Business Operations in The Netherlands (Portfolio 7250)

An extensive discussion of income items excluded from the tax base of corporations is provided, including the participation exemption and the exemption for investment companies. Information is also supplied regarding the Netherlands tax treatment of foreign nationals employed in The Netherlands.

Noteworthy characteristics of Netherlands tax law, such as the ability of foreign businesses to hold advance discussions with the Dutch tax administration concerning the tax consequences of their business operations in The Netherlands, are explained. The Portfolio also considers methods used to allocate the profits and costs of foreign corporations operating in The Netherlands through a permanent establishment.

The various taxes on individuals are discussed. The principal direct tax on individuals, including foreign nationals, is the individual income tax. In addition, individuals are subject to a tax on gifts and legacies, and several minor taxes.

The Netherlands is a member of the European Union, all the Member States of which impose a value added tax. This Portfolio analyzes thoroughly the mechanism of the VAT and explains the Netherlands VAT provisions.

Among the nontax matters covered in this Portfolio are the Netherlands company law, the financial and labor situation in the country, and the social security system.