To Be or Not to Be: Dutch Dividend Withholding Tax

Limited liability company in the Nederlands

The new coalition agreement rocked the boat in the Netherlands. Especially the alleged abolishment of the dividend withholding tax made a wave. By abolishing this tax, government Rutte III hopes to attract more international entrepreneurs to the Netherlands. Even the renowned tv-host Lubach discussed the country’s international appeal in his show Zondag met Lubach. He illustrated his point of view with the DTS-page on European tax rates. Whether or not the final ruling of the First Chamber might put the people at ease, remains yet to be seen.

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Tax Plan 2018

tax plan 2018_Netherlands_Dutch taxes

 

On Queen’s Speech, ‘Prinsjesdag’ in Dutch, the new Dutch cabinet Rutte III pronounced its ambitious Tax Plan 2018. Over the last months, the Tax Plan instigated many discussions and far more confusion. The 19th of December, the final ruling of the First Chamber took place. Here, you may find an overview of the actual fiscal changes that will go into effect on January 1, 2018.

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VAT on Cross-Border Services and Deliveries

VAT cross-border services deliveries

 

Do you or your clients offer services to foreign customers? Does your company provide services abroad? Then VAT compliance can be quite a hurdle. On one hand, the services were delivered by a company settled in the Netherlands. The beneficiary of those services, on the other hand, is situated abroad. This makes filing taxes a confusing affair. Continue reading

2018’s Fiscal Resolutions by the Dutch Government

changes tax 2018

 

changes tax 2018

The new year usually comes with new resolutions and plans. This isn’t any less true for the Dutch government. It plans on several law adjustments that will be in effect starting January 1, 2018. Among these adjustments are tax changes.

The resolution behind these changes is the aim to improve the Netherlands’ fiscal climate. In order to achieve this ambitious plan, the government will adapt corporate income tax, dividend tax and VAT. Furthermore, there are several other rearrangements concerning multinationals.
The most relevant of tax changes are discussed below.

Corporate Tax

First of all, the government hopes to attract foreign entrepreneurs by lowering the corporate tax rates. Starting January 2019, the rates will decrease with 1.5%-points. By 2021, this should result in 16% of taxable profit up to EUR 200 000 and 21% of the taxable profits exceeding this limit. In addition, the government will raise the corporate tax rate of the innovation box from 5% to 7%.

VAT

VAT rates will increase as well. In 2018 tax authorities will demand 9% instead of 6% VAT.

Dividend tax

Dividend tax, on the other hand, will be abolished altogether by January 2018. To prevent tax abuse, however, companies will still be subjected to withholding tax on outgoing interest and royalty flows to low tax jurisdictions.

Other resolutions

Finally, the Dutch government officially pronounced to reduce the 30% ruling term to five years. This decree will be in effect starting January 1, 2018. It is one of the measures to restrict expats’ tax benefits.
If you have more questions regarding these and other fiscal adjustments, please feel free to contact us. We are happy to assist you.

Expansion of the dividend withholding tax exemption and broadening dividend withholding tax base to include holding cooperatives.

dividend withholding tax obligation and exemption holding cooperatives

dividend withholding tax
Great News! 
The draft bill concerning the Dutch withholding tax contains several decrees that both tightens and broadens the Dutch dividend withholding tax exemption has been sent to parliament. It provides for relief from double taxation in genuine corporate structures.

This legislation makes the Netherlands more attractive for corporate structures.

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The Dutch 30%-ruling

Dutch 30% ruling

Dutch 30% ruling

The Netherlands love their expats. The Dutch ones abroad, but even more so the foreign ones over here. To attract highly skilled and well-paid professionals, the Dutch Tax Authorities grant them the so-called 30% ruling. The 30% ruling seems as simple as it is attractive: 30% of your salary will not be taxed.

I can’t possibly say it is not attractive. Getting and keeping it, however, may be tricky. We have seen applications been turned down for lack of evidence; we have met expat paying thousands of euros too much tax for lack of trying.

Of course, there are conditions: you have to make more than EUR 52.699 (gross) annually; you have to have lived more than 150 kilometres (93 miles) from the Dutch border for at least two-thirds of the 24 months before starting your job in The Netherlands; and if you are a football player, you have to be a pretty good one.

Just to give you an idea: at a EUR 100.000 income, the Netherlands 30% ruling saves the expat 8 years * 15.000 = EUR 120.000. That is worth a try, isn’t it? Moreover, that is worth letting an experienced professional file the application.

Had I already mentioned that your bonus is included in this ruling? That you can transfer your 30% ruling to another employer, even if that employer is your own company? And that you do not have to report your capital to the Dutch Tax Authorities?

