Dutch Holding-, Finance- and Royalty Companies 2021: Introduction to the main Dutch tax matters
Topicality | 18 March 2021
An introduction to the main Dutch tax matters
The Netherlands is fiscally attractive to establish a holding-, finance- or royalty- company because of the tax system which was implemented to support Dutch Multinational Enterprises (MNE’s) with subsidiaries worldwide. This tax system can – under conditions – also be attractive for foreign MNE’s.
The main tax, legal and economic advantages of The Netherlands:
- the participation exemption (100% corporate tax exemption for dividends and capital gains from qualifying participations);
- absence of domestic capital tax;
- absence of domestic interest- and royalty-withholding tax unless interest or royalties paid to specific tax havens and in abuse cases;
- exemption of dividend withholding tax upon outbound distribution of participation dividends in case of 5% or more shareholding or membership (coop) by parent company in tax treaty state or EU/EEA in active (non-abusive) structures;
- absence of dividend withholding tax upon outbound profit distributions by Dutch COOP holding company, running a business, to its foreign members in active (non-abusive) investment structures;
- advance tax ruling (ATR) and advance pricing agreement (APA) policy with a thorough assessment based on comprehensive information required from the taxpayer;
- special tax treaties between the European part and the Caribbean part of the Kingdom of the Netherlands: Curacao, Saint Martin, Aruba and the Dutch public entity Caribbean Netherlands (Bonaire, Saba, Statia);
- broad implementation of EU Parent-Subsidiary Directive and EU Interest- and Royalty Directive;
- extensive tax treaty network of some 100 tax treaties with relatively low (inbound/outbound) dividend- and (inbound) interest/royalty-withholding tax rates;
- some 50+ air/sea transport treaties / agreements to avoid double taxation on international air/sea transport profits if no tax treaty is available with similar arrangements;
- some 20+ social security treaties e.g. with US, China, Japan and application of the EU social security Decree;
- 30% wage tax ruling for expats recruited from abroad including job-rotation within MNEs;
- 9% Innovation Box regime for corporate tax purposes and R&D wage tax reduction;
- tonnage tax regime for international maritime shipping companies;
- reverse charge rule regarding import VAT (Netherlands: VAT gateway to EUrope);
- extensive investment protection treaty network of some 100 investment agreements (IPAs) for protection against nationalization of investments and discriminatory treatment in politically challenging jurisdictions;
- flexible corporate law system;
- political and economic stability;
- excellent ‘wired’ internet infrastructure and public transport, distribution facilities via Port of Rotterdam (largest seaport in Europe) and Amsterdam Schiphol Airport (the best intercontinental airport in Europe);
- highly skilled international orientated labour force: some 34% of the employees in business, trade and industry work for Dutch MNE’s or Foreign MNE’s with presence in The Netherlands;
- hub for R&D and innovation with research institutes and twelve tech universities e.g. in brainport.nl Eindhoven.
This brochure is an introduction to the main tax matters regarding Dutch Holding-, Finance-, and Royalty-companies.
Although this brochure covers a number of relevant areas, this brochure is not exhaustive. We strongly recommend that anyone intending to make use of the facilities referred to in this brochure seeks professional advice before undertaking any action. There are often complex financial and legal implications as well which need to be considered in consultation with a professional advisor.
Horlings Nexia offers a full range of audit and tax services. A staff of specialists is available to assist with most aspects of establishing tax efficient structures in The Netherlands and Dutch Caribbean.