Міністерство Освіти України
Херсонський Державний Технічний Університет
Звіт
для студентської конференції кафедри «Фінанси і кредит» на тему:
Податкова система Нідерландів
Виконав: студент гр. 3 ФК 3,
Баранов Юрій
Керівник: Химченко С.М.
Херсон 2000
Введення. 4
Організаційна структура. 4
2. Загальна інформація про податки, присутніх у системі оподаткування
Нідерландів. 4
3. Податок на прибуток корпорацій (Corporation Tax). 7
3.1 Taxpayers 7
3.2 Tax base and rates 7
3.2.1. General 7
3.2.2. Tax rates 7
3.2.3. Determination of profits according to sound business practice 7
3.2.4. Depreciation of fixed assets 8
3.2.5. Stock valuation 8
3.2.6. Tax-deductible expenses; mixed expenses 8
3.2.7. Reserves 9
3.2.8. Investment allowance 9
3.2.9. Education allowance 10
3.2.10. Tax-deductible donations 10
3.2.11. Offsetting of losses 10
3.3. Participation exemption 10
3.3.1. General 10
3.3.2. Shareholdings 10
3.3.3. Gains 11
3.3.4. Costs 11
3.3.5. Converting a permanent establishment into a subsidiary 12
3.3.6. Losses resulting from liquidation 12
3.3.7. Directive on parent companies and subsidiaries 12
3.4. Fiscal unity; consolidation for tax purposes 12
3.5. Investment institutions 13
3.5.1. General 13
3.5.2. Conditions 13
3.5.3. Reserves 14
3.5.4. Allowance for foreign withholding tax 14
4. Прибутковий податок (Income Tax) 14
4.1 Taxpayers: residents and non-residents 14
4.2 Taxbase and rates 15
4.2.1. Taxable income of residents 15
4.2.2. Tax rates and personal allowances 15
4.2.3. Total gross income 16
4.2.4. Non-source-related deductions 20
4.3. Employee savings and profit-sharing schemes 21
4.3.1. Employee savings schemes 21
4.3.2. Profit-sharing schemes 21
4.4. Foreign employees: the 35% rule 22
5. Податок на багатство (Wealth Tax) 22
5.1. Taxpayers: residents and non-residents 22
5.2. Tax base and rates 23
5.2.1. Exemptions 23
5.2.2. Tax rates 24
5.2.3. Special allowances 24
5.3. Tax returns and assessments 24
6. Податок на додану вартість (Value Added Tax and Excise Duty) 25
6.1. Taxable persons 25
6.2. Tax base 25
6.3. Exemptions 26
6.4. Special arrangements for small businesses (persons) and theagricultural sector 26
6.5. Tax rates 27
6.6. The new VAT system in the single European market 27
6.7. Tax returns and assessments 28
7. Податки на охорону навколишнього середовища (Environmental Taxes) 28
7.1. Fuel tax 28
7.2. Tax on groundwater 29
7.3. Tax on tap water 29
7.4. Tax on tap water 29
7.5. Regulatory energy tax 30
8. Уникнення подвійного оподаткування на дохід, прибуток ібагатство (Avoidance of Double Taxation for Taxes on Income, Profits and
Wealth) 30
8.1. General 30
8.2. Methods 31
8.2.1. The exemption with progression method 31
8.2.2. The credit method 31
8.2.3. Deduction as costs 31
Введення.
Причини, що спонукали мене до написання доповіді щодо голландськогооподаткування, досить прості. Я побував у Голландії, де мав низкуконтактів «колегами» спорідненої спеціальності і від них почув про вельмиважкому тягаря податків, на власні очі ж було видно лише повсюдне процвітанняі соціальна захищеність. Такий феномен не міг не зацікавити, і темадоповіді цілком закономірна.
1. Організаційна структура.
Верховним органом, що приймають і доповнює податковезаконодавство, є Генеральні штати, законодавчий аналог
Верховної Ради. Генеральні штати, точніше представники 2-3 найбільшихпартій, що перемогли на виборах, формують Кабінет Міністрів. Відмінноюособливістю голландського способу управління податкової ситуацією єте, що органи контролю та регулювання входять до структури Міністерства
Фінансів. Існує 2 департаменту - Генеральний директорат з податків,митної політики та законодавчого забезпечення, а також Генеральнийдиректорат з податкового та митного адміністрування.
Перший з вище згаданих департаментів займається коригуваннямпроцесу оподаткування, наприклад, при неефективності якогось податкуподає аналітичну доповідь у Генеральні штати з пропозицією змінити,скасувати, обмежити дію будь-якого пункту в законодавстві, такождиректорат бере участь у фіскальній частині складання бюджету.
Генеральний директорат з податкового та митного адмініструваннябезпосередньо слідкує за виконанням податкового законодавства, збираєперераховані кошти, вирішує конфлікти на грунті оподаткування,вживає заходів у випадку порушень податкового законодавства.
Якщо провести аналогію з нашою ситуацією перший Директоратвідповідає Комітету з оподаткування і податкової політики в нашій ВР,а Генеральний директорат з податкового та митного адмініструванняможе бути співвіднесена зі структурами ДПАУ.
2. Загальна інформація про податки, присутніх у системі оподаткування
Нідерландів.
* Категорія податків на прибуток, дохід і чисте багатство (taxes on income, profits and net wealth) < p> Income tax.
Income tax is a tax on a person's natural annual income. It is levied at aprogressive rate. Personal circumstances are taken into account when makingthe assessment of the amount of tax to be paid, and certain expenses aretax-deductible. The scheme provides for a personal allowance, the amount ofwhich is dependent on the individual circumstances. There are four taxrates, 33.90%, 37.95%, 50% and 60%. The first two rates include both taxand social security contributions; the last two rates consist solely oftax.
Salaries tax
Income tax has two advance levies, which are a salaries tax, and a dividendtax. The salaries tax and the social security contributions are leviedjointly on earned income or benefits. The employer or body paying thebenefit deducts the tax and contributions directly from the salary orbenefit, and pays these to the Tax Department. Many natural persons payonly salaries tax, and are not subject to income tax. For natural personswith a high income or many tax-deductible items, the salaries tax serves asan advance levy, and they are subsequently issued with an income tax returnand an assessment.
