International Tax Newsletter - Spring 2011 - Netherlands - Selected International Tax Developments

  • The Dutch corporate income tax rate for taxable amounts exceeding 200,000 will be reduced from 25.5% (2010) to 25% as of 2011. Taxable amounts up to 200,000 will remain taxable with 20% corporate income tax.
  • Income from patents and research and development activities may benefit from the Dutch innovation box at an effective rate of 5% subject to certain conditions. The reduced rate applies to income exceeding the production costs incurred in relation to the patent or research and development activities. Since the introduction, the innovation box has been extensively improved and the 2011 Tax Budget again provides for a further improvement. Presently, the innovation box only applies for income from patents once the patent is actually granted. As from 2011, income arising in the period in which a patent is pending may be deducted from the production costs. Effectively, this means that more income is taxed at the reduced rate of 5% after the patent is granted.
  • On 24 November 2010, the European Commission (EC) decided to refer the Netherlands to the EU Court of Justice (ECJ) after having formally requested the Netherlands to change tax rules which impose an immediate exit tax when companies transfer their seat or assets to another EU Member State. These rules are considered contrary to the right to freedom of establishment by the EC.
  • In September 2010, the EC requested the Netherlands to change legislation that exempts domestic companies from tax on their income from substantial interests in Dutch resident companies but which taxes companies established elsewhere in the EU and EEA on income from substantial interests not forming part of a business enterprise. The EC considers this rule contrary not only to EU law on the free movement of capital but also to the freedom of establishment, as well as the EU Parent Subsidiary Directive.
  • The Netherlands has further expanded, renewed and/ or revised its extensive tax treaty network: Hong Kong (22 March 2010), Slovakia (7 June 2010), Japan (25 August 2010), Tunisia (8 September 2010) Panama (6 October 2010), and Switzerland (26 February 2010). The new tax treaty with the United Kingdom, signed in 2008 and ratified by the United Kingdom in 2009, is expected to enter into force in 2011.


For further details, Rich Sackin of EisnerAmper LLP in New Jersey can facilitate contact with Jan Roeland in the Netherlands. 

International Tax Newsletter - Spring 2011 

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