Establishing Dutch business operations

Doing business in the Netherlands

Apart from the excellent infrastructure, the fact that around 90% of the Dutch speak English and many people are multilingual, makes that the Netherlands is seen as the “Gateway to Europe”. The Netherlands offers a very good business climate for an optimal European supply chain.

Besides these unique selling points, the Dutch government has created a competitive tax regime that stimulates entrepreneurship and foreign investment in the Netherlands. A combination of rather low corporate income tax rates compared to most other (EU) countries, various attractive financial incentives, a far-reaching network of nearly 100 bilateral tax treaties, the absence of withholding tax on interest and royalties (except for abuse situations), the participation exemption and the possibility to conclude so-called advance tax rulings, makes the country a reliable choice as a base for international operations. In addition, expatriates who are temporarily assigned to the Netherlands may benefit from a special tax regime, known as the “30% ruling”. That is the reason that the Netherlands is a preferred location to establish European headquarters or sales and distribution activities.

A few of the main advantages of the Dutch tax system

• A far reaching tax treaty network to avoid double taxation and providing a substantial reduction of withholding taxes on dividends, interests and royalties, often even to zero.
• No capital tax levy on capital contributions to a company, either in cash or in kind.
• Participation exemption regime: all benefits related to a qualifying shareholding ((cash) dividends, capital gains and liquidation proceeds) are exempt from Dutch corporate income tax.
• Object exemption regime: profits derived from active permanent establishments (branches) are exempt from Dutch corporate income tax.
• Fiscal unity regime: Tax consolidation of group companies whereby the parent company files a tax return on a consolidated basis. The fiscal unity regime allows the offset of losses of one company against profits of another company in a particular year. Moreover, the tax-free transfer of assets and liabilities between the fiscal companies facilitates reorganisations.
• Innovation Box regime: the possibility to be effectively taxed at a reduced rate of 9% with respect to income from (patented) self-developed intangible assets/intellectual property (IP) for which an R&D-declaration (in Dutch: WBSO-verklaring) has been obtained.