Dividend tax
The other second advance levy for income tax is the dividend tax. Thecorporation paying the dividend withholds dividend tax at a rate of 25% andpays the tax to the Tax Department. Shareholders are liable for income taxon the gross dividend they receive. An amount of this dividend is exemptedfrom income tax, NLG 1,000 for single persons and NLG 2,000 for marriedpersons. For non-residents the dividend tax levied on a dividend is inprinciple a final levy. Tax conventions generally provide for a lower ratethan the 25% mentioned above.
Corporation tax
Corporation tax is levied on the taxable profit of both private and publiccompanies. Foundations (in Dutch 'stichtingen') may also be liable forcorporation tax. An important feature of the corporation tax is theparticipation exemption, which ensures that corporation tax is levied onlyonce on the profit obtained within a group. This means that a companyreceiving dividends does not have to pay corporation tax on these dividendssince the tax has already been paid by the company distributing thedividends. Corporation tax is levied at a rate of 35%. The first NLG 50,000taxable profit is levied at a rate of 30%.
Wealth tax
Wealth tax is levied on a natural person's total net wealth. The net wealthis the value of the assets less any liabilities. In principle the assetsinclude all property and possessions, for example the person's own home,shares, bonds and savings, together with the capital invested in theperson's own business. There are several personal allowances andexemptions. For instance the personal allowance for married couples is NLG
250,000. The tax rate is 0.7%.
Inheritance tax
The Inheritance Tax Act has two forms of tax, which are inheritance tax andgift tax. These taxes are, in general, to be paid by the recipient. Thereare substantial exemptions from both inheritance tax and gift tax. Thereare no exemptions from inheritance tax payable upon the inheritance ordonation of specific assets, for example property. The rates are the samefor these taxes, and depend on the value of the assets that have beenreceived and the relationship between the giver and the recipient. There isa minimum and maximum rate.
Tax on games of chance
The tax on games of chance is levied on prizes that exceed NLG 1,000. Therate is 25%. The organisation awarding the prize generally pays the tax,and the winner receives a net prize.
* Категорія податків і мита на товари та послуги (taxes and duties on goods and services)
Import duty.
Import duty is levied on imported goods. This usually amounts to apercentage of the value of the goods being imported. Various rates areapplicable, which are determined by the EU. The rates are usually lower forminerals or raw materials, and higher for finished products. Import duty islevied on goods, which are imported from countries outside the EU. Therevenue is destined for the EU.
Value added tax
Value added tax (VAT) is a general consumer tax included in the priceconsumers pay for goods and services. Consumers pay this tax indirectly,and companies remit the tax to the Tax Department. All companies pay VAT,although there are a few exceptions. The VAT paid by one company to anothermay be reclaimed from the VAT to be paid to the Tax and Customs
Administration. There are three rates for VAT:
. a general rate of 17.5%;
. a lower rate of 6%, applicable mainly to food and medicines;
. a zero rate, applicable mainly to goods and services in international trade, so that goods can be exported free from VAT.
Excise duty
Excise duty is levied on certain consumer goods, ie petrol and othermineral oils, tobacco products, and alcohol and alcoholic beverages. Aspecial consumer tax is levied on non-alcoholic beverages. Excise duty,like VAT, is included in the price consumers pay for these goods. The taxis remitted by the manufacturers and importers of the goods liable toexcise duty.
Taxes on legal transactions
Three taxes on legal transactions are levied in the Netherlands. These aretransfer tax, insurance tax and capital duty. Transfer tax is levied on theacquisition of property located in the Netherlands. The rate is 6% of themarket value of the property. Insurance tax is levied on insurance premiumsat a rate of 7%. The following insurances are exempted from insurance tax:life insurance, accident insurance, invalidity insurance, disablementinsurance, medical insurance, unemployment insurance and transportinsurance. Capital duty is levied when capital is contributed to companieslocated in the Netherlands when the capital is comprised of shares. Therate is 0.9% and the tax due is calculated on the value contributed (assetsless liabilities), or on the nominal value of the shares, whichever ishigher. In certain circumstances an exemption is made for mergers orreorganisations.
Motor vehicle tax
Motor vehicle tax is paid on vehicle ownership, except for buses, for whichvehicles the tax is paid for the use of the roads. The amount depends onthe type and weight (sometimes gross) of the vehicle and for private carsalso on the type of fuel the vehicle uses. Furthermore, for private carsand motorcycles, the amount is dependent on the province in which theperson/owner is resident or the company/owner is established.
Tax on heavy vehicles
The tax on heavy vehicles (also known as the eurovignette) is a tax onvehicles with a gross weight of maximum 12.000 kg or more. It is levied forthe use of motorways in the Netherlands. The tax has to be paid before thevehicle uses the motorway. There are two rates of tax, which are based onthe number of axles of the vehicle; one rate is for three axles or less,the other for four axles or more. The tax can be paid daily, weekly,monthly or annually. A similar tax, based on a directive of the European
Union and a Treaty, is levied in Belgium, Denmark, Germany, Luxembourg and
Sweden.
Tax on private cars and motorcycles
The tax is included in the price paid by the buyer on the purchase of aprivate car or motorcycle. It is usually paid by the manufacturer orimporter. The tax is dependent on the net listed value of the private caror motorcycle. The minimum tax rate is 10% of the net listed value of thevehicle, unless it is 25 years of age or older.
Environmental taxes
There are several environmental taxes in the Netherlands. Fuel tax is to bepaid by suppliers or users of mineral oil and other fuels. Since 1 January
1995 taxes are liable for the withdrawal of ground water and the disposalof waste. A regulatory energy tax came into force on 1 January 1996.
3. Податок на прибуток корпорацій (Corporation Tax).
3.1 Taxpayers
Corporation tax is levied on companies established in the Netherlands
(resident taxpayers) and by certain companies not established in the
Netherlands, which receive income in the Netherlands (non-residenttaxpayers). In this context the term 'company' includes corporations with acapital consisting of shares, co-operatives, and other legal entitiesconducting business. The main types of companies referred to in the
Corporation Tax Act are the public company (NV) and the private companywith limited liability (BV).
Whether a company is deemed to be established in the Netherlands depends onthe individual circumstances. Factors of relevance include the location ofthe effective management, the location of the head office, and the locationof the shareholders 'general meeting. Under the Corporation Tax Act allcompanies incorporated under Dutch law are regarded as being established inthe Netherlands.
