Netherlands: Tax Plan 2019

Last Updated: 21 September 2018
Article by Jurjen Bevers, Paul Halprin, Heico Reinoud and Marnix Veldhuijzen
Most Popular Article in Netherlands, October 2018

On September 18, 2018 the Dutch government released the Budget 2019 containing its Tax Plan 2019 with certain amendments to Dutch tax law. Please find the highlights below:

Corporate Income Tax

Reduction of Tax Rates

The corporate income tax rate currently amounts to 20% for the first €200,000 of profit and 25% for the profit exceeding €200,000. The legislative proposal includes reduction of the rates as follows:

Year  First €200.000   > €200.000
 2019  19%  24.3%
 2020  17.5%  23.9%
 2021  16%  22.25%

Controlled Foreign Company (CFC) Taxation

The legislative proposal for implementation of the EU Anti-Tax Avoidance Directive (ATAD) includes CFC legislation. This means that a Dutch company that directly or indirectly controls a foreign company (CFC) may be taxed on the undistributed income of the CFC. The rule will only apply to certain undistributed passive income earned by the CFC, if the CFC is a resident of a jurisdiction where it is not subject to profit tax, or subject to a profit tax of less than 7% (statutory rate), or if the CFC is resident in a non-cooperative jurisdiction mentioned on the EU -list. The undistributed passive income is taxed in the Netherlands at the statutory rates, and a credit is provided for the underlying profit tax (if any).

Passive income means for example income from interest, royalty’s, dividend, capital gains on shares, income from insurance or bank activities, and income from re-invoicing activities. Income from rented out real estate is not regarded as passive. Income means the positive result of passive income minus the attributable costs in a given year.

A CFC can be excluded from Dutch taxation on undistributed passive income if the CFC’s income usually consist for 70% or more of other income than passive income, if the CFC qualifies as a financial institution, and also if the CFC carries out a meaningful economic activity. The term ‘meaningful economic activity’ will be defined in a special regulation. This test will likely be implemented in a similar manner to the minimum substance test in the current Dutch Dividend Withholding Tax Act for foreign holding companies. This means that the CFC must have its own duly equipped office space for at least 24 months, its own personnel with professional knowledge to carry out the day-today core activities independently, as well as a minimum salary expense of €100,000.

A similar rule will be introduced for foreign permanent establishments of a Dutch company.

General Interest Deduction Limitation – 30% EBITDA

The legislative proposal for ATAD implementation also includes a 30% Earnings Before Interest Tax Depreciation and Amortization (EBITDA) interest deduction limitation. The ‘Earnings’ do not include exempt income. An example: interest income is €1.5 million, interest expense is €3.5 million - the net interest is therefore - €2 million. If the Dutch company has an EBITDA of €5 million, it can deduct 30% of €5 million, which amounts to €1.5 million of interest expenses, and €500,000 may be carried forward indefinitely. The government proposes to introduce a general allowance of €1 million, even if the outcome of 30% of the EBITDA would be less than such amount.

Two existing interest deduction limitation rules (known as article 13l (financing of qualifying participations) and 15ad (acquisition holdings)) will be abolished as per January 1, 2019. Furthermore, the rule that confirms that interest due on certain Tier capital instruments issued by banks and insurers (contingent convertibles (coco’s)) is deductible will be abolished as per 1 January 2019.

Restriction of Depreciation of Real Estate for Own Use

Companies owning Dutch real estate that is used for the purpose of their own business, can annually depreciate the cost price of the real estate to its residual value, but not more than when the tax book value has reached 50% of its estimated market value. The estimated market value assessed annually by the municipality where the real estate is located. It is proposed to increase the threshold from 50% to 100% in 2019, which heavily restricts the possibility to depreciate the real estate for tax purposes. The 100% threshold already applies to Dutch real estate that is rented out to third parties.

Limitation of loss carry-forward

Currently, a tax loss can be carried back one year and can be carried forward nine years. It is proposed to shorten the tax loss carry forward period to six years in 2019.

The rule which restricts the use of losses suffered by companies in the period that they mainly had a holding and/or financing function will be abolished.

Dutch REITs: no longer allowed to directly own Dutch real estate - 2020

On basis of the fiscal Real Estate Investment Trust (REIT) regime, a company is subject to 0% Dutch corporate income tax provided it meets certain criteria. One of them is that all income (capital gains excluded) must be distributed to the investors within eight months following the close of the accounting year. In cross-border circumstances, the Netherlands can usually levy 5-15% dividend withholding tax. Now that the dividend withholding tax will be abolished (see hereafter), Dutch REITs will no longer be allowed to invest in Dutch real estate directly.

Thin Cap rule for Banks and Insurers - 2020

The government announces that it will issue draft legislation in the course of 2019 to introduce thin cap rules for banks and insurers.

Dividend Withholding Tax

Currently, dividend distributions are subject to 15% dividend withholding tax, unless an exemption applies or the rate is reduced on the basis of a tax treaty.

