal) book year, once the Financial Statements have been prepared, and the corporate income tax return is filed.
Even if your Dutch company has not made any profits, and it does not have to pay any taxes, it will be required to file its annual income tax return.
Without a Corporate Income Tax, retained company profits would not be taxed in the Netherlands...Although the Netherlands is no longer the tax haven it once was, the corporate tax rates as being reduced in the next few years to attract more foreign investors and companies (and is considered one of the most competitive corporate income tax rates in Europe).
In the Netherlands, most public and private companies must pay corporation tax on their profits.
Meaning the more Corporate Income Tax (CIT) you have to pay, the more you earn!
Who pays corporate income tax?
As mentioned above, most public and private companies pay Corporate Income Tax. This CIT is calculated on the profit of the company.
There are legal entities who don't have to pay the Corporate Income Tax. For example, funds for joint accounts are not taxable for CIT in The Netherlands.
In general, Dutch resident companies are subject to corporate income tax on their worldwide income. Specific income can be exempted according to Dutch law. Dutch law also states that no-resident entities are limited liable for taxes. These companies are only liable for their income from The Netherlands (foreign taxpayers). This is relevant for companies that are managed and directed from abroad, these companies are not taxed in The Netherlands during their first operating year. (see corporate residence article).
Corporate Income Tax Rates
In The Netherlands, the Corporate Income Tax (CIT) rate is depending on the taxable amount. There are two Corporate Income Tax rates:
16.5% when the taxable amount is less than € 200.000
25% for the taxable amount exceeding € 200.000
This means that there are two tax brackets. On the one hand, the lower bracket of 16.5%, applying to the first € 200.000. On the other hand the standard bracket of 25% which applies to all profits exceeding € 200.000.
In the following year, the Corporate Income Tax rates will be reduced. The high rate will be reduced from 25% to 21.7% in 2021 and the low rate will drop down to 15%.
When do Dutch companies file the income tax return?
The due date for filing a Corporate Income Tax (CIT) return is generally five months after the end of the company’s fiscal year. For example, when the fiscal year of Company X ends on the 31st of December 2019, the Corporate Income Tax (CIT) return has to be filed with the Dutch Tax Authorities before the 1st of June 2020.
The payment of the corporate income tax is due within two months after the date of assessment.
Are there any Dutch withholding taxes on corporate income?
No, in principle there are no withholding taxes related to Corporate Income (tax). However, based on a preliminary assessment, the corporate income tax can already be claimed by the tax authorities in advance and can be due on a monthly basis.
Fiscal unity regime
The main rule is that every company pays its own Corporate Income Tax. But in The Netherlands, a parent company can form a tax group, called a fiscal unity, with one or more of its subsidiaries. When a parent company forms a group with one or more of its subsidiaries The Dutch Tax Authorities will treat the group as a single taxpayer, meaning that only one Corporate Income Tax return has to be filed instead of one for each company. In this tax return profits and losses can be consolidated between all members of the fiscal unity regime.
Fiscal unity regime
In the Netherlands, we have a favourable regime applying to entities which are regarded to be a company from a Dutch tax perspective. No distinction will be made between companies incorporated in The Netherlands or companies incorporated under the law of another European company.
This means that profits can be moved from the working company to the holding company without being taxed twice.
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