Dutch government announces tax rate changes

November 2017

The new Dutch coalition government has announced the joint policy decisions that it intends to execute in the agreement for the government term of office 2017-2021.

As part of the agreement the following tax measures will be introduced from 2019 with the aim of attracting international companies to the Netherlands:

Phased reduction of the corporate income tax rates

Currently the Dutch corporate income tax consists of two tax brackets, a low tax rate of 20% and a high tax rate of 25%. During the course of three years (2019 - 2021), the tax rates will gradually be lowered to a low tax rate of 16% and a high tax rate of 20%.

Abolition of the dividend tax

The current Dutch dividend tax rate of 15% will be abolished. However, a withholding tax will still be levied on dividends paid to low tax jurisdictions and dividends paid in tax avoidance schemes.

In addition, the Dutch government also plans to abolish the setting up of letterbox companies, whose sole purpose is tax avoidance, in the Netherlands. In this respect, the government has announced the introduction of a withholding tax on interest and royalties paid to very low tax jurisdictions. The rate of this new withholding tax has not yet been announced.

Michaël Peffer, partner at Stolp+KAB, commenting on the announcement said: "Although the details of the new measures are yet to be announced, there is a sense that the changes could prove beneficial to international corporate structures in the future. It will be interesting to learn the full extent of the changes when they are released."

Author: Michaël Peffer

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