Income Tax in Netherland
Tax
Compliance
Residents
On
entering the Netherlands, the employee must register as a resident in the
municipality where he/she will live if the expected stay in the Netherlands
exceeds four months. Subsequently, a National Identification Number/”BSN”
(Burgerservicenummer) is granted by the municipality.
Income tax returns are
based on a 31 December year-end.
Spouses are not taxed
jointly; each individual is treated as a separate taxpayer for his/her personal
income (such as employment income). In principle, the non-personal income is
taxed separately on the spouse who is the beneficial owner of the income.
However, spouses are allowed to divide their non-personal income between them
as they choose to, as long as all the income is reported. The income will be
taxed with the spouse to whom the income has been attributed. Non-personal
income of minors is attributed to the parents.
Returns must normally
be filed by 1 May following the end of the tax year. Returns prepared by a
registered tax professional are generally covered by a tax return lodgment
extension program.
If the tax authorities
have not issued an individual income tax return form, the employee may have to
request one following 31 December of the year in question. This is the case if
individual income tax is payable by the employee.
Based on the return,
the tax authorities will issue an assessment taking into account any Dutch wage
tax withheld during the year. It is possible to file an objection against the
final assessment within six weeks from the date of issue of the assessment.
Married couples are tax
partners, yet file tax returns as separate individuals. Unmarried couples
living together at the same address will, under certain conditions, be treated
as tax partners, too. Although tax partners will be taxed separately, certain
income components can be taxed more tax efficiently due to the possibility to
divide non-personal income between them. The non-working tax partner of a
working tax partner can, in principle, claim 40 percent of the general tax
credit (maximum EUR 2,254). If the non-working tax partner was born before
January 1, 1963, the full general tax credit can, in principle, be claimed.
Non-residents
Non-residents should also obtain a National Identification Number. If the employee has less than four months housing available in the Netherlands he/she will have to obtain a National Identification Number by way of an RNI registration at an RNI Desk. Nineteen Dutch municipalities have an RNI desk: Alkmaar, Almelo, Amsterdam, Breda, Den Haag, Doetinchem, Eindhoven, Goes, Groningen/Eemshaven, Heerlen, Leiden, Leeuwarden, Nijmegen, Rotterdam, Terneuzen, Utrecht, Venlo, Westland and Zwolle. If a non-resident employee has housing available for more than four months the employee must register as a resident in the municipality.
Non-residents should also obtain a National Identification Number. If the employee has less than four months housing available in the Netherlands he/she will have to obtain a National Identification Number by way of an RNI registration at an RNI Desk. Nineteen Dutch municipalities have an RNI desk: Alkmaar, Almelo, Amsterdam, Breda, Den Haag, Doetinchem, Eindhoven, Goes, Groningen/Eemshaven, Heerlen, Leiden, Leeuwarden, Nijmegen, Rotterdam, Terneuzen, Utrecht, Venlo, Westland and Zwolle. If a non-resident employee has housing available for more than four months the employee must register as a resident in the municipality.
Non-resident spouses
are not considered tax partners and are therefore not allowed to divide their
non-personal income between them. However, the personal and family situation of
non-residents who are residents of an EU or EEA Member State, Switzerland, or
one of the BES islands, and who earn 90% or more of their income in the
Netherlands, may receive the same tax treatment as that of residents. These
qualifying non-residents will only be taxed on their Dutch income, and are, in
principle, entitled to the same deductions and tax credits as domestic
taxpayers.
The tax year ends on 31st
December and the return shall be filled upto 1st May of following year
for both resident and non resident.
Tax Rates
Resident
Income
tax rate for 2016
Business
and employment income and income from the main private residence:
Taxable Income
Bracket
|
Income Tax
Rate
|
Social
Security Tax Rate
|
|
From EUR
|
To EUR
|
Percent
|
Percent
|
0
|
19,982.00
|
8.90
|
27.65
|
19,983.00
|
33,791.00
|
13.15
|
27.65
|
33,792.00
|
67,072.00
|
40.80
|
0.00
|
Above
67,072.00
|
52.00
|
0.00
|
|
Income
and Gain from substantial shareholding:
A flat rate of 25% is
applicable. Capital gains taxes are not applicable, unless there is a
substantial interest in a company
Income
from savings and investment:
A flat rate of 30
percent on deemed income from savings and investments. The deemed income
depends on the total value of assets and liabilities on 1 January of the tax
year and is calculated as follows.
Taxable base
income from savings and investments*
|
Deemed income
percentage: 1.63
|
Deemed income
percentage: 5.39%
|
Until
EUR 75,000
|
67%
|
33%
|
EUR
75,000 - EUR 975,000
|
21%
|
79%
|
As
from EUR 975,000
|
0%
|
100%
|
* after deduction of
the exempted amount of EUR 25,000
Non Resident
Income tax rate for
2016
Business
and employment income and income from the main private residence:
Taxable Income
Bracket
|
Income Tax
Rate
|
Social
Security Tax Rate
|
|
From EUR
|
To EUR
|
Percent
|
Percent
|
0
|
19,982.00
|
8.90
|
27.65
|
19,983.00
|
33,791.00
|
13.15
|
27.65
|
33,792.00
|
67,072.00
|
40.80
|
0.00
|
Above
67,072.00
|
52.00
|
0.00
|
|
* if subject to dutch
social security
Income
and Gain from substantial shareholding:
A flat rate of 25% is
applicable. Capital gains taxes are not applicable, unless there is a
substantial interest in a company
Income
from savings and investment:
A flat rate of 30
percent on deemed income from savings and investments. The deemed income
depends on the total value of assets and liabilities on 1 January of the tax
year and is calculated as follows.
