The Netherlands offers one of the most favourable tax regimes in Europe. The country ranks 14th in the 2022 International Tax Competitiveness Index, which is an indication that the Dutch taxation framework is reasonably structured and makes it easy for businesses to comply with tax regulations, as well as promotes economic development.
The Dutch Tax and Customs Administration is responsible for imposing tax regulations, inspections, and the collection of taxes on behalf of the government. It also implements various tax reliefs and schemes for tax residents and non-residents. The authority classifies cryptocurrencies as an asset, and crypto companies must share their transaction data with it.
Since the Netherlands is a member of the Organization for Economic Cooperation and Development (OECD), it will also have to integrate the new international tax transparency framework, entitled Crypto-Asset Reporting Framework (CARF) which has been recently introduced by OECD with the aim to improve crypto taxation and tax reporting standards. In accordance with CARF, the Dutch Tax and Customs Administration is obligated to automatically share crypto tax-related information with the international tax authorities. Moreover, the treatment of cryptocurrencies for tax purposes in the Netherlands is also impacted by such EU regulations as Markets in Financial Instruments Directive 2 (MiFID 2).
The taxation of a crypto company is determined not only by the business model, but also by its tax residency status. Companies established under Dutch law are generally deemed to be tax residents of the Netherlands. Also, a company is considered a tax resident in the Netherlands if its place of effective management is in the Netherlands, although local law doesn’t include a definition of a ‘place of effective management’ and it’s determined by facts and circumstances on a case-by-case basis. Normally it’s the case when the Netherlands is the place where important business decisions are made, where company directors work and meet, and where the business records are kept, and the financial statements are prepared.
Corporate Income Tax
The Corporate Income Tax rate depends on the taxable amount, which is the taxable profit in a year reduced by deductible losses. If the taxable amount doesn’t exceed 200,000 EUR, the 19% rate applies. If the taxable amount exceeds 200,000 EUR, companies have to pay 59,250 EUR, and a 25.8% tax is levied on the taxable amount exceeding 200,000 EUR. Since generally Dutch taxpayers are taxed on the presumed increase in value of their assets based on the fair market value on the 1st of January, even held cryptocurrencies are taxed, which isn’t the case in most other European jurisdictions.
A special 9% rate applies to income, including royalties, sourced from originally developed innovative assets which are covered by the innovation box. The purpose of this box is to provide tax relief which encourages innovative research and development (R&D). Businesses are eligible for the innovation box if at least 30% of the profits have been sourced from the patent. Also, if the development of the intellectual property has no patent but has incurred R&D costs, such a company is also eligible for availing of the reduced 9% rate.
It’s important to note that the 9% rate applies exclusively to positive income, allowing innovation losses to be fully taken into account. Companies can also include profits from an intangible asset sourced during the period between the patent application and the granting of the patent in the innovation box regime.
Another effective way to optimise taxes in the Netherlands is through international agreements covering various types of income. The Netherlands has around 80 international agreements on the elimination of double taxation. They provide clarity on the treatment of cross-border trade and investment, as well as protect businesses from having their income taxed twice in two different countries.
Crypto-specific rules pertaining to the Corporate Income Tax include the following:
- Cryptocurrencies are taxed as assets
- Cryptocurrencies received from mining are subject to Corporate Income Tax based on their market value upon receipt
- Cryptocurrencies received by airdrop are subject to Corporate Income Tax based on their market value upon receipt
- The lending of cryptocurrencies is not treated as a taxable disposal
In the Netherlands, the application of VAT is aligned with the EU’s VAT Directive. The standard VAT rate is 21% which is levied on products and services sold in the territory of the Netherlands. Numerous exemptions apply depending on the nature of the business. For instance, the issuance of security tokens is also VAT-exempt as it’s similar to purchasing vouchers. The tax liability arises when the tokens are exchanged for products or services.
In accordance with the decision of the Court of Justice of the European Union (CJEU), crypto exchanges (including exchange into fiat money and vice versa) are VAT-exempt. However, other crypto-related products and services might be subject to VAT and therefore crypto companies have to register as VAT payers with the International Office of the Dutch Tax and Customs Administration.
Dividends received from Dutch resident companies are generally subject to a 15% Withholding Tax. Exemptions may apply if the recipient of the dividends distributed by the Dutch company is a resident of the EU or EEA or another country with which the Netherlands has signed a tax agreement that includes a section on dividends. Exemptions may also apply if the recipient of the dividends would have been able to apply the Dutch participation exemption or the participation credit to the dividends if it would have been a resident of the Netherlands.
Cryptocurrencies gifted by a resident of the Netherlands are subject to the Gift Tax. The rates vary between 10% and 40% of the value of the cryptocurrencies received on the date of the gift. The applicable rate is determined in accordance with the level of connection between the donor and the donee. Tax exemptions apply in certain cases. In-game rewards transferred in cryptocurrencies aren’t taxed unless the transaction is done professionally, in which case it’s subject to the Personal Income Tax (Box 1).
Personal Income Tax
Employees of Dutch crypto companies are subject to Personal Income Tax. Residents of the Netherlands are taxed on their worldwide income, and non-residents are only taxed on their income sourced within the territory of the Netherlands, which includes employment income, director’s fees, business income, and income from Dutch immovable property.
Worldwide income is classified into three different types of taxable income, and each type is taxed separately under a specific schedule (a box) which has its own tax rate(s). An individual’s taxable income is based on the accumulated income in these three boxes.
The boxes are as follows:
- Box 1 – income sourced from profits, employment, and homeownership (in 2023, the rate has been reduced to 36.93% on income not exceeding 73,031 EUR)
- Box 2 – income sourced from substantial interest (the rate is 26.9%)
- Box 3 – income sourced from savings and investments (the rate is 32%); the tax-free capital limit is 57,000 EUR
Social Security Contributions
In accordance with Dutch laws, every individual working in the Netherlands is covered by the national insurance schemes for a state pension and surviving dependents. These contributions are withheld by the employers from the salaries of the employees and remitted to the Dutch Tax and Customs Administration. The national insurance contributions are withheld from all components of the employment income – salaries, holiday allowances, overtime pays, end-of-year bonuses, and benefits in kind. National insurance contributions are levied on income up to 37,149 EUR and capped at 10,272 EUR per annum.
Employers also remit employee insurance contributions. These contributions cover the unemployment benefit scheme, sickness benefits, disability insurance scheme, and the work and income (capacity for work) scheme. Instead of withholding these contributions from salaries, employers pay them themselves. These contributions are paid on income of up to 66,956 EUR. The rate is determined depending on the company’s industry, and the annual average per permanent employee is around 7,887 EUR. The annual average per temporary employee can reach 11,235 EUR.
If you’re determined to succeed in the Netherlands and wish to pay optimal taxes, highly qualified and experienced legal consultants of Regulated United Europe (RUE) will be pleased to assist you in structuring your taxes. We very well understand and closely monitor crypto Dutch and international taxation rules, and strive to ensure that our clients not only comply with local regulations but also operate in a tax-efficient way. Moreover, we’re more than happy to help you with company formation, crypto licensing, and accounting. Book a personalised consultation now.
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