The Netherlands benefits from a strategic geographic location, a world-class economy, a stable political climate, and a skilled workforce.
These characteristics, in addition to a favorable tax environment, make Netherlands one of the most open economies in the world for multinational corporations (MNCs).
[2] Profits earned by both public and private enterprises are normally subject to corporate income tax.
Foundations and associations may be required to file corporate income tax reports in specific circumstances.
[3] Dividends distributed by Dutch resident corporations with capital divided into shares are subject to a withholding tax in the Netherlands.
Furthermore, dividends may be free from taxation in the Netherlands, subject to anti-abuse rules, if both of the following conditions are met: The Netherlands has committed to accept the minimum criteria (primary purposes test and dispute resolution) as well as some optional aspects of the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI).
A covenant is reached between a taxpayer and the Dutch tax authorities under the horizontal monitoring program, in which the taxpayer pledges to providing information proactively and discusses any concerns in advance during frequent meetings with the Dutch tax inspector.
These rates have been lowered by the Dutch government to stimulate a competitive tax environment for international businesses.
Besides both the parent company and subsidiary must have the same financial year, apply the same accounting policies, and be established in the Netherlands.
However, if the members of the group include Netherlands companies, they can still form fiscal unity in two specific situations.
There have been implemented anti abuse clauses for the participation exemption, interest deductions for hybrid loans and recently for the dividend withholding tax act.
Minister Van der Stee admitted that the country was internationally known as a tax haven, but refused to act, arguing that the problem could not be solved on a national level alone.
[19] Dutch tax laws have brought the country into conflict with the European Union several times, starting with strong criticism in the 1999 Primarolo Report.
[22][23][24] In February 2013, the Dutch House of Representatives accepted a motion calling on cabinet members to "reject, and where possible in discussions to insist on not mentioning" the qualification of the country as a tax haven; the motion was drafted by MP Roland van Vliet, a former tax advisor with Ernst & Young.
[25] Economist Ewald Engelen [nl] estimated that at the time of the motion, the state earned some €1.5 billion in tax from €12 trillion being transferred through the country annually.
[19][24] In June 2014 the EU initiated a new investigation relating to the Dutch corporate taxes as part of a State aid (European Union) case by the Directorate General for Competition.
[27] The investigation ended in October 2015, with the EC ordering Starbucks to pay up to €30 million in overdue taxes.
[29] In 2017, the EU initiated another State aid (European Union) investigation into a special deal on corporate taxation between the Dutch public administration and IKEA.
[30] National and foreign companies known to have special agreements with the Dutch tax service include Starbucks, Microsoft and PostNL.