The Dutch Government has announced new tax plan, regarding it small- and medium-sized businesses and most individuals will receive a tax cut, certain tax procedures will be simplified, and the Dutch dividend tax regime will also be amended. However, the Government also intends to continue tackling tax avoidance and evasion.
According to the plan, companies will benefit from an extension of the 20 percent lower corporate tax bracket, although no further detail was provided in the announcement.
The lower rate currently applies to annual income up to EUR200,000 (USD223,500), with the excess taxable at the main rate of 25 percent.
The proposed dividend tax changes are designed to align the dividend tax treatment of holding cooperatives, which are frequently used in international holding company structures, with that of private companies (BVs) and public companies (NVs).
Under existing rules, holding cooperatives are generally not subject to dividend tax in the Netherlands, unlike BVs and NVs. The Government intends to abolish this difference but at the same time exempt distributions from dividend tax in cases where shareholders in a holding cooperative, BV or NV, reside in a jurisdiction with a tax treaty with the Netherlands, subject to a minimum five percent holding threshold.
These changes are expected to be introduced on January 1, 2018. In a letter to the Dutch parliament, State Secretary for Finance Eric Wiebes said that the Government “intends to ensure the Netherlands remains an attractive business location in the future.”