Table of Contents
Consider the repatriation of profits
When opening a company in the Netherlands, foreign entrepreneurs may think about repatriating the profits made by their Dutch company. This can be done in two ways, depending on the type of company and is subject to the Dutch taxation principles. The attractive corporate taxation regime is one of the advantages of opening a business in the Netherlands. Our Dutch law firm can help you know everything about international taxation for Dutch companies.
Dividends distribution and withholding taxes in the Netherlands
The taxation principles in the Netherlands vary according to the type of company entrepreneurs choose to open. Dutch branches must pay withholding taxes when repatriating profit, while corporations must consider the distribution of dividends.
In the Netherlands, the dividend withholding tax of 15% is generally due on dividends paid to foreign shareholders, unless a double tax treaty applies and the rate is reduced. In other cases, dividends are exempt from the withholding tax if the participation exemption is applicable in that particular situation. According to the EU parent-subsidiary directive, an exemption from the withholding tax applies for dividends paid to EU parent companies under the same conditions as for distributions to a Dutch parent company.
Other taxation issues
The Dutch participation exemption regime provides that the dividend income is exempt if the following two conditions are met:
– the legal entity owns at least 5% of the share capital of the subsidiary (the ownership test); and
– the subsidiary is not a low-taxed passive company (the asset test).
There are no withholding taxes on royalties in the Netherlands. Also, there is no withholding tax on interest. The Netherlands is generally looked upon as a tax haven and a special location for holding companies. Foreign investors should completely understand the Dutch taxation system in order to benefit from various exemptions and tax minimization.
Our Dutch law firm ca provide various legal services and offer you advice for international tax planning. For more information about the cost of repatriating profits from the Netherlands, please contact our law firm.