Corporate tax in the Netherlands
A Dutch company is subject to 25% corporate tax ("vennootschapsbelasting") on its worldwide profits. Certain items of income, however, are exempt from tax and certain costs are non-deductible.
Worldwide profits
The worldwide income of a Dutch company is taxable income for Dutch corporate tax purposes. Costs are tax deductible. Thus, a Dutch company is subject to Dutch corporate tax on its worldwide profits.
Rate
The 2013 Dutch corporate tax rate is applied at 20% for the taxable amount up to and including €200,000. For the excess taxable amount the rate is 25%.
Exemptions
Certain items of income are exempt from Dutch corporate tax. The most important items of income that are exempt are:
- capital gains and dividends derived from qualifying subsidiaries ("participation exemption");
- income attributable to a foreign business enterprise ("permanent establishment").
Participation exemption
Capital gains and dividends derived from a qualifying subsidiary are fully exempt from corporate tax in the Netherlands ("participation exemption"). A subsidiary qualifies for the Dutch participation exemption when:
- the subsidiary is an active company; and
- the Dutch parent company holds an interest of at least 5% in such company.
Foreign branch
Income received by a Dutch company from a foreign branch is exempt from Dutch corporate tax provided such branch is a permanent establishment or representative.
Tax haven
The Netherlands are known internationally, since at least the 1970s, as a tax haven. As of 2013, the country harbors holding companies for various multinationals, participates in more than a hundred bilateral tax treaties, and the various exemptions facilitate tax avoidance by corporations.[1][2]
A political debate about this issue started in 1977, when economist and social-democratic MP Flip de Kam published a book about corporations transferring large sums to Caribbean countries without paying corporate tax. Minister Van der Stee admitted that the country was internationally known as a tax haven, but refused to act, arguing that the problem could not be solved on a national level alone.[1] The debate raged for years; in 1986, Representative Willem Vermeend estimated that the country's tax service missed some ƒ4 billion per year due to companies such as The Rolling Stones' holding bv's using the "Caribbean route".[1]
Dutch tax laws have brought the country into conflict with the European Union several times, starting with the heavy criticism of the 1999 Primarolo Report. The Dutch government responded by having a group of high-ranking fiscal experts (known with the Ministry of Finance as the "Barbapapa group") create a smoke screen, changing the appearance of the fiscal system while leaving its structure intact.[1] In June 2014 the EU again investigated Dutch corporate taxes as part of an anti-trust case, when it suspected the Netherlands of illegally providing state support to Starbucks and various other multinational firms.[3] The investigation ended in October 2015, with the EC ordering Starbucks to pay up to €30 million in overdue taxes. A pair of economists from the KU Leuven noted that the Commission did not forbid Starbucks's tax construction as such, pretending that Starbucks is a Dutch company and effectively rewarding the Dutch state for its lenient tax policy.[4]
Starting 2009, the "tax haven" label resurfaced and sparked political controversy when the White House issued a press release in which the Netherlands were mentioned as tax haven.[5][6] According to various NGO's the Netherlands "can be seen as an intermediary tax haven for foreign corporations".[7][8][2] In February 2013, the Dutch House of Representatives accepted a motion calling on cabinet members to "reject, and where possible in discussions to insist on not mentioning" the qualification of the country as a tax haven; the motion was drafted by MP Roland van Vliet, a former tax advisor with Ernst & Young.[9] Economist Ewald Engelen estimated that at the time of the motion, the state earned some €1.5 billion in tax from €12 thousand billion being transferred through the country annually.[10]
National and foreign companies known to have special agreements with the Dutch tax service include Starbucks, Microsoft and PostNL. A 2015 FOI request by de Volkskrant to unearth the agreements failed, because these secret agreements are not centrally administered by the Tax and Customs Administration; even the House of Representatives has no access to them.[11]
See also
References
- 1 2 3 4 Vanheste, Tomas; Oberndorff, Map (6 August 2013). "Nederland belastingparadijs, met dank aan de PvdA" [The Netherlands a tax haven, thanks to the Labor Party]. Vrij Nederland.
- 1 2 "Dutch masters of tax avoidance". The Guardian. 19 October 2011.
- ↑ "European Commission to probe tax affairs of Apple, Starbucks and Fiat". Europe Sun. Retrieved June 12, 2014.
- ↑ Hagen, Rutger; Wijsman, Sebastiaan (23 October 2015). "Een 'straf' die Nederland bonus oplevert" [A 'punishment' that works as a bonus for Holland]. De Volkskrant.
- ↑ "The Netherlands a tax haven, a misunderstanding?". Tax Justice nl. Retrieved 21 May 2011.
- ↑ "US tax haven claim surprises Dutch". DutchNews.nl. 5 May 2009. Retrieved 21 May 2011.
- ↑ "New tax treaty policy prejudices developing countries". Centre for Research on Multinational Corporations. 20 April 2011. Retrieved 21 May 2011.
- ↑ Michielse, Geerten (24 February 2011). "Mag het een beetje minder koopman zijn?" (PDF) (in Dutch). Tijdschrift voor Fiscaal Recht.
- ↑ Smits, Henk Willem (19 February 2013). "Geert Wilders houdt wél van belastingparadijs Nederland" [Geert Wilders does love Holland, the tax haven].
- ↑ Engelen, Ewald (16 February 2013). "Nederland is een topplek voor belastingontwijking" [Holland is a great place for tax avoidance].
- ↑ "Belastingdienst: geen zicht op deals met bedrijven" [Tax Administration: no overview of deals with corporations]. De Volkskrant. 23 October 2015.