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Concerns set up in the Netherlands are subject to Dutch tax legislation regulations, according to which income is taxed at 20-25%. Additionally, a Dutch organisation owes tax on the worldwide profit of the whole organisation. This worldwide profit includes company income, dividend income and interest. With the introduction of the participation exemption, such income from abroad is no longer taxed. The essential point of a participation exemption is that, by participating in another company, a “body” is exempt from income tax on the result of what comes from the other company. Aspects of this income include dividends, capital gains on participations and capital goods. Losses are, with the exception of liquidation losses, not deductible.
Participation exemption foreign participation
Participation exemptions are crucial if you want to properly compete with local companies abroad. In order for a company to qualify for the granting of an exemption, it has to first comply with a number of requirements. The taxable person:
- Falls under Dutch tax legislation
- Possesses a minimum of 5% of the nominal paid-up capital of a joint-stock company
- Possesses a minimum of 5% of the amount of the participation certificates of a mutual fund that are in circulation
- Is a member of a cooperative or an association set up on a cooperative basis
- Has stock in an open limited partnership as a limited partner, through which he benefits from the profits of the open limited partnership.
Once the above requirements have been met, the taxable person qualifies for a participation exemption, through which double levies are avoided and internationally-operating companies can compete more easily. Do you have any questions about participation exemptions? If so, contact us at (088) 838 76 69 and speak to our experienced advisers.
DTS will help you to come to an arrangement to suit your company
The purpose of a participation exemption is, and remains, to prevent double levying of taxation within a company. Through a participation exemption, active subsidiary companies of a parent company that is established in the Netherlands can compete on an equal footing fiscally with local companies in foreign markets. Of course, the participation exemption does not apply to all companies. Investment companies are an exception to the rule and do not, as such, fall under the remit of a participation exemption. We at Duijn’s Tax Solutions have many years’ experience dealing with the most complex tax issues. We offer direct support in finding tax solutions within the established guidelines. Our advisors will assess your situation, investigate which arrangement suits your company and assist you in putting it into place.
Avoid double levying of taxation within your company!
Contact us and inform yourself immediately of the possibilities.