Taxable base
income from savings and investments*
|
Deemed income
percentage: 1.63
|
Deemed income
percentage: 5.39%
|
Until
EUR 75,000
|
67%
|
33%
|
EUR
75,000 - EUR 975,000
|
21%
|
79%
|
As
from EUR 975,000
|
0%
|
100%
|
* after deduction of
the exempted amount of EUR 25,000
Corporate Tax Rates
In general, a Dutch
resident company is subject to CIT on its worldwide income. However, certain
income can be exempted or excluded from the tax base. Non-resident entities
only have a limited tax liability with regard to income from Dutch sources.
Standard
corporate income tax (CIT) rate
The standard CIT rate
currently stands at 25%. There are two taxable income brackets. A lower rate of
20% applies to the first income bracket, which consists of taxable income up to
200,000 euros (EUR). The standard rate applies to the excess of the taxable
income.
The earlier proposal to
increase the first bracket to EUR 250,000 per 2018, to EUR 300,000 per 2020,
and to EUR 350,000 as of 2021, is withdrawn. The first bracket will continue to
apply to taxable income up to EUR 200,000.
However, the new
coalition has expressed its intention to reduce both the lower and standard CIT
rate starting from 2019. The rate will be reduced in steps from 25% to 24% in
2019, to 22.5% in 2020, and to 21% in 2021. The lower rate will decrease by the
same steps, from 20% to 19% in 2019, to 17.5% in 2020, and to 16% in 2021.
Fiscal
investment fund regime
In general terms, under
the existing fiscal investment fund regime, the CIT rate for fiscal investment
funds is 0%, provided that their profit is made available to the shareholders
and holders of certificates of participation no later than eight months after
year end.
Fiscal investment funds
may also invest in real estate development (or redevelopment) activities,
provided that these activities take place through a subsidiary subject to Dutch
CIT and the development (or redevelopment) activities are exercised for the
benefit of real estate that is (or will be) forming part of the fund’s own
portfolio, an affiliated fiscal investment fund’s portfolio, the portfolio of a
company in which the fund or the affiliated fund has a substantial interest, or
for the benefit of the subsidiary’s own portfolio ('project development'
subsidiary). Fiscal investment funds that invest in real estate are allowed to
hold a taxable subsidiary that provides customary services in relation to the
real estate held by the Dutch real estate investment trust (REIT). Examples are
conference facilities or the exploitation of an in-house restaurant.
Exempt
investment fund regime
The exempt investment
fund regime exists next to the fiscal investment fund regime described above.
In accordance with the exempt investment fund regime, investment funds as
defined in the Dutch Financial Supervision Act (Wet op het financieel toezicht)
that meet certain conditions can request an exemption from CIT. Apart from the
exempt status for CIT purposes, the exempt investment fund is not obligated to
withhold dividend WHT with regard to profit distributions to its shareholders.
Innovation
box regime
A special regime
applies with respect to profits, including royalties, derived from a
self-developed intangible asset (developed after 31 December 2006). In this
so-called innovation box, the taxpayer may opt, under certain conditions, for
the application of a lower effective rate on taxable profits derived from these
intangible assets. The effective tax rate of the innovation box is 5%.
Following the 2018 Dutch Tax Package, this will be increased to 7% as of 1
January 2018.
The innovation box is
applicable if at least 30% of the profits have been originated by the patent.
Companies that have incurred certain qualified research and development
(R&D) costs for the development of intellectual property (IP) for which no
patent was granted are also entitled to the favourable effective tax rate. This
is subject to the condition that these qualified R&D assets became part of
the company’s assets after 31 December 2007.
The lower effective tax
rate only applies to positive income, allowing innovation losses to be taken
into account in full. It is also possible to include profits from an intangible
asset derived in the period between the patent application and the granting of
the patent in the innovation box regime (not for R&D assets).
The outcomes of the
OECD/G20’s base erosion and profit shifting (BEPS) project have influenced the
Dutch innovation box regime. As of 2017, the Dutch innovation box regime is
aligned with the modified nexus approach as described in the OECD report on
Action 5. Transitional measures apply to certain assets, especially those
created before 1 July 2016 (e.g. the continuing application of the former
innovation box regime).
Tonnage
tax regime
In order to stimulate
entrepreneurs engaged in ocean shipping, a favourable regime (known as the
Dutch tonnage tax regime) may be available to certain shipping companies. Under
this regime, the taxable profit of a sea-going vessel is based on its
registered net tonnage multiplied by a fixed amount of deemed profit per ton
instead of the actual profits from the exploitation. The regime only applies to
the calculation of the profit related to the qualifying shipping activities.
These activities include operating vessels in international traffic (including
transportation for the purpose of the exploitation of natural resources at
sea), cable and pipe-laying activities at the bottom of the sea, and towing and
dredging and connected activities. The profits from the qualifying activities
are taxed at a deemed tonnage profit according to a five bracket regressive
scale system. The tonnage tax regime applies upon request and for a fixed
period of ten years or multiples of the ten-year period.
Local
income taxes
There are no provincial
or municipal corporate income taxes in the Netherlands.
No comments:
Post a Comment