The incoming Dutch coalition government presented its coalition agreement for the coming four years. Starting in a prospering economy, the new coalition laid out its policy plans in a coalition agreement titled “Confidence in the Future.”
The coalition agreement demonstrates an intention to further improve the country’s attractiveness for active business operations and doing business in the Netherlands, for instance by lowering the corporate income tax, taking away the dividend withholding tax and removing administrative burdens. The tax cuts are balanced by certain regulations to strengthen the Dutch tax base. Most measures will take effect as of 2019.
A look at the most important tax plans in the field of corporate taxation.
Dividend withholding tax
- Currently, all non-resident shareholders are, in principle, liable to 15% Dutch dividend withholding tax in respect of dividends paid by a Dutch resident company. In practice, you may be able to claim a lower tariff or and exemption under a tax treaty. However, the process of claiming reductions, exemptions and credits gives rise to administrative burdens.
- The incoming government intends to abolish the dividend withholding tax per 2020, except in cases of abuse and for dividend payments made to low-tax jurisdictions.
- The coalition government does not offer guidance when a jurisdiction will qualify as ”low tax”, and what situations will be regarded as abusive. In this context the Dutch government has proposed a “black list” with non-cooperative jurisdictions.
Corporate Income Tax
The coalition agreement provides a phased reduction of the corporate income tax rate in the period between 2018 and 2021. The “high bracket” will decrease from 25% to 21%, and the “low bracket” will be reduced from 20% to 16%, as the table below shows:
> EUR 200,000
< EUR 200,000
Dutch tax base changes
- The effective period to carry forward losses is reduced from nine to six years.
- The effective period for the favorable 30%-regime will be reduced from 8 to 5 years.
Specific to the skilled foreign expats, the regime allows for a fixed 30% allowance for Dutch wage and income tax purposes.
- The effective rate for profits derived form intangibles that qualify for the innovation box will be increased from 5% to 7%.
- The depreciation floor for real estate used for group operations from 50% to 100% of the so-called “WOZ-value”.
- The lower VAT rate, which applies to groceries, books and entertainment, will increase from 6% to 9%.
- As a result of EU-commitments, the new government will introduce new interest deduction regulations, which will restrict deduction of net interest expenses to 30% of EBITDA, with a 1 million treshold for small and medium sized entities.
The coalition agreement does not offer guidance on the precise effective date of all the tax policies, as the new government have to submit legislative proposals to adopt the measures set out in this blog to the Dutch parliament.
We will keep you informed of any further developments. Please contact your trusted adviser at Visser & Visser in case you have any queries.
Click here to download a pdf of the coalition agreement (English).