Netherlands: Main Tax Aspects Of The Coalition Agreement 2017 - 2021 For Business Community

Last Updated: 7 November 2017
Article by Heico Reinoud, Jurjen Bevers, Paul Halprin and Marnix Veldhuijzen

The new Dutch government was officially installed on 26 October 2017. Hereafter we will discuss the main tax aspects of the coalition agreement for the business community.

Abolishment of the Dividend Withholding Tax 2020

Profit distributions by Dutch companies are subject to 15% dividend withholding tax. Dutch resident retail investors can credit this tax against their corporate income tax or personal income tax. For non-resident retail investors, this withholding tax is often a final tax.

For non-resident companies that own an interest of 5% or more in a Dutch company it is often possible to claim an exemption of dividend withholding tax or a reduction to 5 or 10%.

The government proposes to abolish the dividend withholding tax. It however adds thereto that dividend withholding tax will still be levied in case of abuse of law, and in case of dividend payments to investors who are resident in countries with a very low income tax. All in all, it is expected that this is a welcome relief for many Dutch listed companies, investment funds and joint venture companies.

Reduction of Corporate Income Tax Rate 2019 - 2021

The government proposes to reduce the Dutch corporate income tax rate as follows.

The earlier proposed extension of the first bracket to €350,000 will be terminated.

For individuals that own an interest in the paid up nominal capital of a company of 5% or more, the personal income tax rate of 25% (Box-2) will be increased to 27.3% in 2020 and 28.5% in 2021.

The two measures mentioned above will be financed through the following extension of the Dutch corporate tax base.

Restriction of Depreciation of Real Estate for Own Use - 2019

Companies owning Dutch real estate that is used in their own business, can annually depreciate the cost price of the real estate to its residual value, but not more than when the tax book value has reached 50% of its estimated market value. The estimated market value is annually assessed by the municipality where the real estate is located. It is proposed to increase the threshold in 2019 from 50% to 100%, which heavily restricts the possibility to depreciate the real estate for tax purposes. The 100% threshold already applies to Dutch real estate that is rented out to third parties.

Introduction of a General Interest Deduction Limitation – 30% EBITDA – 2019

On basis of the EU Anti-Tax Avoidance Directive, in 2019 the Netherlands must introduce the so-called 30% Earnings Before Interest Tax Depreciation and Amortization ('EBITDA") interest deduction limitation. An example. Interest income is € 1.5mio, Interest expense is € 3.5mio, the net interest is therefore EUR 2mio. If the Dutch company has a EBITDA of EUR 5mio, it can deduct 30% of € 5mio is € 1.5mio of interest expenses, and € 500.000 may be carried forward. The government proposes to introduce a general allowance of € 1mio, so even if 30% of the EBITDA would be less than such amount. The government does not intend to introduce a group escape.

Introduction of a Thin Cap rule for Banks / Insurance companies 2020

Since banks and insurance companies usually receive more interest than they pay, they will not suffer from the 30% EBITDA rule. The government proposes to limit the deduction of interest expenses that relate to a debt level in excess of 92% of the commercial balance sheet total.

Dutch REIT: No longer Allowed to Directly Own Real Estate - 2020

On basis of the fiscal Real Estate Investment Trust regime, a company is subject to 0% corporate income tax provided it meets certain criteria. One of them is that all income (capital gains excluded) must be distributed to the investors within 8 months following the close of the accounting year. In cross border situations, the Netherlands can usually levy 5-15% dividend withholding tax. Now that the dividend withholding tax will be abolished, Dutch REITs will no longer be allowed to invest in real estate directly.

Introduction of withholding tax on interest and royalty payments to tax havens - 2020

The government states that in connection with the abolishment of the dividend withholding tax in 2020, it plans to introduce a source tax on interest and royalty payments to low tax countries. We understand that this source tax is mainly meant to combat payments to letterbox companies in tax havens. The government does not expect any revenue from this measure.

Increase of Effective Tax Rate Innovation Box - 2018

Profits realized with respect to certain self-developed intangible properties can qualify for a reduction of the taxable income up to 80% of such profits. As a result, the effective tax rate is currently 5%. The government proposes to reduce the 80% exemption resulting in an increase of the effective tax rate to 7%.

Limitation of Loss Carry Forward Period

Currently, a tax loss can be carried back one year and can be carried forward nine years. It is proposed to shorten the tax loss carry forward period to six years.

Limitation of 30% Expat ruling period - 2019

An employer can pay expats a tax free compensation of up to 30% of their salary, provided certain conditions are met. Such allowance currently applies for a period of 8 years. The government proposes to reduce this period to 5 years starting in 2019.

If you have any questions what these proposals could imply for your structure, please do not hesitate to contact us to discuss these potential consequences and possible measures to mitigate adverse consequences.

Dentons is the world's first polycentric global law firm. A top 20 firm on the Acritas 2015 Global Elite Brand Index, the Firm is committed to challenging the status quo in delivering consistent and uncompromising quality and value in new and inventive ways. Driven to provide clients a competitive edge, and connected to the communities where its clients want to do business, Dentons knows that understanding local cultures is crucial to successfully completing a deal, resolving a dispute or solving a business challenge. Now the world's largest law firm, Dentons' global team builds agile, tailored solutions to meet the local, national and global needs of private and public clients of any size in more than 125 locations serving 50-plus countries. www.dentons.com.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Events from this Firm
23 Nov 2017, Seminar, London, UK

The UK is one of Europefs largest investors in China, and is one of the largest destinations in Europe for Chinafs outward investment. Post Brexit, the UK is set to continue to be an important market for Silk Road investment (also known as the Belt and Road initiative), cementing London's position as the world's financial centre.

28 Nov 2017, Conference, Munich, Germany

On 28 May 2017, interested students, legal clerks and fully qualified lawyers will have the opportunity to meet Dentons at the JURAcon career fair in Munich.

29 Nov 2017, Business Breakfast, London, UK

As more and more electricity generation is decentralised and produced from inherently inflexible energy sources, everyone agrees that the UK electricity system needs to become more flexible. There is no shortage of technologies and business models that could provide that flexibility and there are plenty of ideas about how regulatory change could facilitate their adoption.

 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Emails

From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.