Budget Day 2016 – The Netherlands
Global Tax Update:September 2016/Netherlands
On 20 September 2016, the Dutch government’s budget plans for the coming year were released in public. The budget plans contain the details of the Tax Package 2017. (Global Tax Update:September 2016/Netherlands)
The Tax Package 2017 contains some important amendments to Dutch tax law which are relevant for Dutch subsidiaries of Japanese MNC’s.
This newsletter introduces a summary of the most notable items in the Tax Package 2017.
(1) Corporate Income Tax
A. The 2016 Tax Package does not include an amendment of the corporate income tax rate for 2017. As such, the general corporate tax rate for taxable income of more than EUR 200,000 will remain at 25%, while the first EUR 200,000 taxable income is taxed at 20%.
(2) Other proposed legislation
A. Currently, companies with Research & Development (R&D) activities in the Netherlands can apply the so-called innovation box upon request. In short, if certain requirements are met, net income of the Dutch corporate taxpayer that is allocable to its R&D activities is effectively taxed at a corporate tax rate of 5%.Based on the Tax Package 2017, it becomes more and more important to demonstrate that the R&D activities are performed in the Netherlands by the taxpayer itself (i.e. no contract R&D agreement with affiliate companies).
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