3.2 Tax base and rates
3.2.1. General
Corporation tax is levied on the taxable amount, which is the taxableprofits made by the company in a particular year less deductible losses.
The taxable profits are the profits less tax-deductible donations. Inprinciple the profits should be calculated in accordance with theprovisions laid down in the Income Tax Act to determine the businessprofits of natural persons. In certain cases additional stipulations madein the Corporation Tax Act are also applicable. Under certain conditions itwill be permitted to taxpayers to compute their taxable profit in currencyother than the guilder (the 'functional currency') for a period of at least
10 years.
3.2.2. Tax rates
Corporation tax is levied at a rate of 30% of taxable profits.
3.2.3. Determination of profits according to sound business practice
The profits should be determined according to sound business practice andconsistent accounting methods. The concept of sound business practice hasmainly been developed in case law. For example unrealized losses may betaken into consideration, while unrealized profit may be ignored. Therequirement of consistent accounting methods means that the method ofdetermining profits may be changed only if this is compatible with soundbusiness practice. Companies exploiting sea-going vessels may opt for atonnage-based profit determination, providing that certain requirements aremet. An important requirement is that the decision is binding for a periodof ten years.
3.2.4. Depreciation of fixed assets
The depreciation of fixed assets for tax purposes is a statutoryrequirement. In principle taxpayers are free to choose a depreciationmethod. The method chosen must be in accordance with sound businesspractice. The linear method of depreciation is generally used. A lesscommon method of calculating depreciation is the declining balance method.
In case law, the latter method is accepted only for fixed assets with asteadily declining use with age. A combination of both methods, i.e.depreciation according to a declining percentage, may also be used.
Goodwill may only be depreciated if the goodwill has been purchased from athird party; goodwill generated by the company itself cannot bedepreciated. An accelerated depreciation is permitted for certain fixedassets, of which the most important are:
. energy-saving fixed assets and other environmentally-friendly fixed assets;
. sea-going vessels;
. intangible assets, providing these belong to a business that has been purchased which was not established in the Netherlands.
This is subject to restrictions.
3.2.5. Stock valuation
The following stock valuation methods are permitted: valuation based oncost, valuation based on cost or market value (whichever is lower), or thebase stock method. Valuation at cost is in accordance with sound businesspractice, unless the market value is significantly lower than the cost. Inthis system unrealized profit is ignored, while unrealized losses can betaken into account directly. The value of the stock can be determined byeither the FIFO or LIFO method. Subject to certain conditions, case lawalso permits the use of the base stock system.
3.2.6. Tax-deductible expenses; mixed expenses
The basic principle of the determination of the profits is that allexpenses associated with business operations are tax-deductible. If anexpense can be regarded as commercially sound then its value is not ofimportance. However, the deductibility of certain business expenses issubject to restrictions. This concerns mixed expenses, which are businessexpenses with a private element. Non-deductible expenses include costsconnected with pleasure craft used for entertainment purposes and fines.
The limitations on deductibility of expenses are more strict for companieswith one or more natural persons holding a substantial interest in thecompany, who also work (s) for the company. Basically, a natural person hasa substantial interest if he holds 5% or more (direct or indirect) of theshare-capital of the company. In that case 10% of the company's costs inconnection with food, drinks, tobacco, representation including receptionsand entertainment, seminars, excursions etc., are not deductible. Thecompany can opt for a fixed amount of NLG 3,200 per substantial interestholder, who also works for the company, to be treated as non-deductible.
The Corporation Tax Act gives an inexhaustive list of deductible and non -deductible expenses. The following expenses are always deductible:
. profit shares paid to directors and other staff as remuneration for employment;
. profit shares paid to creditors other than founders, shareholders or other persons entitled to shares in the corporation;
. profit shares paid in connection with licences, patents, etc., to persons other than founders, shareholders or persons otherwise entitled to shares in the corporation;
. profit shares paid by an insurance company to its policyholders;
. the costs of incorporation and of alterations in the capital.
In the Netherlands no thin capitalization rules exist. Since January 1997limitations on the deductibility of intercompany interest expenses havebeen introduced in the Corporate Income Tax Act. The (interest) expenses onintercompany loans are not deductible in basically two types of situations:
(interest) expenses arising from indebtness in the shareholder/susidiaryrelation, e.g. in connection with dividends, reduction of capital andcapital contributions. However, (interest) expenses remain deductible, ifthe tax payer can demonstrate that both the transaction and the loan wereentered into for sound business reasons;
(interest) expenses related to artificial conversion of equity into debtwithin the group. However, expenses related to these schemes remaindeductible, if the tax payer can demonstrate that either both thetransaction and the loan were entered into for sound business reasons orthat the interest paid is effectively subject to a reasonable level ofprofits tax in the hands of the recipient.
The following expenses are never deductible:
. profit distributions other than those specifically designated as deductible in the Corporation Tax Act (see above);
. corporation tax, dividend tax and tax on games of chance.
3.2.7. Reserves
Certain reserves may be formed by making a deduction from the profits. Inorder to qualify for this deduction the business must keep regular annualaccounts. Three reserves are legally permitted, which are the costequalisation reserve, the replacement reserve and since January 1997 thereserve for financial risks for multinational companies.
The cost equalisation reserve enables recurrent costs to be spreaduniformly over a period of time.
A replacement reserve may be created if fixed assets are lost, damaged, orsold, when the payment received exceeds the book value. To be eligible forthis reserve there must be plans to replace or repair the assets. Thereserve should generally be terminated in the fourth year following theyear in which it was formed.
Under certain conditions a reserve may be formed for the special risksinvolved in operating as an international group. The risks aimed at concernfinancing and holding activities. One of the main conditions to qualify isthat the financing activities must comprise financing of group companies inat least four countries or on two continents. In principle, the entity thatforms the reserve may charge to this reserve 80% of its income derived fromfinancing activities before tax. The tax inspector will grant the regimefor ten years upon a request filed by the tax payer, in wich the tax payerstates the relevant factual circumstances. The Dutch tax inspector canimpose additional conditions.
3.2.8. Investment allowance
This scheme allows a certain percentage of the sum invested in fixed assetsin a particular year to be deducted when calculating the taxable profits.
