Comparing legal forms in the Netherlands
LEGAL FORM
Sole proprietorship or Partnership
COMPANY STRUCTURE
Tax for businesses in the Netherlands
Any business or person active in the Netherlands is normally subject to a number of taxes.
Taxes on BV companies
The main tax on a Dutch limited companies is called corporate income tax. In Dutch this tax is called Vennootschapsbelasting (or Vpb).
Personal taxes in the Netherlands
Example
To give you a rough estimate you can use the following example:
Business X BV is owned by Mr. Y. He is the 100 percent shareholder and also the managing director.
X BV has a revenue of €250.000. The costs excluding salaries are €100.000.
Mr. Y would like to receive around €50.000 in net income. The minimum director/major-shareholder salary (DGA-salaris) he has to pay is set at €47.000. The shareholder/director in X BV is normally forced to pay out a salary. This is only the case if there are sufficient funds in the company.
Mr. Y decides to pay out the minimum amount of €47.000 in salary. This will be taxed at the progressive income tax rate:
| Personal Income Tax (IB) | 2022 | 2023 |
|---|---|---|
| Bracket 1 | 37,10% up to €68.508 | 36,93% up to €73.031 |
| Bracket 2 | 49,50% from €68.508 | 49,50% from €73.031 |
Including payments for social security and the applicable deductions, Mr. Y will keep roughly €32.000 of that €47.000 after tax.
Meanwhile the company has, after general costs and Mr. Y's salary, €103.000 in profit before tax. First of all, X BV will pay corporate income tax at the following rate.
| Profit | 2022 | 2023 |
|---|---|---|
| SME tariff | 15% (up to €395.000) | 19% (up to €200.000) |
| Standard tariff | 25,8% (profits exceeding €395.000) | 25,8% (profits exceeding €200.000) |
| Innovation Box | 9% on profits derived from qualifying innovative activities | 9% on profits derived from qualifying innovative activities |
In this scenario, the business has to pay 15 percent in corporate income tax, so roughly €16.000. Meaning X BV has €87.000 in net profit.
Mr. Y would like to receive a total disposable income of roughly €50.000. The remainder on top of the mandatory major-director/shareholder salary can be paid out as dividend instead of salary. This is taxed at the so-called substantial interest tax in box 2 of the Dutch tax system.
| Box 2: Substantial Interest | 2022 | 2023 | 2024 |
|---|---|---|---|
| Up to €67.000 | 26,9 % | 26,9 % | 24,5 % |
| Over €67.000 | 26,9 % | 26,9 % | 31 % |
This means he should pay out an additional +/- €25.000 of the profits as dividend to himself to add another €18.000 in net income. This makes his total net income roughly €50.000.
Conclusion:
X BV pays €16.000 in corporate income tax over a €103.000 profit. Besides that the BV usually incurs employer/wage costs which will not be discussed here.
In our example Mr. Y received a pre-tax income of €72.000 consisting of salary and dividend. He pays around €15.000 in personal income tax and €7.000 in substantial interest tax to receive a pre-tax income of net income of €50.000.