September 13th, 2023
Corporate income tax is paid based on a percentage of the profits made by public and private companies in the Netherlands. If a company’s primary management entity is located in the Netherlands, it is considered a Dutch resident company and needs to pay corporate income tax in the Netherlands.
What’s New in Dutch Corporate Tax Laws in 2023?
Changing laws have made estimating a company’s corporate tax liability more difficult, so we’ve put this handy guide together.
On 1 January 2023 The threshold for the lowest rate of corporate tax decreased from EUR 395,000 to EUR 200,000. At the same time, the lower corporate tax rate increased from 15% to 19% while the higher rate remained the same at 25.8%.
Step 1: Determine the Taxable Profit
Corporate tax liability in the Netherlands is based on a company’s total profit, so this is the first figure we need to calculate. Just subtract the company’s deductible expenses from its total revenue for the year, and make a note of the result. Deductible expenses can include operating expenses, depreciation of assets, interest expenses, and other allowable deductions.
Step 2: Apply the Corporate Income Tax Rate
With the taxable profit calculated, you’ll then need to apply the correct rate of tax. This is dependent on which threshold your total profits fall under, and ranges from 15-19%. You’ll need to check the official Dutch government site for the latest rates. It’s important to note that there may be certain exemptions, deductions, or reduced tax rates that apply to specific types of income or companies. An underpayment can get you in trouble and an overpayment can make you poorer, so we recommend a consultation with a qualified tax professional.
Step 4: Calculate the Corporate Tax Liability
After considering all applicable deductions, exemptions, and tax incentives, the corporate tax liability is calculated by applying the correct percentage to your total taxable profit. The result will be an estimate of the corporate income tax that the company is liable to pay for that tax year.
Step 5: Stay Informed
Dutch tax laws and regulations are complex and subject to change. There are plenty of exemptions and quirks, so it’s important to stay informed about any updates or changes that may impact the company’s tax liability. A company has to remain on the front foot when it comes to Dutch tax law as, ironically, it is’t set in stone, and the Dutch authorities are very strict. Broadstreet’s tax experts go beyond just filling out the forms for that year, they’ll make sure that you’re never blindsided by complex regulations and get an optimal outcome on your Dutch corporate tax liability.