Investments are divided into nine tranches, where the percentage of theallowance decreases with increase in investment. In 1999 the lowest trancheis applicable to investments between NLG 3,900 and NLG 65,000, and thehighest tranche is applicable to investments between NLG 503,000 and NLG
566,000. The corresponding percentages are 27% and 3% respectively. Certainfixed assets are excluded from the investment allowance. If fixed assetsfor which an investment allowance was obtained in the past are sold withinfive years of being purchased then the investment allowance is withdrawneither wholly or in part.
Furthermore, there is an investment allowance in respect of investments inenergy saving business assets, placed on an Energylist. For investmentsover NLG 3,900 up to NLG 65,000 the allowance is 52%. The percentage of theallowance declines as the amount of the investment increases. The maximumallowance is 40% of NLG 208 mln.
3.2.9. Education allowance
This scheme allows an additional percentage of the costs of education ofemployees to be deducted when calculating the taxable profits. Thepercentage of the allowance varies between 20% and 80%.
3.2.10. Tax-deductible donations
Within certain limits donations to religious, ideological, charitable,cultural or academic institutions or other bodies serving the public goodare tax-deductible. The donations must be more than a total of NLG 500. Themaximum deduction is 6% of the profits.
3.2.11. Offsetting of losses
A loss may be offset against the taxable income of the three precedingyears (carry back) and against taxable income of all years to come (carryforward).
If a corporation discontinues its business either wholly, or in part, thenany losses that have not been offset may be compensated with futureprofits, provided that at least 70% of its shares continue to be held bythe same natural persons
3.3. Participation exemption
3.3.1. General
The Corporation Tax Act has always provided for a participation exemption,which is applicable to both domestic and foreign shareholdings. Thisexemption is one of the main pillars of the Dutch Corporation Tax Act, andit is motivated by the desire to prevent double taxation when the profitsof a subsidiary are distributed to its parent company which is also liableto corporation tax. The main features of this scheme are as follows: allgains from shareholdings are exempted, the costs associated with ashareholding are not deductible, and losses arising from liquidation of thecorporation are deductible only under certain conditions. The corporationdistributing dividends does not have to pay dividend tax if thedistribution of profits falls under the participation exemption enjoyed bythe company receiving the dividend.
The most important elements are as follows.
3.3.2. Shareholdings
The participation exemption is applicable to both domestic and foreignshareholdings. A shareholding is deemed to exist if the taxpayer:
1. holds at least 5% of the nominal paid-up capital (a shareholding includes the related possession of 'jouissance' rights); or
2. holds less than 5%, but ownership of the shares is part of the normal business conducted by the taxpayer, or the acquisition of the shares served a general interest; or
3. is a member of a cooperative; or
4. holds at least 5% of the share certificates in a mutual fund based in the Netherlands.
The participation exemption is not applicable if the taxpayer or subsidiarycompany is a fiscal investment institution. The concept of an investmentinstitution is explained in section 3.6. The participation exemption is notapplicable when the shares are held as stock.
The participation exemption does not apply internationally when shares inthe foreign corporation are held as a portfolio (passive) investment.
Another requirement for the exemption to be granted is that the foreigncompany in which the shares are held is subject to a tax on profits leviedby the central government in the country in which it is established (seealso 3.3.7.). Furthermore, the participation exemption is not applicablefor participations in foreign 'passive' finance companies.
In principle a Dutch company cannot credit any foreign withholding tax ondividends received from foreign subsidiaries to which the participationexemption is applicable. However, the Dutch dividend tax which has to betransferred by the Dutch company in the event of the redistribution offoreign dividends received can be partly reduced, subject to certainconditions. The reduction amounts to a maximum of 3% of the foreigndividends received.
3.3.3. Gains
Gains from shareholdings are ignored when calculating the profits. Inprinciple the term 'gains' includes both profits and losses. Profits, ofcourse, include both official and disguised dividends received. Exemptedgains also include profits made by the sale of a participation (includingexchange rate differences). Since January 1997, it is possible to opt forapplication of the participation exemption to currency results arising fromfinancial instruments which are used to hedge the translation risks oninvestments in foreign subsidiaries. Accordingly losses from sales are notdeductible. If the participation declines in value as a result of lossessuffered, then a write-off by the parent company is in principle non -deductible. An important exception is losses resulting from liquidation
(see 3.3.6.).
However, since January 1997 a company may claim a tax deduction for start -up losses of a subsidiary, in which it holds at least 25% of the share -capital. The rules allow the parent company to depreciate the book value ofthe subsidiary in the first 5 years after the acquisition if and to theextent that the value of the subsidiary has declined below cost price. Whenthe subsidiary becomes profitable, a taxable appreciation has to be made upto the amount of the cost of the investment. To the extent the depreciationhas not been reversed during the first 5 years, the balance will then haveto be reversed in the next 5 years in equal steps.
If the depreciated debts of a subsidiary to a parent company are convertedinto share capital then a special provision prevents tax claims being lost.
In such cases an amount equal to the depreciation of the debt is, inprinciple, again regarded as part of the profits of the parent company.
This is also applicable when the debt is sold to an affiliated company orif it is discharged.
3.3.4. Costs
Shareholdings may give rise to costs as well as gains. In principle suchcosts are not deductible. However an exception is made when these areindirectly conducive to making profits taxed in the Netherlands. Withforeign shareholdings this may occur if the foreign subsidiary has apermanent establishment in the Netherlands. In practice the main non -deductible costs are the costs of financing the participation. The taxpayerprofits.
3.3.5. Converting a permanent establishment into a subsidiary
As losses incurred by foreign subsidiaries cannot be offset against profitsmade by the Dutch parent company, foreign activities from which profits arenot directly expected are often undertaken through a permanentestablishment. Foreign losses can then be directly deducted from theprofits of the Dutch company. To prevent losses being deducted from theprofits in the Netherlands whilst later profits in this country are nottaxed, it is stipulated that when a permanent establishment is convertedinto a subsidiary then the profit made by the subsidiary up to the amountof the losses deducted from the Dutch profit is not exempted from taxation.
This obligation to compensate profits made by a subsidiary with earlierlosses incurred by the permanent establishment is applicable to the eightyears preceding the conversion, and is subject to the condition that thelosses have not been offset against other foreign profits.
3.3.6. Losses resulting from liquidation
In principle losses from participations cannot be taken into account by theparent company. An exception is those losses resulting from liquidation.
The liquidated subsidiary cannot be compensated for these losses in thefuture. For this reason these losses may be taken into account by theparent company, under certain conditions, in the year in which theliquidation of the subsidiary is completed. The loss resulting fromliquidation is the difference between the liquidation payments and the sumpaid to acquire the participation (the 'sacrificed amount'). Special rulesapply if a tax deduction has been claimed for this participation (see
3.3.3.).
There are additional requirements for taking account of the lossesresulting from the liquidation of foreign participations. One requirementis that the holding must be at least 25%, and that it must have been heldduring the five years preceding the discontinuation of the subsidiary'sbusiness, the year of discontinuation itself, and during subsequent yearsin which liquidation payments are received. In addition no loss resultingfrom liquidation can be taken into account if the participation wasobtained from a foreign associated company when the operations concernedare discontinued within three years.
3.3.7. Directive on parent companies and subsidiaries
In 1992 Dutch legislation was amended in line with the EU directive onparent companies and subsidiaries. The relevant Act has a retroactiveeffect from 1 January 1992. The participation exemption has been extendedin several respects. For example an investment in a company established inanother EU member state can be regarded as a participation covered by theparticipation exemption. For this purpose a shareholding of at least 25% isrequired. The possession of at least 25% of the voting rights in a companycan also be regarded as a participation under certain conditions, even ifthe shareholding is less than 5%. Under this Act dividend tax is not leviedon dividend paid to a company established in another member state when thecompany has an interest of at least 25% in the company paying the dividend.
This act was further amended in 1994 in order to give the exemption ofdividend tax a wider application than the EU directive. If certainconditions are met then the exemption now becomes applicable when theshareholder has an interest of at least 10% in the company's capital, orholds at least 10% of the voting shares.
3.4. Fiscal unity; consolidation for tax purposes
Under certain conditions a parent company may form a fiscal unity with oneor more subsidiaries. For corporation tax purposes this means that thesubsidiaries are deemed to have been absorbed by the parent company. Themain advantages of fiscal unity are that the losses of one company can beset off against profits from another company, and that fixed assets can betransferred at book value from one company to another.
This type of tax consolidation is possible only between a parent companyand its wholly owned subsidiaries (in practice 99% is sufficient) when allthe companies involved in the consolidation are established in the
Netherlands. Other conditions are that the parent company and thesubsidiaries have the same financial year, and are subject to the sametaxes. A request to form a fiscal unity must be submitted to the Inspectoron behalf of all the companies involved. The standard conditions drawn upby the Minister of Finance must be met. These conditions cover a largenumber of technical aspects involved in consolidation.
The fiscal unity can be terminated upon request, or will be terminatedautomatically if any of the conditions are not met.
Since January 1997 new regulations apply to leveraged acquisitions, in casea leveraged Dutch acquisition vehicle is used to acquire a Dutch operatingcompany. The aim of these regulations is to prevent the acquisition vehicleto form a fiscal unity with the target company in order to offset itsinterest expenses against the profits of the operating (target) company. Inprinciple, following to the new fiscal unity rules these (interest)expenses are disallowed (for a period of eight years) to be offset againstthe profits of the target company.
3.5. Investment institutions
3.5.1. General
Subject to certain conditions Dutch-based public companies, privatecompanies and mutual funds may apply for recognition as investmentinstitutions for taxation purposes. An investment institution can requestto pay corporation tax at 0%. The purpose of this system is to ensure thatpersons investing in an investment institution shall not receive a lessfavourable treatment than persons who invest directly. This would not bethe case without a special scheme.
As stated in section 3.3.2. an investment institution does not qualify forthe participation exemption, whether it be a parent company or asubsidiary.
3.5.2. Conditions
Several conditions must be met before an organisation may be regarded as afiscal investment institution. These conditions include the way in whichthe investments are financed, the distribution of the investment returns,and the ownership of shares in the investment institution. The mainconditions are:
. up to 60% of the book value of the immovable property may be financed with borrowed capital. For other investments the limit is 20% of the book value;
. the profits must be distributed within eight months of the close of the financial year;
. when the investment institution is listed on the Amsterdam Stock
Exchange, less than 45% of the shares may be held by a corporation liable to corporation tax or several associated corporations (parent, subsidiary, or sister corporations with interests of a third or more in each Mother), unless the corporation is another listed investment institution;
. when the investment institution is not listed on the Amsterdam Stock
Exchange then at least 75% of the shares must be owned by individuals, corporations not liable to profits tax, or listed investment institutions which meet the above condition;
. less than 25% of the shares in the investment institution may be held indirectly by Dutch shareholders via foreign-based corporations;
. less than 25% of the shares in the investment institution may be held directly by a single foreign shareholder.
3.5.3. Reserves
Institutions are allowed to form two special fiscal reserves, thereinvestment reserve and the rounding-off reserve. The reinvestment reserveis formed by non-distribution of capital gains. The level of the annualcontribution to the reserve and its absolute size are both subject torestrictions. If, when establishing the amount of the profit to bedistributed, an amount remains due to sums being rounded off then thisamount may be added to the rounding-off reserve. The rounding-off reservemay not exceed 1% of the paid-up capital.
3.5.4. Allowance for foreign withholding tax
Under Dutch law and Dutch tax conventions withholding tax levied abroad maygenerally be set off against income or corporation tax payable by thetaxpayer in the Netherlands. As an investment institution is liable forcorporation tax at a rate of 0% it cannot make use of this facility. Toensure that persons who invest directly and persons who invest via aninvestment institute receive equal tax treatment, special arrangements aremade for investment institutions allowing the former to offset foreignwithholding taxes against income from securities and claims. Under thesearrangements an investment institution may obtain an allowance from the
Dutch tax authorities which amounts to no more than the withholding taxlevied abroad. If not all the shareholders in the investment institutionare resident or established in the Netherlands then the allowance iscalculated according to the number of shareholders resident or establishedin the Netherlands.
4. Прибутковий податок (Income Tax)
4.1 Taxpayers: residents and non-residents
Under the present Income Tax Act residents are liable for income tax ontheir world-wide income. Non-residents are taxed only on the income from alimited number of sources in the Netherlands. The Netherlands has concludeda large number of double taxation conventions to prevent the doubletaxation of world-wide income. If no convention is applicable, tax reliefmay be obtained on the basis of the Unilateral Decree for the prevention ofdouble taxation. (If certain requirements are met, foreign employeestemporarily posted to the Netherlands may request the application of aspecial tax arrangement known as the 35% rule, see 4.4.)
The legal definition stipulates that a taxpayer's place of residence isdetermined 'according to circumstances'. Several factors are of relevancewhen deciding whether the taxpayer maintains personal and economic tieswith the Netherlands. These include a family home, employment, orregistration in a municipal register. Nationality is not a determiningfactor, but it may be relevant in some cases. The law also provides for anumber of special cases. The crews of ships and aircraft with a homeharbour or airport in the Netherlands are deemed to be residents of the
Netherlands unless they have established residence abroad. Dutch diplomatsand other civil servants serving abroad remain residents of the
Netherlands. Foreign diplomats and the staff of certain internationalinstitutions are exempt from Dutch income tax.
If both spouses are resident in the Netherlands then married couples aretaxed individually on their personal income (business profits, salary,pension, etc.) less certain deductions, allowances and premiums. Investmentincome and non-source related deductions such as certain personalobligations and exceptional expenses are attributed to the spouse with thehighest personal income. If only one of the spouses is resident in the
Netherlands then their incomes are regarded as completely separate.
4.2 Taxbase and rates
4.2.1. Taxable income of residents
The tax year for persons is the calendar year. Residents are taxed on theirtotal gross income, which is the income from all domestic and foreignsources less the associated expenses. This income may be further reduced bycertain deductions and allowances not directly related to a specific sourceof income. The balance is the total net income. This total net income isfurther reduced by the deduction of losses and a personal allowance beforetax is levied. The result is the taxable amount, which is calculated asshown below. The various terms are explained in sections 4.2.3 and 4.2.4.
| GROSS INCOME (4.2.3): | | |
| profits from business or | |............ |
| professional activities | | |
| income from a substantial holding | |............ |
| net income from employment and | |............ |
| services rendered outside employment | | |
| net income from capital | |............ |
| net income in the form of periodic | |............ |
| payments | | |
| | |______ |
| | | + |
| TOTAL GROSS INCOME | (A) |............ |
| MINUS: DEDUCTIONS (4.2.4): | |............ |
| contribution to the old-age reserve | |............ |
| the self-employed persons 'deduction | |............ |
| business-assistance deduction | |............ |
| personal obligations (special | |............ |
| expenses) | | |
| exceptional expenses | |............ |
| tax deductible donations | |............ |
| | |______ |
| | | + |
| | (B) |............ |
| TOTAL NET INCOME | (A-B) | |
| minus: deductible losses | (C) | |
| TAXABLE INCOME | (A-B-C) | |
| minus: personal allowances | (D) | |
| TAXABLE AMOUNT | (A-B-C-D) | |
4.2.2. Tax rates and personal allowances
Income tax is levied on the taxable amount calculated as shown above. Thisis a progressive tax. The rates are:
| 33.90 | on the first | NLG 15,255 |
| 37.95% | on the next | NLG 33,739 |
| 50% | on the next | NLG 58,762 |
| 60% | on the remainder | |
The 33.90% rate is comprised of 4.5% tax and 29.40% social securitycontributions, the second rate is comprised of 8.55% tax and 29.40% socialsecurity contributions, whilst the 50% and 60% rates consist solely of tax.
A rate of 16% (first rate) and 20.05% (second rate) is applicable topersons aged 65 and over, as they are no longer liable for several socialsecurity contributions.
The above diagram shows that a personal allowance is deducted from thetotal net income before tax is levied. The level of this allowance isdetermined by the tax class to which the person is assigned. This leveldepends on the individual circumstances. The basic personal allowance is
NLG 8,950. For married or single persons with a spouse or partner withoutan income the personal allowance is NLG 17,473. For single parents withchildren living with them the allowance is NLG 15,768. For single parentsin paid employment this amount is increased by a maximum of NLG 6,821. Forpersons older than 65 years the personal allowance is increased by NLG 520to a maximum of NLG 5,678.
4.2.3. Total gross income
The Income Tax Act distinguishes five different sources of income, whichtogether comprise the total gross income. The five categories are:
| I. | profits from business or professional activities; |
| II. | income from a substantial holding; |
| III. | Net income from employment and from services rendered outside |
| | Employment; |
| IV. | net income from capital; |
| V. | income in the form of periodic payments. |
I. Profits from business or professional activities
For income tax purposes the definition of 'profits' is the same as that forthe assessment of the corporation tax which is to be levied, except that inassessing profits for corporation tax purposes a number of special factors,notably those which reflect the difference between liability to pay incometax and liability to pay corporation tax, are taken into consideration.
This means that for income tax purposes only sections 3.2.1, 3.2.3 to 3.2.6
(in part), 3.2.7, 3.2.8 and 3.2.11 are applicable.
The following additional rules apply to persons conducting a business whoare liable for income tax.
Accelerated depreciation when starting a business
From 1 January 1996 an accelerated depreciation of fixed assets ispermitted, subject to certain restrictions, for persons who have recentlystarted a business.
Exemption of profits derived from the liquidation of a business
Only part of the profits derived from the liquidation of a business aretaxable. The exemption varies with the age of the person who conducted thebusiness. The maximum exemption is NLG 45,000.
Transfer of a business to a relative
If a person conducting a business transfers the business or part thereof tohis or her spouse or partner or children, the transfer may, on request, beexempted from income tax. The successor then takes the place of the personconducting the business. A similar smooth transfer also takes placefollowing the death of the person conducting the business and thedissolution of the community of property.
Discontinuation of a business liable for income tax when it is to becontinued as business liable for corporation tax
If a person conducting a business which is liable for income tax wishes tocontinue the business activities in the statutory form of company which issubject to corporation tax, e.g. a private company, then he or she mayrequest an exemption from income tax when this conversion is made. Thecompany then takes the place of the person conducting the business. The
Ministry of Finance has published standard conditions for such situations.
Deduction for assistance in the business
If the spouse or partner of a taxpayer conducting a business works for thatbusiness for a certain number of hours per year then the taxpayer may makea deduction for that assistance from his or her gross income. The deductionis made from the profits at a rate which is dependent on the number ofhours the spouse or partner works for the business. The rate increases to amaximum 4% when the spouse or partner works for 1,750 hours or more in thebusiness in that financial year. At the request of both the taxpayer andhis or her spouse the deduction for assistance in the business may bewaived. The spouse is then assessed separately on the basis of the wage orsalary received from the business.
Old-age reserve for the self-employed
Resident taxpayers who derive income from the profits of a business or fromself-employment are allowed to offset a certain percentage of their grossincome towards the provision of a retirement pension. The annualcontribution to this reserve may be no more than NLG 21,367 and at no timemay the reserve exceed the book value of the business's assets. If thisreserve is not converted into an annuity when the business is terminatedthen tax will be levied over this amount at a rate of 45%.
Deduction for self-employed persons
Resident self-employed taxpayers between the ages of 18 and 65 who devoteat least 1,225 hours to running a business are allowed to offset adeduction for self-employed persons against their gross income. The amountof this deduction is in inverse proportion to the size of the company'sprofits. A fixed deduction of NLG 13,110 is allowed on profits of less than
NLG 96,170. The allowance gradually declines to NLG 8,730 on profits of NLG
108,395 or more. Persons who have recently started a business may deduct anadditional sum of NLG 3,840 for the first three years.
II Income from a substantial holding
Income, including capital gains or losses, from a substantial holding in acorporation is subject to income tax and is taxed at a rate of 25% insofaras this income exceeds the first two tax brackets.
A taxpayer is regarded as having a substantial holding in a corporation ifhe or she, either alone or with his or her spouse, holds directly orindirectly 5% of the issued capital. If the corporation has issueddifferent classes of shares, a substantial holding also exists if thetaxpayer, either alone or with his or her spouse, holds more than 5% of theissued capital of a particular class of shares. If the taxpayer holds asubstantial interest in a corporation, jouissance rights and debt-claimsissued by that corporation and held directly or indirectly by the taxpayer,either alone or with his or her spouse, are regarded as forming part of thesubstantial holding.
Interest derived from debt-claims forming part of a substantial holding istaxed at the normal rate of income tax. Dividends and capital gains derivedfrom the alienation of shares or from the redemption of debt-claims aretaxed at a proportional rate of 25% in the income tax, insofar as thisincome exceeds the first two tax brackets. In case of a capital loss 25% ofthat loss may be offset against the tax which would otherwise be due. Forthis purpose an arrangement similar to that for the offsetting of losses isapplicable (section 3.2.11). In case of emigration of the taxpayer thesubstantial holding is deemed to be alienated. However, the tax due willnot be collected as long as the substantial holding is not disposed of.
After the elapse of 10 years the remainder of the tax levied because of thedeemed alienation at the time of emigration, is pardonned.
For non-residents the income from the substantial holding is only subjectto tax in case of a substantial holding in a corporation wich is a residentin the Netherlands. With respect to non-residents a corporation is alsodeemed to be a resident of the Netherlands if it was resident in the
Netherlands for at least five years during the last ten years. With respectto non-residents the substantial holding is deemed to have been alienatedin case of the transfer of the place of effective management of thecorporation from the Netherlands to elsewhere.
III. Net income from employment and services rendered outside employment
This income is comprised of all income other than business income that isreceived in cash or in kind from present and former employment, togetherwith income derived from services rendered outside employment.
Income from present employment includes salaries, payments, gratuities,tips and certain periodic payments received under social securitylegislation (in cash), and the free use of a private car and free housingpaid for by the employer (in kind). Income from past employment includespensions, and invalidity, disablement and unemployment benefits.
Salaries, wages and certain periodic payments received under socialsecurity legislation are subject to the salaries tax. This tax is withheldby the employer, and is essentially an advance levy on the person's finalincome tax assessment (see 4.5.1).
Income from activities and services which does not qualify as income frombusiness or employment is considered to be income from services renderedoutside employment. To be regarded as income there must be a reasonableexpectation that these activities will yield income. Examples are theprovision of boarding for lodgers, and fees for services and copyrights.
In principle expenses incurred in connection with employment and theprovision of services are deductible from the income derived from theseactivities. The deduction is equal to the actual expenses lessreimbursements or, subject to upper and lower limits, 12% of the grosssalary, whichever is larger. A fixed sum is tax-deductible for travelbetween home and work.
IV. Net income from capital
Net income from capital is comprised of all income from movable andimmovable property and rights not related to goods. Only the yield fromproperty and rights is taxable; the increase in the value of the assets isexempted. There is no capital gains tax in the Netherlands.
A special provision is applicable to owner-occupied property. The propertyis taxed at an imputed rental value, which represents the balance of therevenue and expenses connected with the use of a dwelling. This rentalvalue, which is a positive amount, is assessed on statutory tables. Asnormal expenses are included in the imputed rental value, no expenses otherthan (mortgage) interest and ground rent may be deducted.
Interest and dividends received by private investors from designated creditor investment institutions which mainly participate in environmentalprojects are exempt from income tax.
Income from stocks and shares includes cash dividends, stock dividends andbonuses. The final payment to the shareholder following the liquidation ofa corporation is regarded as a dividend if it exceeds the average amountpaid on the shares concerned.
Notional dividends from foreign investment corporations and funds areincome from assets, and are taxed accordingly. In principle the income fromthe latter is set at 6% of the market value of the shares.
A maximum allowance of NLG 1,000 is granted insofar as dividends subject to
Dutch dividends tax exceed related expenses (including interest expenses).
Under certain conditions the amount of the dividend allowance can beraised:for dividends received from specific private participation companies, theallowance is raised by a maximum of NLG 1,000;for dividends received in connection with employee savings and profit -sharing schemes, the allowance is raised by a maximum of NLG 1,000;
For dividends received from specific participation companies which mainlyparticipate in starting entrepeneurs (both natural persons and corporatebodies), the allowance is raised by a maximum of NLG 5,000. However,insofar as the corresponding interest allowance in connection with startingentrepeneurs is utilized, this amount of NLG 5,000 is reduced.
For married taxpayers the above mentioned amounts of the dividend allowanceare doubled. The dividend allowance is not applicable with respect todividends from a substantial holding in a corporation.
Interest is more than just the interest received from a debtor or bank.
There are special provisions for taxation of the increase from the lowerissue price to par value of zero bonds and deep discount bonds, and thenotional interest on the bare ownership of rights and claims of which thetemporary usufruct is divided.
A maximum allowance of NLG 1,000 is granted insofar as any interestreceived exceeds the interest paid in connection with sources of income andpersonal obligations. This is exclusive of the interest paid on a mortgage,which is related to the purchase or renovation of owner-occupied property.
Under certain conditions the amount of the interest allowance can beraised:for interest received in connection with employee savings and profit -sharing schemes, the allowance is raised by a maximum of NLG 1,000;for interest received in connection with a subordinated loan to a startingentrepeneur of at least NLG 5,000, or interest originating from specificparticipation companies wich mainly participate in starting entrepeneurs
(both natural persons and corporate bodies), the allowance is raised by amaximum of NLG 5,000.
For married taxpayers the above mentioned amounts of the interest allowanceare doubled. Furthermore, the taxpayer is entitled to an additionalinterest allowance when his children under the age of 18 receive interest,up to a maximum of NLG 500 per child.
The interest component of a capital payment from a life insurance policy
(and the investment income) is not taxed if the payment occurs because theperson insured dies before the age of 72. The beneficiary is generallyallowed the same exemption for payments upon the death of the insuredperson at or after the age of 72 if the premiums have been paid over aperiod of at least 15 years. Interest included in payments of up to NLG
62,000 on a fixed date is exempt from income tax if the annual premiums arepaid over a period of at least 15 years. This is also applicable tointerest included in life insurance payments of up to NLG 210,000 if theannual premiums are paid over a period of at least 20 years. Bothexemptions are subject to the condition that the highest annual premiumpaid for the insurance may not be more than ten times the lowest premium.
Income from capital includes income from life annuities and other periodicpayments resulting from either a lump-sum payment or the payment ofpremiums. These payments are liable to tax over the amount that thepayments and the payments received in the past exceed the total premiums orlump sum paid under the policy.
V. Net income in the form of periodic payments
There are two categories of periodic payments, those which are classed asincome from capital, and those which qualify as a separate source ofincome.
Periodic payments forming a separate source of income can be divided intodifferent categories. Examples are:payments from the state, such as certain public scholarships and governmentsubsidies;periodic payments under family law, such as maintenance payments, unlessreceived from relatives once or twice removed;other periodic payments, claimable in court, unless received from closerelatives, foster parents or members of the same household, such asmaintenance payments to a former partner.
4.2.4. Non-source-related deductions
In certain circumstances payments which are not related to the acquisitionof income may be deducted from the total gross income. These non-source -related expenses can be divided into three categories, which are personalobligations (special expenses), exceptional expenses and tax-deductibledonations.
I. Personal obligations
The most important expenses which may be regarded as personal obligationsare the following:premiums for several forms of life annuity payments, such as (temporary)disablement, old age and widows 'annuities up to NLG 6.179 or, in certaincircumstances, up to NLG 12,358 in the case of (married) couples. Ifcertain conditions are met then this amount can be increased to NLG 86,480,if the provisions for the old age pension are inadequate in relation tocurrent income.certain maintenance payments or lump-sum payments which replace these;interest on debts. Since 1997, the deduction of interest on debt isrestricted. Insofar interest paid is not connected with a source of income,a maximum amount of NLG 5,291 is deductible. For married taxpayers, thisamount is doubled. Certain exemptions are applicable.losses on specific loans. Under certain conditions a loss on a subordinatedloan granted to a starting entrepeneur can be deducted up to a maximum of
NLG 50,000.
II. Exceptional expenses
Resident taxpayers may deduct certain exceptional expenses from their totalgross income. There are a number of categories of exceptional expenses,each of which has its own specific non-deductible component based on thetaxpayers 'gross income. For married couples the non-deductible componentis calculated on the basis of their joint income.
The following categories can be distinguished:medical expenses and expenses related to disability and old age are tax -deductible when they exceed a certain percentage of the joint gross income,subject to specified upper and lower limits;expenses involved in the maintenance of children younger than 27 years ofage;expenses involved in the support of certain relatives;expenses which are made in connection with study or training for aprofession. Studies as a hobby do not qualify;expenses involved in child care, subject to certain conditions.
III. Tax-deductible donations
Donations to domestic religious, charitable, cultural and academicinstitutions or other bodies serving the public good in excess of 1% of thegross income may be deducted by resident taxpayers, with a lower limit of
NLG 120. Donations in excess of 10% of the gross income are not tax -deductible. Provided certain conditions are met this restriction does notapply to donations in the form of annuities. Contributions to foreigninstitutions of the kinds indicated above may also qualify, if theinstitutions have been designated as such by the Ministry of Finance.
4.3. Employee savings and profit-sharing schemes
Employers and employees may agree to set up employee savings schemes inwhich a certain maximum amount of the salary is exempt from tax and socialsecurity contributions. Employers in the private sector can set up profit -sharing schemes to provide a tax advantage for both employers andemployees.
4.3.1. Employee savings schemes
Since January 1994 new rules apply which exempt employers from paying taxand social security contributions on each employee's salary to a maximum of
NLG 2,894. This is applicable to salaries based on:premium savings schemes, orsalary savings schemes (including blocked profit-sharing schemes and shareoption schemes in the private sector).
In premium savings schemes the employer withholds an agreed amount from theemployee's net salary and deposits this in a premium savings account. Theemployer can then award the employee a savings premium of up to 100% of theamount withheld, to a maximum of NLG 1,158. Under certain conditions no taxand social security contributions need to be paid on this savings premium.
In salary savings schemes the employer withholds an agreed amount notexceeding NLG 1,736 of the employee's gross salary and deposits this in asavings account blocked for at least four years. When the sum is paid outit is not liable to tax or social security contributions.
However, the employer is required to pay 10% salaries tax on the exemptedamount.
4.3.2. Profit-sharing schemes
Employers in the private sector can give their employees a share in the
(fiscal or commercial) profits of the business or of one or more businessesassociated with the business. If the profit payment is blocked in a salarysavings account then the rules for salary savin