So: are you a foreigner working in The Netherlands, making more than EUR 52.699, and don’t you have the 30% ruling? Get in touch. Are you a foreigner considering working in The Netherlands? Get in touch. Are you an independent entrepreneur thinking of moving to The Netherlands? Do not hesitate to get in touch with us!

The whys and wherefores of doing business in the Netherlands: the attraction of the Low Countries

why business in the Netherlands

why business in the Netherlands

The Netherlands: Are you planning to launch a new business? Or are you considering taking your existing operations to an international level? Then you may well be doing yourself a disservice by dismissing the Netherlands out of hand! For this reason, we have put together the following selection of Dutch plus points.

 

Official name:Population:
Kingdom of the Netherlands17,080,575
Capital city:Seat of government:
AmsterdamThe Hague
Currency:Surface area:
Euro41,543 km2 (16,040 mi2)

 

Geography and infrastructure

The Netherlands’ central location and state-of-the-art infrastructure have made it the obvious gateway to Europe. Both Amsterdam (Schiphol Airport) and Rotterdam (boasting Europe’s largest port) represent logistical hubs. Hence, the Netherlands provides easy access to the European market. Moreover, Schiphol Airport currently ranks fourth in the “premier league” of European airports. The water transport from Rotterdam Port onwards is impressively well organized, too.  In addition, the country offers a conveniently dense road network that is well looked after. Last but not least, there is the eastbound Betuwe Railway Line. This 160 kilometer (100 miles) long freight transport connection enables the rapid and efficient transport of commodities from Rotterdam Port to the German border and on to the hinterland.

Economy

The Dutch open economy is characterized by a great deal of economic interaction involving international trading partners. Furthermore, the above-average stability of the Dutch economy boosts the profitability and solvency of its business community. Businesses are quite adroit at “rolling with the punches” of a fluctuating international economy. The oil refinery sector, chemicals, food processing, electronics development and pharmaceuticals are the Netherlands’ main industrial activities. It mainly exports to Germany, Belgium, the United Kingdom, France, the United States and Italy. Significant import countries are Germany, Belgium, China, the USA and the UK.

Tax friendliness

Another great asset is the extensive double taxation convention network. This network involves a host of foreign countries. Moreover, domestic tax rates are relatively low and competitive. The corporate income tax rate, for example, is 20% for taxable amounts of up to EUR 200,000. Excess earnings being taxed at 25%. The Netherlands offers further attractive tax schemes. Examples are the 30% ruling, the participation exemption scheme. Another interesting fact is the zero withholding tax rate on interest or royalties. Find out more about the Netherlands’ 30% ruling here: https://www.companynl.com/30-ruling-netherlands/.

People

The Dutch tend not to be backward in coming forward. As counterparts in business, they have a reputation of being quick-witted and easy to deal with. Furthermore, they are straight shooters who tend not to dilly-dally. At European level, the Dutch workforce ranks as one of the most educated. Workers tend to be quite flexible and have a good command of the English language.

Do you want to find out more about the legalities of establishing a Dutch-based business or the Dutch tax system? Please do not hesitate to contact CompanyNL. It will be our pleasure to provide you with additional information!

Opening a Dutch bank account

BSN number

BSN number

How hard can it be to open a bank account in a foreign country? Actually, it can be quite a challenge if this country is the Netherlands! This blog offers you a selection of “tips and tricks”, to help you negotiate the rocky road to Dutch bank account ownership.


Opening a business account 

Opening a business account with a Dutch bank in principle calls for a Chamber of Commerce (KvK) file number. The only way of obtaining such a file number is by having your business entered in the Commercial Register. There are two possible ways to do so: First, you can set up a Dutch branch of a foreign-based business. This should be pretty straightforward, as the business will boast a Dutch address. The second option is to become an “establishment-less” performer of particular business operations in the Netherlands.  This is not always as undemanding as you might have expected it to be. The business will not only need a Dutch-based address but will also have to have access to the relevant premises.

Ergo, if you intend to carry on operations in the Netherlands without incorporating a company under the laws of the Netherlands, you will still need some sort of address in order to register with the KvK (as a national “Registrar of Births, Deaths, Marriages and Civil Partnerships for Businesses” of sorts).

You can provide yourself with a Dutch address and bank account without actually having to come to the Netherlands. Still, you will need to send in an authenticated copy of your identity record.

Opening a bank account without a Chamber of Commerce file number

Selected banks – such as ABN AMRO Bank – offer the option of opening a business account without a KvK file number. However, the fees for such an arrangement are several times higher than those charged for a “regular” business account. In particular, the fee for opening such a “disembodied” account starts at € 109.00.

