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 Dennis Vermeulen

By Dennis Vermeulen | July 16, 2016 |

IinH Business Taxation

Taxation

For centuries, the Netherlands has been a nation of traders. To ensure that this longstanding tradition endures,the Dutch government has created a competitive tax regime that stimulates entrepreneurship and foreign investment in the Netherlands. Not only the corporate income tax rates are lower in relation to most of its European neighbours, there are also numerous features that make it attractive for foreign companies to locate operations in the Netherlands. In comparison with other (EU) countries, the Netherlands is known for its very competitive tax climate resulting from its far-reaching tax treaty network, its system of bonded warehouses, and the possibility to conclude so-called advance tax rulings, whereby a company’s future tax liability is laid down. The principal taxes in the Netherlands are corporate and personal taxes on income (including wage withholding tax) and value added tax (“VAT”). In addition, individuals are liable to a number of other taxes, such as inheritance tax and gift tax.

Tax ruling

Taxation is a significant factor for international groups in the choice of locations in which to establish them. The Dutch tax authorities are aware of this, and therefore seek to be as transparent and accessible as possible. The Netherlands occupies a competitive position internationally as far as providing certainty in advance. One of the specific features of the Dutch tax system is the possibility to discuss in advance the tax treatment of certain operations or transactions. If requested, the Ministry of Finance, or any of the inspectors, is, in most cases, willing to discuss the tax effect of any contemplated transaction. If this leads to a written advance tax ruling, the tax inspector usually abides by that opinion, provided that the relevant facts have been presented fairly. Multinational enterprises attach a great deal of importance to the speed with which certainty in advance is given. In response to signals from the field, the State Secretary of Finance has taken measures to reduce the time to require a tax ruling to, in principle, a maximum of eight weeks. The fact that the Netherlands has signed treaties with more than 90 countries around the world emphasizes its commitment to international and bilateral
commerce. These treaties have been signed so that companies are not forced to pay double taxation.

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