All questions

Direct taxation of businesses

i Tax on profitsGeneral

Dutch CIT is levied on Dutch and non-Dutch tax residents. Dutch tax residents are in principle subject to Dutch CIT on their worldwide income. Non-residents are subject to CIT only insofar as they enjoy Dutch-source income, which falls into two categories:

  1. taxable profits derived from a business that is conducted through a permanent establishment (PE) or a permanent representative in the Netherlands (see Section IV.ii); or
  2. taxable income derived from a substantial interest in a company that is a resident of the Netherlands, provided that:
    • the main purpose (or one of the main purposes) for holding the interest is to avoid Dutch personal income tax in the hands of another person (subjective test); and
    • an arrangement (or a series of arrangements) is in place that is not genuine (objective test).

For purposes of condition (b), an arrangement or a series of arrangements is considered not genuine if and to the extent it is not based on valid commercial reasons that reflect the economic reality.

Whether an arrangement has been put into place for valid commercial reasons may depend on the substance at shareholder level. Valid commercial reasons may be present if, inter alia, the shareholder conducts a material business enterprise and the shareholding is part of the business enterprise's assets; the shareholder is a top holding company that performs material management, policy and financial functions for the group; or the shareholder functions as an intermediate holding company within the group structure. Intermediate holding companies are subject to an additional requirement pursuant to which the holding company must satisfy the Dutch minimum substance requirements. In addition to the minimum substance requirements, the Netherlands has introduced a wage sum criterion (in general, a wage sum of €100,000) and an office space criterion (office space for at least 24 months), that would apply to intermediate holding companies.

Determination of taxable profit

Dutch CIT is levied on a taxpayer's taxable profit, being the net income earned and capital gains less deductible losses, as determined annually in accordance with the principles of sound business practice. Under this general principle, which has been widely developed under Dutch case law, profits and losses are attributed to the years based on principles of realisation, matching, reality, prudence and simplicity. In principle, all business expenses may be deducted from the taxable profit, including interest on loans (subject to interest deduction limitation rules), and annual amortisation and depreciation on assets used for the taxpayer's business.


In general, tax losses can be carried back to be offset against the previous year's taxable profits, and can be carried forward for nine years (six years for losses made in fiscal years starting on or after 1 January 2019). Loss carry-backs and carry-forwards are applied in the order in which the losses arose (meaning that a loss will first be offset against the previous year's profits, and then against future profits).

However, special rules for loss relief may apply to holding companies and direct (or indirect) financing companies (for holding and financing losses incurred prior to 2019) as to the trade in 'loss-making companies'. In the latter scenario, a company's losses may not be offset against future profits if 30 per cent or more of the ultimate interest in that company changes among the ultimate beneficial owners or is transferred to a new shareholder. This rule offers a number of exceptions, however (the going-concern exception, for example).

In view of the Dutch participation exemption regime (see Section V.i), taxpayers may not deduct losses on the disposal of a qualifying participation from their taxable profit. In addition, a write-off of the cost price of a participation is not deductible. However, liquidation losses, whether foreign or domestic, may be deducted from the taxable profits, provided that certain requirements are met. The liquidation loss amount is determined on the basis of the difference between the liquidation proceeds and the cost price of the participation.


The standard CIT rate is 25 per cent. The first €200,000 of annual taxable profit is taxed at a step-up rate of 20 per cent. To further bolster the investment climate, legislation has been adopted to lower the CIT rates, including a top bracket CIT rate reduction to 20.5 per cent in 2021 (2018: 25 per cent, 2019: 25 per cent, 2020: 22.55 per cent) and a lower bracket CIT rate reduction to 15 per cent in 2021 (2018: 20 per cent, 2019: 19 per cent, 2020: 16.5 per cent).


Taxpayers must file annual CIT returns with the Dutch tax authorities within five months of the end of their financial year. It is possible to apply for an extension of this filing deadline.

Dutch taxpayers are allowed to file their returns in a functional currency (i.e., a foreign currency other than the euro) if their annual reports are drawn up in the same foreign currency. As such, a Dutch taxpayer can ensure that fluctuations between the euro and the functional currency do not lead to taxable profits (e.g., foreign exchange results on outstanding debt or receivables).

Tax grouping

The Dutch consolidation regime (fiscal unity) offers the possibility for taxpayers to opt for treatment as a single taxable entity for Dutch CIT purposes. A Dutch resident parent company and its Dutch resident subsidiaries may form a fiscal unity if certain requirements are satisfied, the most important being that the parent company, directly or indirectly through other fiscal unity members, must hold at least 95 per cent of the legal and economic title to the shares issued by the subsidiaries. As a result, the assets and liabilities of the entities included in the fiscal unity are consolidated, meaning that intercompany transactions are eliminated and that the business income of the fiscal unity members is balanced for CIT calculation purposes. Although each member of the fiscal unity remains jointly and individually liable for the CIT due by the entire fiscal unity, the CIT assessments are only imposed on the parent company. A fiscal unity (for Dutch CIT purposes) is optional (i.e., it is not formed by operation of law), and therefore requires a prior request to that effect.

Following the judgment of the European Court of Justice (ECJ) in SCA Group Holding, the Dutch court of appeal ruled on 16 December 2014 that by disallowing a fiscal unity between a Dutch parent company and an indirect Dutch subsidiary held through an EU or EEA intermediate subsidiary, or a fiscal unity between two Dutch 'sister' companies held through a joint EU or EEA parent company, the Dutch fiscal unity regime conflicts with the European principle of freedom of establishment. In accordance with this decision, the Dutch Ministry of Finance issued a decree providing for an extra statutory consent for such European cross-border fiscal unities. Moreover, a legislative proposal codifying these changes to the fiscal unity regime into the Dutch Corporate Income Tax Act (CITA) entered into force as of 1 January 2017.

Following the judgment of the ECJ in X BV of 25 October 2017, in which the ECJ declared the Dutch fiscal unity regime (partially) breaches the freedom of establishment, the Dutch government announced emergency reparatory legislation to bring the fiscal unity regime in line with the EU freedom of establishment. The emergency reparatory legislation proposal will have retroactive effect up to 1 January 2018. The legislation would decrease the scope of the consolidation of the Dutch fiscal unity regime for a number of Dutch CIT rules that affect non-Dutch resident companies (which could not be included in the Dutch fiscal unity due to not being a Dutch tax resident), where these rules do not affect Dutch resident companies that are a part of a Dutch fiscal unity. The legislative proposal is currently still pending before Dutch parliament.

ii Other relevant taxesValue added tax (VAT)

VAT is charged on supplies of goods and services in the Netherlands and is based on the various EU VAT Directives. The standard VAT rate is 21 per cent. A reduced rate of 6 per cent (9 per cent as of 2019) is charged on designated supplies, while a zero per cent rate applies to supplies related to international trade. In addition, various VAT exemptions exist in the Netherlands, pursuant to which no VAT is charged (although it is important to bear in mind that in some cases the corresponding input VAT cannot be deducted).

The Dutch VAT Act provides for a deferment system for VAT, under which taxpayers must declare import VAT in their periodic tax returns but simultaneously deduct it, meaning that on balance no VAT is actually paid.

Excise and import duties

Excise duties, being a consumption tax, are levied on alcoholic products, tobacco and mineral oil products. Import (or customs) duties are levied on various products that are imported into the Netherlands from outside the EU. The Netherlands does not impose export duties.

Real estate transfer tax (RETT)

The acquisition of the legal or economic ownership of real estate (or rights relating thereto) located in the Netherlands is subject to real estate transfer tax at a rate of 6 per cent (2 per cent for residential properties). Various exemptions may apply in situations involving mergers or reorganisations.

Moreover, the acquisition of shares in a real estate company, being a company where real estate assets make up more than 50 per cent of the assets, of which at least 30 per cent consists of real estate located in the Netherlands, is also subject to Dutch RETT.

Wage tax and social security contributions

In principle, individuals in employment are subject to wage tax, which the employer withholds from their wages and remits to the tax authorities. This applies not only to wage tax on salary payments, but also to social security contributions. Dutch wage tax is considered to be an advance levy, meaning that individuals may credit it against their Dutch personal income tax due.

Highly skilled expatriates may claim a special tax facility, known as the '30 per cent ruling'. The 30 per cent ruling is a tax-free reimbursement of 30 per cent of an employee's (gross) salary, which may be applied if the employee has been recruited or assigned from abroad and has specific expertise that is difficult to find in the Dutch labour market.


The Netherlands does not levy any stamp or capital duties.