Low Corporate Income Tax
The Netherlands is among the most attractive jurisdictions for foreign investors seeking to expand in Europe and beyond. The Dutch corporate income tax rate is 25.5%, which is well below the average in the EU. Profits derived from a foreign subsidiary are fully exempt from Dutch corporate income tax - the so-called Participation Exemption. This makes the Netherlands irrefutably the most tax efficient place to anchor your European business, a claim further bolstered by a tax treaty network encompassing more than 80 countries and regions. Importantly, a tax treaty with the US provides an exemption of withholding tax on dividends paid to US parent. The wide treaty network in combination with the absence of withholding taxes on interest and royalties makes the Netherlands a perfect location for your holding and financing activities. For logistic operators, the non-formalistic and pragmatic approach by the Dutch tax authorities towards matters like VAT and Customs Duties means that less time is spent in doubt, and more on the road. Testament to this approach is the possibility to conclude Advance Tax Rulings and Advance pricing Agreements with the Dutch tax authorities, to confirm the tax consequences of transactions upfront - generally mitigating future uncertainty on those positions.
Attractive tax environment
Since international trade contributes significantly to the Dutch economy, the government is working hard to create an even more attractive business climate for companies that operate on an international level. The Netherlands aims at business activities through cooperation and flexibility, as well as through streamlined and efficient customs procedures, creating an ideal location for pan-European supply chain activities. Examples of the favourable tax climate in the Netherlands:
Customs Bonded Warehousing
Goods imported in the European Union (EU) will have to be released into free circulation (i.e. to be disabled by the Customs) before they can be freely traded. This means that value added tax (VAT) and custom duties must be paid. However, it is also possible to store the goods in a bonded warehouse. By doing so, a company can postpone the customs clearance and payment of the VAT and duties, or entirely prevent the payment for goods intended for customers outside the EU.
The number of physical controls of customs bonded warehouses in The Netherlands is very limited since they are all administratively controlled. This makes it possible to use a European distribution centre (EDC) 24 hours a day, 7 days per week, 365 days per year. Many HIDC members offer bounded warehousing services to their customers
Automated Customs Responses
The Dutch Customs Department understands that in supply chain management timing is everything. Therefore, in order to speed up the process and to avoid unnecessary delays, customs procedures are nowadays computerized. In order to accelerate the selection and inspection process, pre-arrival information is supplied electronically to the Customs Department, before arrival of a shipment in the EU. This way, Customs can inform the parties involved at the earliest possible stage, if a consignment will be checked upon arrival.
No VAT Payment with Import
In contrast to most other EU member states, The Netherlands has a system that provides for the deferment of VAT at the time of import. Instead of paying VAT when the goods are imported into free circulation within the EU, the payment can be deferred to a periodic VAT return. Under this system, the VAT at import should be declared but the amount can be deducted on the same return. The bottom line is that there is no actual payment of VAT at import, so that companies can realize cash-flow and interest earning benefits.