2020 Dutch Tax Plan and what it means for Companies Registered in the Netherlands

2020 Dutch Tax Plan

By Kooshila Takoordyal, 26.05.2020

Setting up a company in the Netherlands is now more convenient than ever. The exact amount of time and requirements it takes to form a company abroad depends on the country you want to establish your company in. Most entrepreneurs don’t even consider registering their business abroad, but they might be missing out on new thrilling opportunities.

But with so many countries in the world, where will it be best for your company in terms of low cost, fast incorporation and tax regimes? Did you know, for example, that there are huge variations in tax rates in most European countries? There are also some countries that offer quite broad tax deduction options and the Netherlands is one of those countries.

The tax plan for 2020 released by the Dutch Government on the 17th of September 2019 which contains significant changes to Dutch tax laws. Many of these changes will result in improved business for Companies Registered in the Netherlands. The objective of this new tax plan is to tackle tax abuse, maintain a competitive business climate and support the Dutch tax rules with EU case law and EU Directives along with the Dutch liquidation loss regime due to be effective 1 January 2021.

The Dutch Tax Plan 2020 proposes changes to various areas of the Netherlands tax landscape.

1. Decrease in Corporate income tax rate

With the announced of the Tax Plan 2020, the corporate income tax rate on profits up to EUR 200,000 will be reduced from the current 19% to 16.5%, whereas the corporate income tax rate on profits exceeding EUR 200,000 remains 25%.

2. Personal Income tax

Important personal income tax measures in the Tax Plan 2020 include:

  • Tax rates and credits
  • Levy rebate and self-employed person’s allowance
  • Cancelation education facility
  • No voluntary disclosure for box 2 and box 3 income
  • Continuation of the transitional rules for hybrid annuities predating 2001
  • Box 3 taxation of saving

3. Wage Tax

Applicable wage tax measures in the 2020 Tax Plan include:

  • Free space for Work Costs Scheme
  • Work costs scheme items`
  • Addition to income for environmentally friendly cars
  • Insurance tax exemption for self-insurers
  • Indexing the volunteer scheme
  • No final levy for administrative penalties
  • Definition permanent establishment
  • Amended treatment of share options for start-ups

4. Procedural tax law

As from 1st January 2018, the voluntary disclosure regime is no longer applicable with respect to income from savings and investments accumulated overseas.

5. Introduction of new withholding tax on Interest and Royalty

Under the new proposed rules for Withholding tax Act, introduced as of 1st January 2021, interest and royalty payments to a related company will become subject to 21.7%.

Other relevant proposals included in the Dutch Tax Plan 2020 can be found here

If you are looking for a stable, economical, international and prospering environment; then the Netherlands could be the right choice for your new company. With many well-developed sectors to choose from, a pool of bilingual (Dutch and English), specialized workforce and many business opportunities nationwide as well as globally, you are ready to go once your business is set up. If you are looking to explore the new trilling opportunities of registering a company in the Netherlands, please contact the experts at Euro Company Formations on +353 (0) 16461627 or complete the Contact us form to explore your options.

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