Doing Business in the Netherlands 2012 - American Chamber of ...

Doing Business in the Netherlands 2012
� Box II income includes income from shares in case of
substantial interest of 5% or more.
� Box III income includes income from savings and
investments.
Each box has its own rules for determining the tax base and its own
tax rate.
Income in Box I is taxed at a progressive rate with a maximum of
52%. Income in Box II is taxed at a flat rate of 25% and income in
Box III is taxed at a flat rate of 30%. Box III income is set at a fixed
notional yield of 4% of the taxpayer’s average equity. There are
impermeable “walls” between the three boxes: losses that the taxpayer
incurs in Box I may be set off, i.e., carried backward or forward,
against Box I income only and the same applies to losses in Box II.
The taxable income in Box III is calculated at 4% of the fair market
value of the taxpayer’s property, minus the amount of the taxpayer’s
outstanding debts and a basic allowance of EUR20,785 (for 2011). In
other words, the tax burden on savings and investments that fall within
the scope of Box III, minus debts and basic allowance, is 1.2% (4% of
income x 30% tax rate).
17.3 Business Profits in Income Tax
In general, this is the taxation for entrepreneurs who are gaining profit
in a one-man business or a small company without limited liability.
The total profit minus the relevant entrepreneur’s deductions and the
tax deduction for small- and medium-sized businesses is the basis of
taxation. In the Netherlands, there has been a long tradition of
government support for entrepreneurship. In the year that the
entrepreneur starts his or her activities, he or she may claim a tax
reduction (zelfstandigen aftrek voor starters) of EUR2,123 (for 2011).
Furthermore, the tax exemption for small and medium-sized
businesses is stretched up to 12% of the total business profits minus
the entrepreneur’s deductions in each year.
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