The Kingdom of the Netherlands is a parliamentary democracy led by a constitutional monarch under the common law system. The Kingdom includes a Caribbean part (the Lesser Antilles islands of Aruba, Curacao and St Maarten) and the continental European country of the Netherlands (proper) located in northwestern Europe, which borders the North Sea to the north and west, Belgium to the south and Germany to the east. The countries of the Caribbean area of the Kingdom adopt autonomous tax regimes.
CIT = Corporate Income Tax - corresponding to IRPEG
SSC = Social Security Contribution - corresponding to the Social Contribution (Employee + Employer)
The Dutch economy is known for its stable industrial relations, moderate unemployment and inflation, a sizable current account surplus and plays an important role as a European transport hub. A modern, professional service-oriented nation, the Netherlands is also a major exporter of agricultural products. Industrial activity is mainly concentrated in food processing, chemicals, oil refining and electrical machines. A highly mechanized agricultural sector employs only 2% of the workforce, but provides large surpluses for the food industry and for exports.
The long history of trade translates into a government ambition to attract foreign direct investment through tax incentives such as the participation exemption, the innovation box regime. As part of the Rhineland area of influence, a stronger emphasis than the Anglo-Saxon emphasis is placed on the welfare state. In the common law system, legislation generally prevails over jurisprudence. The judicial system acts as a support to the legislative and executive branches of government.
Taxation of individuals
Holland has a personal income tax system called the " box system ". Income is divided into three categories (boxes) each of which has a specific taxation.
Box 1 - taxable income from work and from home ownership.
This category includes income from employment (for example wages or company profits) and rental income taxed at progressive rates from 36.5 to 52%;
Box 2 - taxable income from substantial interest.
This includes taxpayers who own at least 5% of the shares of a company, options or profit sharing certificates. Income from these types of income is taxed at 25%;
Box 3 - taxable income from savings and investments.
For this third category, the taxpayer pays an income tax of 30% on the fixed return of 4% of the savings and investment base.
The current legislation also recognizes various deductions and concessions to the taxpayer. In particular credits relating to income tax and social security contributions and other credits according to personal situations.
Employee insurance contributions and national insurance tax are applicable to the income of residents and non-residents under a number of different regulations.
National Insurance Tax
Under national insurance tax laws, contributions are levied on income up to a maximum of EUR 35,472. At present, the contribution is limited to € 9,808 per year with various deductions. Social security contributions paid by an employee are not deductible from taxable income.
Employee insurance contribution
Under the regulations on employee insurance, contributions must be paid on income up to a maximum of EUR 59,706. The contribution rate depends on the sector of the employer, but on average the annual contributions entirely paid by the employer amount to 7,027 euros for a worker with a permanent contract and 10,012 euros for a worker with a temporary employment contract .
Dutch health insurance law
It is mandatory for all Dutch residents and all employees subject to Dutch wage tax to be covered by the Dutch Health Insurance Act (Zorgverzekeringswet) and to have a mandatory health insurance policy. For employees, the contributo will consist of:
a nominal contribution of approximately EUR 1,522 (of which EUR 385 payable by you), to be paid to the health insurance company, and
an income-related contribution (6.7% on income up to a maximum of EUR 59,706, with a maximum of EUR 4,200), payable by the employer to be paid to the Dutch tax authorities.
Taxation of legal persons
Corporate income tax is levied on the profits of some companies, for example joint stock (NV) and limited liability (BV) companies. Foundations and associations can also be subject to tax if they carry out business activities. The corporate income tax rates in the Netherlands are progressive from 20 to 25%. With a taxable income of up to 200 thousand euros, the rate is reduced and is 20%. If the taxable income exceeds 200 thousand euros, the rate is 25.5%. It should be emphasized that the rates are applied by income brackets rather than on the profit of the company as a whole. Consequently, a company with a taxable income of € 250,000 is taxed at 20% on the first € 200,000 and 25.5% on the remaining € 50,000.
Value added tax
All subjects who carry out an economic activity independently are subject to VAT. The tax is applied on a taxable basis consisting of the consideration for the sale of goods and services at the following rates: standard rate of 21%; reduced rate of 6%, envisaged for the sale of specific items, such as foodstuffs, pharmaceuticals, books and newspapers; zero rate for intra-community exports and sales.
Excise and customs duties
Some consumer products expressly indicated by law are subject to excise duty. Among them, spirits, cigarettes and wine. Customs taxes are due in the case of imports, or purchases of goods made by operators located in countries outside the European Union. The amount due is determined on the basis of customs tariffs. The duty is paid at the latest on the last day of the month following that in which the goods were released for consumption. In the case of direct imports at the latest on the 15th day of the month following that in which the import took place.
Declaration and instrumental obligations
For the purposes of taxation of individuals, the tax return must be filed by 1 April of the year following the tax year. If the Tax Administration does not receive the return in good time, it sends a reminder to the taxpayer. Those who live in the Netherlands only for a period of the year, because they have moved or emigrated, cannot submit the tax return electronically but must use the form M. The Italian CU has its equivalent in the Netherlands in the Jaaropgaaf that the taxpayer receives from the employer and in which are reported all the data necessary for the purposes of the declaration, the taxable amount and the taxes to be paid.
For the purposes of corporate taxation, corporations (NV), limited liability (BV) companies are required to submit the corporate tax return in electronic format to the Tax Administration within six months of the end of the financial year. The declaration must indicate all the information necessary to establish the company's taxable profits. In particular, the balance sheet, the profit and loss account and any other information requested by the national administration. Accounting documents must be kept for at least seven years.
OUR PRESENCE IN THE NETHERLANDS
Our Amsterdam office can count on the support of a firm of Accountants and Auditors founded in 2000 made up of 3 Partners as well as a staff of 8 people who work daily in the areas of auditing, payroll processing, accounting, tax assistance and compliance.