2023 Tax Plan - Outline of corporate income tax and withholding tax measures

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Outline of corporate income tax and withholding tax measures

2023 Tax Plan - Budget Day (Prinsjesdag)

The following lists the measures proposed in the 2023 Tax Plan in respect of corporate income tax and withholding tax.

29 November 2022

Outline of corporate income tax and withholding tax measures

Back to outline Tax Plan 2023

Dutch version

Corporate income tax rate structure

The top corporate income tax rate will remain at 25.8% in 2023. However, the basic rate will be up from 15% to 19%. Moreover, this basic rate will only apply up to a taxable amount of EUR 200,000, compared to EUR 395,000 in 2022. The rate structure is set out in the table below. The figures for 2022 are for comparison.

Year 2022 2023
Basic rate 15.0% (taxable amount up to EUR 395,000) 19.0% (taxable amount up to EUR 200,000)
Top rate 25.8% (taxable amount > EUR 395,000) 25.8% (taxable amount > EUR 200,000)

 

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Mining Act amendment due to temporary increase of cijns

As part of compensating Dutch households for the increased energy costs, the Dutch government proposes to introduce an additional cijns. Cijns is a fee based on the turnover generated with the production and exploration of oil and gas in the Netherlands. The temporary cijns rate of 65% will apply to turnover specifically generated with natural gas at a higher price than EUR 0.50 per m3 during 2023 en 2024. Turnover relevant to the cijns also includes the result of legal transactions aimed at hedging price risks run in relation to hydrocarbons extracted or to be extracted (hedge contracts). This ensures that for the purpose of cijns the turnover actually realised by the licence holders is taxed.

Temporary solidarity contribution

Companies subject to corporate income tax, which generate at least 75% of their turnover (for foreign taxpayers this regards the turnover of their Dutch branch) in a financial year starting in 2022, will be subject to a solidarity contribution of 33% of the excess profit they generate. This involves companies engaged in hydrocarbon extraction, mining, petroleum refining, or manufacturing coke oven products. This tax comes on the back of a proposal by the European Commission to introduce a compulsory solidarity contribution, the proceeds of which must be used to compensate for increased energy prices for (among others) households.

A surplus profit arises if the profit in the (financial) year 2022 exceeds by 20% the reference profit (the average taxable profit in the four financial years preceding the financial year starting in 2022, with a minimum of zero). The contributor must pay the solidarity contribution due by filing a tax return within 17 months of the end of the tax period. Additional assessments and penalties are possible up to seven years after the end of the calendar year in which the tax debt arose. A liability clause has also been provided for.

Considering the exceptional circumstances, the government does not consider the retroactive effect of this tax until 1 January 2022 to violate article 1 ECHR. The tax explicitly only applies to the (financial) year 2022. For the years 2023 and 2024, a temporary increase in the cijns is provided for.

Measure for real estate FIIs

The government proposes to introduce a corporate income tax measure from 1 January 2024 that will prevent Dutch fiscal investment institutions (FBIs, here FIIs) from investing directly in real estate (in the Netherlands or abroad). This measure subjects profits earned from real estate to corporate income tax in all cases. The measure will not have any consequences for securities FIIs.

An FII is taxed at a corporate income tax rate of 0%. The idea is that the income from the FII’s investments is taxed at the level of the participants, as the FII must distribute its profits to the participants every year. This profit distribution is subject to 15% dividend withholding tax. In situations involving foreign investors, the power to tax Dutch real estate held by FIIs cannot always be exercised (in full). From 1 January 2024, an investment institution may therefore not invest in real estate to qualify for the FII regime.

It is expected that certain real estate FIIs will restructure before 1 January 2024 to avoid independent corporate income tax liability. Transfer tax may be payable on such restructurings. The government will examine whether it is desirable and possible to take accompanying measures for this purpose, specifically mentioning Dutch pension funds.

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