5 Tax Benefits for Companies In The Netherlands
If you are an investor, Dutch fiscal policies are important considerations when bringing a company to the Netherlands to start a new venture.
Without a shadow of a doubt, the Netherlands' solid combination of corporation tax rates and financial incentives makes the country a reliable choice as a base for international operations. Indeed, the Dutch Tax Authorities take a flexible and practical approach and are proactive too.
This article explains some of the tax benefits you will enjoy for setting up a company in the Netherlands. Keep reading to learn these and take advantage of them once you register a business and start operations. You can only enjoy what you know if you know how to take advantage of it.
Here Are Tax Benefits and Incentives You Company Can Enjoy In The Netherlands
Arguably, the Netherlands' solid combination of corporation tax rates and financial incentives makes the country a reliable choice as a base for international operations. Here are some of the benefits and incentives you can enjoy after registering business in Netherlands:
Tax Benefits for Innovation
The Netherlands provides several tax advantages to encourage innovation. More precisely, a tax incentive called "Innovation Box" enables companies to pay corporate tax at a lower rate on income from specific innovative activities. So, if you register a company in the Netherlands and innovate, you are entitled to these benefits.
In addition to the innovation box, the Investment Deduction Scheme also offers tax benefits for investments in specific innovative assets. Also, the WBSO (Research and Development Wage Tax Credit) allows businesses to claim a tax credit for employee pay related to innovative activity.
Tax Deduction for Research and Development Activities
You are entitled to research and development tax benefits if you operate a company in the Netherlands that deals with research. In particular, some research and development activities on applied new technology are subsidized by a reduction in wage tax. It applies to all wage tax that is payable on wages of employees engaged in technologically new products.
Each time your company employees receive a credit for the normal amount of wage tax, they receive the subsidy. Please, note that these tax benefits depend on specific legislation applicable when doing business in the Netherlands. You must also follow the laid down rules and regulations for your company to enjoy these benefits.
To qualify for the research and development tax incentive program in the Netherlands, taxpayers must submit an electronic/online application to the Netherlands Enterprise Agency. Once you fulfil this requirement, you will get a declaration specifying the tax reductions you will enjoy.
However, note that tax reductions applicable for research and development activities change from time to time. Further, the subsidy's budget is fixed, and the amount depends on the availability of resources. So, beware of this and be ready to enjoy the benefits once you start a company in the Netherlands.
30% Tax-Free Allowance for Highly Skilled Foreign Employees
The Netherlands provides selected highly trained foreign workers with a 30% tax-free allowance. This stipend serves as a payment for the costs associated with working abroad. In the Netherlands, the allowance can pay for 30% of the gross salary for a maximum of 8 years.
With the help of this tax-free allowance, the government hopes to recruit more international workers and make it simpler for them to live and register a company in the Netherlands. People who meet specific requirements, such as having a salary above a certain level and having a particular educational background, are eligible for the allowance.
The sum applies to accommodation, transport, and other expenses. Foreign employees may greatly profit from this provision during company incorporation and later.
Tax Allowance for Wages
Employers are obligated to pay taxes on employee wages in the Netherlands. It comprises payments for social security, income tax, and health insurance. The salary of the employee, their tax bracket, and the applicable federal, state, local tax rates and corporate tax rate in the Netherlands will all affect how much tax a business must pay on compensation.
However, when paying wages to employees, firms are qualified for some tax breaks. For instance, the Dutch government offers payroll tax allowances to employers. These are tax credits for wages paid to employees. Based on the employee's age and pay, this allowance is calculated as a proportion of the wages received.
Additionally, employers can be qualified for a tax credit known as a company tax allowance. This and the corporate tax rate in the Netherlands are all meant to give you a tax-friendly operating environment.
Tax Benefits for Patented Products
There are several tax advantages for patented products for companies doing business in the Netherlands. These include the Patent Box and the Research and Development Deduction, which let businesses pay less tax on the proceeds of patented products.
Companies can deduct up to 125% of their research and development expenses from their taxable income thanks to the research and development deduction. By using the Patent Box, businesses can lower their corporate tax rate on revenue from patented goods to 10%.
The Netherlands gives patent owners the choice to postpone paying taxes on royalties for up to 10 years, enabling them to invest and reinvest their gains. Additionally, the Netherlands has a Patent Incentive Scheme that gives businesses that invest in R&D projects a tax credit.
Frequently Asked Questions
Are There Any Unique Tax Advantages for New Businesses In the Netherlands?
Yes, new businesses can take advantage of many particular tax perks. These include the Knowledge Intensive Start-up (KIS) program, which offers a unique tax credit for businesses investing in research and development, and the Innovation Box, which offers a reduced tax rate of 7% on income derived from intellectual property rights.
What Tax Advantages Do Businesses in the Netherlands Have?
The tax system in the Netherlands provides businesses in the country with several tax advantages. They include a corporation tax rate of 20%, tax breaks for R&D efforts, and a patent box regime that lowers the corporate tax rate for income derived from intellectual property rights.
Are There Any Tax Advantages for Foreign Companies Doing Business in the Netherlands?
Foreign companies operating in the Netherlands may be, in some cases, eligible for a variety of tax breaks. These include the participation exemption, which allows for the tax-free distribution of profits generated by a foreign subsidiary, and the dividend distribution exemption.
In a nutshell, the Netherlands provides numerous tax benefits and incentives to businesses and companies operating in the country. These include a more transparent tax system, lower corporate income tax rates, tax breaks for R&D, and the ability to deduct certain expenses from taxable income.
You can enjoy one or all the tax benefits and incentives if you meet the requirements. Whether you are a native or a foreigner doing business in the Netherlands, take advantage of these benefits. They are for you and other business owners. Grab them!