Opening a private account

You can also open a private bank account in your capacity of Dutch-resident natural person. In this context, most banks will expect you to put in a personal appearance at one of their branches. (We would point out that it is impossible to open a private bank account in the Netherlands for anyone who is not Dutch-registered.)

Reference is made to the overview for an enumeration of Dutch banks and the fees they charge for opening an account with them.

If you require more detailed information about opening a bank account or securing a Dutch address, please do not hesitate to contact CompanyNL. It will be our pleasure to be of service to you!

Dutch participation exemption

opening dutch bank account

Gains and losses from a participation are normally no part of the taxable profits. The Dutch Participation Exemption (PE) scheme guarantees that profits, which are charged at a subsidiary, will not be charged again at the parent company. This article explains how the exemption works in practice.

participation exemption

Companies which are tax resident in the Netherlands are generally subject to Dutch corporate income tax (CIT). The regular CIT rate of 20-25% applies to a company’s worldwide profits. The worldwide profits include business income, trading income, dividend income, royalty income and interest income.

Under the application of the PE regime, income items received in connection with a qualifying shareholding are exempt from CIT. This income includes dividends, other profit distributions, capital gains and foreign exchange rate results realized by a Dutch resident company. Furthermore, losses are non-deductible, except for liquidation losses/ loss on a dissolution and currency exchange losses in case the tax-payer chooses (conditions apply).

You can perform 5 tests in order to determine if a subsidiary qualifies for the PE regime:

  1. The subsidiary needs to be a company for Dutch tax purposes (“Company Test”);
  2. The shareholder needs to be the legal owner of 5% in the nominal paid-up share capital in the subsidiary (“Shareholding Threshold Test”) (exception include a.o., 5% voting-power, member of Cooperative);
  3. The shareholder does not intend to hold the subsidiary as portfolio investment (“Intention Test”);
  4. The subsidiary is not a deemed portfolio investment (“Deemed Portfolio Investment Test”);
  5. If 4 applies, then the subsidiary may be a qualifying portfolio investment (“qualifying portfolio investment exception test”).

Based on tests 1, 2 and 3, one can determine if the PE-regime applies to a specific participation. Moreover, test 4 investigates whether the subsidiary is a deemed portfolio investment. Then, one needs to determine if the subsidiary is a qualifying portfolio investment (5).

Ad 5) Qualifying Portfolio Investment Exception Test

If the subsidiary meets test 4, the PE-regime is still available if the participation meets the qualifying portfolio investment exception test (5). In particular, this is the case if it meets either of two tests:

  1. Less than 50% of the assets of the participation directly and indirectly consist of “low-taxed free portfolio investments” (“Asset Test “); or,
  2. The participation is subject to a profit tax that results in a genuine levy according to Dutch tax standards (“ETR Test”).

If the participation does not meet the above conditions, the PE is not suitable. In this case, a credit for underlying tax may be available. Other exceptions apply to real estate companies. Here, tax-exempt investment vehicles do not own real estate and rights.

Do you want to know more about the Dutch PE? Please do not hesitate to contact us! We can tell you more about the requirements and how to apply for the exemption. In addition, we have a one-pager about the Dutch PE and a white paper (15 pages) available for free, as well.

Private shareholding: keeping your shareholding confidential

bv private shareholder

private shareholding

Private shareholding: how can I keep my shareholding in a Dutch BV private?

In order to set-up a Dutch Limited Liability Company, you will need to full-fill “know your client procedures”, so the Dutch notary will know who the shareholder is. But sometimes you want to keep your shareholding confidential. In case the “know your client procedures” are full-filled, you can make your shareholding in a Dutch BV as private as you deem appropriate, whereby there are various degrees:

  1. Set up a Dutch BV with 2 shareholders to prevent being listed in the Dutch Chamber of Commerce; and/or,
  2. Have somebody else incorporate the BV on your behalf to prevent the inclusion in the deed of incorporation; and/or,
  3. Have somebody else manage the BV on your behalf to prevent the inclusion with the Dutch Chamber of Commerce as Director; and/or,
  4. Have somebody transfer the shares at a later date (option agreement) in order to not be a shareholder initially;
  5. Provide an abstract name for your BV and change it later on (not your own name, etc);
  6. Set up the BV via a third party provider so that its addresses does not have a connection to you;
  7. Use a STAK (foundation) to certify the shares;
  8. There is a UBO (Ultimate Beneficial Owner) registry being set-up throughout Europe. If you set up a trust which incorporates a BV, you probably avoid the inclusion in the UBO register;

Do you want to know more about private shareholding? Please contact us so we can give you some more information about shareholding.