The corporate tax system in the Netherlands

Taxable Income The corporate tax in Netherlands goes like this: the Dutch companies have to pay a corporate tax on their worldwide income. Also, foreign companies which hold 5% or more in the issued share capital of a Dutch resident company are also subjected to the Dutch corporate income tax on Dutch-source income but this happens only if the corporate shareholder cannot benefit from any treaty protection. Participation exemption Double taxation won’t be applied if the participation exemption takes place. In order to benefit from the participation exemption you need to meet the following requirements: the entity in which the participation is held must have a capital divided into shares; the shareholder must have an interest in the share capital of the entity of at least 5% the entity in which the participation is held can’t be qualified as a low taxed portfolio investment participation. Regarding the last statement, a participation is considered to be a low taxed portfolio investment company if it fulfils the following conditions: the assets of the participation (directly or indirectly) consist for more than 50% of portfolio investments the effective tax rate of the participation is less than 10%. What is more, if there is an EU/EEA or Dutch resident company which holds 5% or more in the issued share capital of a Dutch resident company, then no withholding tax will be collected upon dividends distributed to this qualifying shareholder. Taxable Year The tax year for a corporation is the same with the calendar year. It is possible to use a different tax year if allowed by the articles of association of the Corporation tax Netherlands . There will be issued a corporate income tax return form by the tax authorities that should be filed until the deadline set by the tax authorities. If there was a preliminary tax assessment imposed during the tax year and the final tax assessment is lower than the preliminary tax assessment then a refund will be granted.