Company taxation in the Netherlands: VAT, Income, Corporate and others
We will assume from the start that if you’re reading this, you’ve already got at least some interest in doing business in the Netherlands. Good for you, it is the home to many highly profitable ventures with plenty of opportunities for registered international businesses, too. But then, there are taxes.
Knowing exactly how much of your revenue is going to the state and how you can exploit the various taxation laws is crucial for any entrepreneur. It’s also one hell of a knowledge base to keep in mind, but we’ll try to keep it as simple as it gets in this guide. Promise.
What are the taxes?
It would be somewhat easier to have just one, but sadly that’s not how it works. The most common business taxes in the Netherlands are:
Turnover tax / Value added tax
Income tax (for vof)
Corporate income tax (for bv and nv)
Dividend tax (for bv and nv)
Other taxes (municipal, waterboard, provincial, etc.)
Not such a long list after all, is it? Also, make note of how some taxes exist only for certain types of business structures and/or depend on local laws. Now, let’s dig a bit deeper in each one.
The Notorious VAT
Value Added Tax (VAT, or BTW in Dutch) is a type of turnover tax that applies to most goods and services sold by businesses in the country.
Basically, when you sell something that's subject to VAT, you need to add the tax to the price. The rate depends on what you're selling — it could be 9%, 21%, or even 0%. Then that money goes to the Dutch tax authority.
But here's the cool part: you can usually claim back the VAT that you pay on things you buy for your business by filing a VAT return form. That means you won't get taxed twice on the same thing.
Another cool thing is that if your annual turnover doesn’t exceed €20,000, you can apply for the Small Business Scheme and forget about VAT until that threshold is reached. You can read more on that here.
Now, if your business is based outside of the Netherlands but you do business in the country, you still need to follow Dutch VAT rules. They’re a bit different if you are based abroad, so make sure you know what you're doing to avoid any issues. For starters, register with the International Office of the Dutch Tax and Customs Administration.
Income tax
If you're a self-employed person or part of a commercial partnership, and the Dutch Tax and Customs Administration is aware of that, you'll have to pay income tax on your taxable earnings, meaning your income minus deductible items and tax benefits.
The amount of tax you'll have to pay depends on a few things, like how much money you make, what assets you have, how much you can deduct, and any debts you owe.
In 2023, the income tax rate is 36.93% for people earning up to 73,071 euros a year. But if you make more than that, you'll have to pay a higher tax rate of 49.5%. Ouch!
If you want to figure out how much income tax you'll have to pay, you can use this handy tool made by the Netherlands Chamber of Commerce KVK. Just make sure you complete your tax return by May 1st each year.
Usually, the Dutch Tax and Customs Administration will let you know if you need to file a tax return. But even if they don't, you might still have to do it, for example if you have income over which you have paid an insufficient amount of tax or no tax at all.
You can read more about Income tax in our guide here.
Corporate income tax
CIT is a tax that the government charges on a company's taxable profits every year. Basically, every business in the Netherlands has to wrap up their financial year by calculating how much money they made, and paying taxes on those earnings. You've got to do it within five months of the end of the financial year and submit the CIT return online via the Tax and Customs Administration.
But here's some good news: the Dutch government has been trying to give small and medium-sized businesses a break by lowering taxes. Since 2020, when the coronacrisis hit, they've really been cutting the corporate tax rates, especially the CIT. It's important to keep in mind that the Dutch tax rules change all the time, so if you're running a business in the country, you need to keep up with the latest tax amendments.
So what does this mean for you? Well, in 2023, if your company earns up to €395,000, you'll only have to pay a 15% CIT. But if you make more than that, you'll pay 15% tax on the first €395,000 of your earnings (that's the "first bracket"), and then 25.8% on anything above that (the "second bracket"). It's kind of confusing, we know. That's why we wrote a detailed guide about it on our blog – check it out!
Dividend tax
As a private or public limited company (bv or nv), you might want to distribute profits to your shareholders in the form of dividends, which is great. The catch is, obviously, that the dividends are taxed, too. The general rate for dividend tax is 15%, and as the company, you're responsible for withholding it from the dividends you pay to your shareholders. For example, if you want to pay out €100 in dividends, you'll need to withhold €15 for the tax man.
When you do so, you must file a return for dividend tax within one month of issuing the dividends. On this return, you need to report the amount of tax you've deducted from the dividends you've issued to your shareholders.
It's important to note that, in certain circumstances, your company may be eligible for a partial or full exemption from dividend tax or a dividend tax refund. It's worth checking into these possibilities to see if your company qualifies.
Municipal, provincial and other taxes
Depending on where you're located and what type of business you're running, you may be required to pay a variety of different taxes. Some examples of these taxes include parking tax, waste disposal tax, and advertising tax, among others.
To find out which specific taxes apply to your business, you should get in touch with your local municipality, provincial, or water board. They'll be able to provide you with all the information you need to make sure you're in compliance with local tax laws. Don't forget to factor these taxes into your budget, as they can add up quickly and impact your bottom line.
Without getting into each and every one of them, let’s focus on some of the most common ones here:
Water tax
If your business owns or utilizes land, buildings, or nature areas in the Netherlands, you're required to pay water authority tax. This tax assessment can include levies such as water purification, pollution, water system, and road levies. The amount of tax you need to pay is decided by the regional water authority each year, and it depends on your business's location and situation.
Municipal tax
If you or your company own a house or any other municipal property in the Netherlands, you will owe municipal property tax (OZB in Dutch). The amount of OZB will be set annually by your local municipality, ergo it differs from town to town.
To determine the amount of tax you owe, the municipality's own surveyors will conduct a yearly valuation of your property and set your tax rate accordingly.
Now, get this: if you're unable to pay your municipal taxes, you may be eligible for an exemption. All you need to do is ask for it! Also, keep in mind that if you're simply renting or using a property, this tax is none of your concern. Owners only club.
Road tax
If you own a car or other motor vehicle in the Netherlands, you are required to pay road tax, also known as wegenbelasting. The tax amount is determined by the size and weight of the vehicle. Generally, heavier cars are taxed more than lighter ones, and diesel-powered vehicles are more expensive than petrol-driven ones when it comes to taxes. This one is not completely business related per se, but important to remember if you own any vehicles as a company.
Forget About All-Consuming Taxation with Enty
We know better than most that taxes are a lot. But we also know you don’t have to do them all on your own.
Enty is proud to have a team of tax-savvy accountants and legal advisors who know their way around any problems you might have down the road. Not only that, but you can find a whole bunch of features in Enty’s subscription to ease your workflow: create ready-to-go documents and contracts, fill out tax returns or issue invoices in a matter of minutes.
Book a free call with us and we’ll answer any and all questions you have. Give yourself a break, will you?
