SubscribeOn November 28, the First Chamber of the Dutch Parliament adopted the new corporate tax act entitled "Working on Profit."
So, from 1 January 2007, the corporate tax rate will be reduced to 25.5%. This rate considerably improves the investment climate for medium to large foreign firms and is lower than the national average of the expanded EU-25 (25.8%) and far below the average of the EU-15 (29.5%). For smaller firms, even lower rates will apply - 20% for the first €25,000 of taxable profits and 23.5% for profits between €25,000 and €60,000. The dividend tax rate has also been reduced from 25% to 15%.
"Working on Profit" also includes measures to fuel innovation. Pending approval by the European Commission, a 10% tax rate will apply for income from innovations ("patent box") and financing profits within a group will be subject to a separate rate of 5% ("interest box").
This new bill further enhances the pro-business climate in the Netherlands. The existing tax system has many advantages including tax treaties with more than 75 countries, the 30% regulation for foreign employees, and advance tax rulings and pricing agreements, making the Netherlands uniquely suited to foreign direct investment and a premier EU business location.
Want more information about expanding or relocating your business? Contact the Netherlands Foreign Investment Agency today to discuss the possibilities.