18 September 2020

Prinsjesdag (Budget Day) 2020 and Corporate Income Tax

Prinsjesdag (Budget Day) 2020 and Corporate Income Tax

 

Netherlands Taxation of Resident Companies

On September 15, 2020, the Tax Plan 2021 and several accompanying legislative proposals ("Tax Plan 2021") were presented by the Dutch Minister of Finance.

 

Corporate Income Tax and Withholding Taxes

With regards to the Corporate Income Tax ("CIT") and withholding taxes, the main points can be summarized;

  • The CIT-rates for 2020 are 16.5% on the profits up to EUR 200.000, and 25% on the excess. As per January 1, 2021 the first bracket will be increased from EUR 200.000 to EUR 245.000. The first bracket will be further increased in 2022 to a taxable amount of EUR 395.000. Please refer to the table below.

 

 

  • In 2021, a conditional withholding tax will be introduced at a rate aligned with the highest statutory CIT rate. The rate was originally scheduled at 21.7%, however, it is now expected to be set at 25%. The conditional withholding tax will be levied on the gross amount of interest and royalty payments flowing to lowtax jurisdictions (i.e. statutory tax rate of less than 9% or a jurisdiction that is included on the EU list of non-cooperative jurisdictions[1]), as well as in abusive situations. Please refer to the table below.

 

 


Please note that, on May 29, 2020, the Dutch government announced its intention to, from January 1, 2024, implement a withholding tax on dividend payments to low-tax jurisdictions. This new tax will work alongside the 2021 withholding tax on interest and royalty payments to such jurisdictions. It is not explicitly stated, but the expectation is that the definition of low-tax jurisdiction will mirror the one contained in the 2021 tax withholding on interest and royalty payments - i.e. a jurisdiction with a statutory corporate income tax rate of less than 9%. We will update you further on developments as they occur.

 

Innovation Box

The Innovation box reduces the effective tax rate for profits related to the innovative activities. The reduced rate is for 2020 set at 7%. As per 2021 rate will be increased to 9%.

**Please note that there are additional changes within the Dutch corporate income tax for 2021, as this depends on the kind of company.

If you have any questions or would like to receive more information, please feel free to contact our office at +31 (0) 85 0187471 or via info@briddge.com.

 

[1] EU-list of non-cooperative jurisdictions: Cayman Islands, Palau, Panama and the Seychelles, US Virgin Islands, US Samoa, Fiji, Guam, Oman, Samoa, Trinidad and Tobago and Vanuatu. Please note that this list is subject to changes.