tax requirement for
What are the tax requirements for a newly incorporated Dutch company?
Dutch companies need to consider several kinds of taxes. And of course, each tax comes with certain (filing) obligations.
The exact requirements depend on the corporate structure (does it concern a branch or a legal entity/subsidiary) and the tax liability of transactions that take place. In the next paragraphs, we discuss the most common taxes that a Dutch business is likely to have to deal with, such as:
Corporate Income tax
Corporate Withholding Tax (interest, royalty, dividend)
VAT is a Sales Tax. Which means, VAT is charged on your sales invoices.The Dutch name for value-added tax (VAT) is BTW (Belasting Toegevoegde Waarde). Sales tax in the Netherlands applies when you sell or buy goods or services in the Netherlands, although there are some exemptions from BTW. If you are required to charge BTW in the Netherlands, then it will be following one of three tariffs:
Zero Dutch BTW applies to international activities, such as transferring goods or offering services outside of the EU.
A Dutch BTW rate of 9%, commonly known as the low tariff, applies to the sale of common products (e.g., food, drink, agriculture, medicines, books).
A 21% Dutch BTW rate, also called the high or general tariff, applies to all other VAT taxable activities.
Basically any company can apply for a VAT number in the Netherlands. Even if the company is not considered resident in the Netherlands, but on occasion, has to deal with Dutch VAT. For example when it imports goods.
For example, if your Dutch company does not provide any VAT tax liable transactions, there is NO legal requirement to apply for a VAT number. This also means that there is no need to file a (quarterly) tax return.
Our team of experts can inform you on the VAT liability of your transactions.
Under the reverse-charge arrangement, you do not charge VAT, but reverse-charge it to your (European) buyer.
In case of export of either services or products, in most cases VAT is not applicable (except for example for electronic services).
Application of a VAT number
Although many resident companies in The Netherlands receive their VAT number automatically, this is typically not the case when your company is considered ‘non-resident’. Based on several chareasterics of your company, such as the nationality of its ‘sole’ director, or the registration address (fully fledged, or at a business center), the tax authorities can determine if it will consider the company as a ‘resident company’. If not, or in case of doubt, extra information must be provided to the tax authorities, or the ‘non-resident’ VAT number must be applied manually. Such number is typically released within 2-3 weeks after application, and has one major restriction compared to the VAt number for ‘residents’. The ‘non-resident’ VAT number will not allow you to apply for the art. 23 license, to allow VAT exempt(postponed) imports into the EU.
Read more on how to apply for a VAT number
Most Dutch companies need to file corporate tax returns, in certain circumstances, foundations and associations must also file corporation tax returns. This also applies for Dutch branches, even if they are not required to draft financial statements.
Based on the registration at the Chamber of Commerce, the Dutch tax authorities will automatically release the Corporate Income Tax ID. This is not the same as your VAT number (although the actual number might be the same).
Natural persons (such as the self-employed) pay tax on their profits through their income tax returns.
The corporate tax rates for 2019 are:
16,5% of taxable income under € 200,000
25% of taxable income over € 200,000
In 2015, 2016, 2017 and 2018, the rate for taxable income under € 200,000 was 20%. In 2021 the corporate tax rate upto 200.000 EUR will be reduced to 15%, and any profits above 200.000 EUR will be taxed at 21,7%.
Read more on when you need to file your Corporate Tax Return
Branch vs. Legal Entity
If your company is foreign-based, with a branch or subsidiary in the Netherlands, you will be liable for corporate income tax on the income received by the Dutch subsidiary. However, it is possible for parent-daughter companies to establish a so-called fiscal unity, which enables them to level out negative results from one constituent of the fiscal unity with the positive results from another (or others).
The branch could have a tax advantage, since outgoing payments to the headquarters, are not taxed as dividend.
Read more about the differences between a branch or legal entity.
YOUR BUSINESS TOOLKIT
FREE ACCESS TO ALL THE THINGS YOU NEED TO KNOW
Our experts have combined their knowledge and strengths to create a tool we call the Business Toolkit.
The Business Toolkit will help you and entrepreneurs from around the globe to truly understand the Dutch market, regulations and laws. And will enable you to take a deep-dive the many business-related topics.
Make sure to check out our handy checklists, explainer video's and extensively written Whitepapers too!