Tax news

Corporate tax plan 2007

Corporate Tax Plan 2007: Working on profit




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.

Enterprises large and small will profit to the same extent

Corporation tax, which is generally paid by the somewhat larger enterprises, will go down even further: from the originally planned 29.1 per cent to 25.5 per cent. Separate rates will apply for smaller profits. Profits of up to € 25,000 will be taxed at a rate of 20 per cent (24.5 per cent), while for profits between € 25,000 and € 60,000 a rate of 23.5 per cent will apply.

Entrepreneurs who pay income tax will also see tax cuts. As from 1 January 2007, 10 per cent of their income from dividends and business profits will not be taxed: the SME profit exemption.

The legislative proposal also comprises measures that will have a favourable effect for innovative companies. A tax rate of 10 per cent is being proposed for income from innovations (“patent box”). Financing profits within a group will be subject to a separate rate of 5% (“interest box”).

Tax rules better attuned to reality in the business world

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.