CORPORATION tax group, a so-called fiscal unity, with one

CORPORATION TAX RATEThe corporation tax rate in the Netherlands depends on the taxable amount. The taxable amount is the taxable profit less deductible losses.The tax rate is 20% if the taxable amount is less than €200,000.The tax rate is 25% if the taxable amount is equal to €200,000 or higher. (government)FISCAL UNITYA parent company can form a tax group, a so-called fiscal unity, with one or more of its subsidiaries, which allows the group to deduct a loss incurred by one company from the profits generated by another.The establishment of a tax group is only possible under certain conditions. The main condition is that the parent company holds at least 95% of the shares in the subsidiary.Aside from this, all potential group members must have the same financial year, apply the same accounting policies and be established in the Netherlands. (idem)ASSET INVESTMENT TAX RELIEFInvestments in certain types of assets can qualify for a special deduction in calculating taxable profits. This relief is in addition to the usual depreciation and is computed as a percentage of the qualifying expenditure. The available deductions fall into the three categories below:SMALL-SCALE INVESTMENT DEDUCTIONThis deduction applies to investments in business assets of 2,300€ up to 11,242€ per calendar year. The deduction amounts to 28% for investments from 2,300€ up to 56,024€. The maximum possible deduction is 15,687€ for investments of 56,024€ up to 103,748€. The relief gradually decreases to zero when the investment reaches 311,242€ENERGY INVESTMENT ALLOWANCE (EIA)This deduction applies to investments in qualifying new energy-saving assets. The maximum investment qualifying for relief is 120 million Euros. The relief amounts to 58% of the investment if it exceeds 2,500€ per calendar year.ENVIRONMENTAL INVESTMENT ALLOWANCE (MIA)This deduction applies to investments in qualifying new assets contributing to environment protection. The relief provided is 36%, 27%, or 13.5%, depending on the type of asset and whether the investment exceeds 2,500€ per calendar year. (KPMG)RESEARCH AND DEVELOPMENT ACT (WBSO)Certain R&D activities (development of technically new physical products, production processes, or software) qualify for a payroll tax reduction (WBSO).The reduction amounts to 32% (40 percent for start-ups) of the relevant payroll costs relating to R&D (R&D payroll costs, but also other R&D costs and R&D investment expenditures), up to a maximum of 350,000€, and 16% for any excess. (English.rvo.nl, 2018)LIQUIDATIONShould a business go into liquidation, there is no longer a corporate income tax liability. The company is obligated to prepare a final balance sheet for tax purposes at the time of liquidation, in which assets and liabilities are presented at their fair market value. This ensures that all benefits not yet reported for tax purposes are included in the profit for the final financial year. Any distribution above and beyond average paid-in capital is regarded as a dividend subject to 15% withholding tax. Exemptions or applicable double tax treaties may reduce this withholding tax.BANKRUPTCYIt is unlikely that bankruptcy leads to a corporate income tax charge. However, one has to consider specific case law regarding liabilities the company’s directors have to adhere to special reporting requirements to circumvent personal liability, particularly concerning VAT and wage tax.EMIGRATION AND CROSS-BORDER ASSET TRANSFERSShould the company relocate abroad, an exit tax might be due unless assets of the company are kept with a Dutch permanent establishment. In the same vein, an exit tax will arise in case of a transfer of assets to a foreign head office or closure of a permanent establishment.In both cases, the exit tax is computed by taking the gain of the assets transferred, including any untaxed gains and reserves and provisions. However, exit tax is not usually payable when assets are transferred from a Dutch head office to a foreign permanent establishment.Businesses established in and resident of an EU Member State or a European Economic Area Member State might not be obligated to pay the entire exit tax burden in one go. The exit tax rules allow taxpayers to choose between immediate taxation, a deferral until subsequent realization and payment in ten annual instalments. Should the taxpayer choose for a deferral, it will entail interest payments on the deferred tax plus a collateral, which will usually be a bank guarantee of solvency. (Investinholland.com, 2018)