The government proposes to abolish the Dutch dividend withholding tax in its current form as per January 1, 2020. A new tax will be introduced, “Source Tax”. The tax rate will be 23.9% in 2020 and of 22.25% in 2021. In general, the tax is only due in case of dividend payments to a company that exercises (directly or indirectly) definitive influence over the Dutch company (e.g. >50% of the voting rights), and that is resident in a jurisdiction where it is not subject to profit tax, or subject to a profit tax of less than 7% (statutory rate), or in a jurisdiction that is mentioned on the list of non-cooperative jurisdictions listed by the EU. The Source Tax may also apply to sale proceeds to the extent the Dutch company has retained earnings and profits. A specific anti-abuse rule applies if a company is interposed to avoid the Source Tax (for example in case of an EU parent company) and in addition thereto such interposed company is not established for valid commercial reasons that reflect economic reality. The latter test will likely be implemented in a similar manner to the current test (minimum substance requirements). This likely means that the interposed holding company must have its own duly equipped office space for at least 24 months, own personnel with the professional knowledge to carry out the day-today core activities indepently, as well as minimum salary expense of €100,000.

A similar rule will be introduced for foreign permanent establishments to which the shares in a Dutch company are allocated.

The current proposals do not contain draft legislation to introduce a withholding tax on interest and royalty payments. The government may publish such proposal in the course of next year. It is envisaged that such tax will be introduced as per January 1, 2021.

Personal income tax

Box I: income from work and primary residence

Change in tax brackets and tax rates

The legislative proposal includes the following amendments with respect to the tax brackets and tax rates for 2019 applicable to income from work and primary residence for individuals below the retirement age:

Taxable amount as of  Taxable amount up to  Tax rate
   €20,384  36.65%
 €20,384   €68,507  38.10%
 €68,507    51.75%

The legislative proposal includes the following amendment with respect to the tax brackets and tax rates for 2020 applicable to income from work and primary residence for individuals below the retirement age:

Taxable amount as of Taxable amount up to Tax rate  
   €20,751  37.05%
 €20,751  €68,507  37.80%
 €68,507    50.50%

A new two-bracket income tax system is proposed for income from work and primary residence. The legislative proposal includes the following tax brackets and tax rates for individual below the retirement age as of 2021:

Taxable amount as of  Taxable amount up to Tax rate 
   €68.507  37.05%
 €68.507    49.50%

Limitation on deductions

It is proposed that any deductible expenses will only be deductible against the lower base rate of 37.05% instead of the highest applicable rate for the relevant taxpayer (as is currently the case). The limitation in the rate will be introduced gradually, with annual steps of 3% starting from 1 January 2020 to ultimately the rate of 37.05% in 2023.

Box II – income from substantial interest

Increase of tax rate

Income received by an individual that holds an interest of at least 5% in a company (i.e. a substantial interest) is currently taxed at a rate of 25%. The legislative proposal includes an increase of this tax rate to:

2020  26.25%
2021  26.9%

There will be no grandfathering for existing profit reserves.

Limitation of loss carry-forward

Currently, a tax loss can be carried forward nine years. It is proposed to shorten the tax loss carry forward period to six years.

Limitation on accounts payables

The Dutch government has proposed to limit the accounts payables of substantial interest owners to an amount of €500,000. It is mentioned that an account payables that exceed the amount of €500,000 will become subject to taxation in Box II. However, this measure is not part of the 2019 legislation package currently proposed and will probably be introduced as part of the 2020 Tax Plan.

Wage tax

30% ruling – Limitation of the period

The 30% ruling is granted to highly skilled expats with specific expertise working in the Netherlands provided certain conditions are met. With a 30% ruling, the expat can receive a tax free compensation from its employer of up to 30% of its gross salary. In addition, the expat may opt to be qualified as a non-resident taxpayer of the Netherlands with respect to income received in Box II and Box III (i.e. partial non-resident taxpayer). The 30% ruling is currently applied for a period of eight years. The government proposed to reduce the application period to five year as of January 1, 2019. The reduction of the application period will also apply to rulings that have been granted before January 1, 2019 without grandfathering rules (i.e. rulings that were valid for a period of at least five years will terminate as of January 1, 2019).


Change reduced VAT rate

In the Netherlands a reduced VAT rate of 6% applies to certain goods and services, such as food, water, books, art, healthcare and repair services of bikes, clothes and shoes. The legislative proposal includes an increase of the tax rate from 6% to 9% as per January 1, 2019.

Special rules for small enterprises – special VAT scheme

By means of a separate legislative proposal it is indicated that small enterprises -individuals and legal entities- are relieved from VAT obligations as of 2020. The relief will apply when the turnover per calendar year does not exceed the threshold of €20,000.

E-commerce – implementation of changed EU VAT Directive

The VAT on e-commerce Directive will be implemented in the Dutch VAT law as of 2019. These rules will simplify the regulation from an administrative and compliance perspective for entrepreneurs in the digital economy.

VAT exemption sports

The legislative proposal widens the scope of the VAT exemption for sports and implements provisions in line with the VAT Directive 2006/112/EC. Based on the new rules, both members and non-members should benefit from the sports exemption provided by non-profit-making organizations. Due to the wider scope of the exemption chances are that the VAT treatment of sports organisations will change and will alter from a VAT taxable exploitation to a VAT exempt service supply. In case the sports organization uses a sports accommodation that is newly build or not older than 10 years transitional law is arranged for in respect to the deductibility of VAT.

Dentons is the world's first polycentric global law firm. A top 20 firm on the Acritas 2015 Global Elite Brand Index, the Firm is committed to challenging the status quo in delivering consistent and uncompromising quality and value in new and inventive ways. Driven to provide clients a competitive edge, and connected to the communities where its clients want to do business, Dentons knows that understanding local cultures is crucial to successfully completing a deal, resolving a dispute or solving a business challenge. Now the world's largest law firm, Dentons' global team builds agile, tailored solutions to meet the local, national and global needs of private and public clients of any size in more than 125 locations serving 50-plus countries.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions