Taxes on profits will go further down as of 1 January 2007. This is of great importance for a healthy economy. With these new tax rates, the Netherlands will put itself in a favourable position internationally – both within the European Union and outside of it. Reduced taxes on profits will not only mean better development opportunities for Dutch businesses. Favourable rates will also attract companies from other countries.
The lower rates mean less tax revenues. The loss will be compensated in part by using different rules to define taxable profit. In determining the new tax bases, much care has been taken to ensure that profitable and innovative enterprises in particular will benefit from the reduced rates for corporation tax and income tax for self-employed persons.
For instance, it will be possible to carry losses forward 9 years, whereas this period is now unlimited. While losses can now be carried back for a period of 3 years, this will be restricted to 1 year. Enterprises that are liable to income tax will then still be able to make use of loss carry-back facilities of 3 years.
The depreciation allowance for immovable property will be reduced. The proposal would allow companies to write off 50 per cent of the market value of their business premises (value for the purposes of the Valuation of Immovable Property Act). Investment real estate may then be written off up to only 100 per cent of market value.
For more information from Expatax see our article: Improving the Dutch tax regime: changes in the corporate tax system 2007.