For centuries, the Netherlands has been a nation of traders. To ensure that this long held tradition endures, the Dutch government has created a competitive tax regime which stimulates entrepreneurship and foreign investment in the Netherlands. While corporate tax rates are similar to its European neighbours, there are numerous features which make it attractive for foreign companies to locate their operations in the Netherlands.

The principal taxes in the Netherlands are:

	corporate tax (34.5%)
	personal taxes on income (including wage withholding tax)
	value-added tax (0%, 6% or 19%)

In addition, individuals are liable to pay tax over net wealth, acquisitions obtained through inheritance and gifts. Duties or taxes are also payable on transfers of certain types of property and on contributions to share capital.

Taxation is a significant factor for international corporations in the choice of investment location and one the Dutch tax authorities are well aware of. In order to be as open and accessible as possible, the Netherlands occupies a competitive position internationally as far as providing certainty in advance regarding tax matters is concerned. One of the specific features of the Dutch tax system is the possibility to discuss the tax treatment of certain operations or transactions in advance. In most cases and upon request, the Ministry of Finance, or any of the inspectors, is willing to discuss the tax effect of any contemplated transaction. If this leads to a written advance tax ruling, the tax inspector usually abides by that opinion, provided that the relevant facts have been presented fairly.

This openness is also illustrated by the special tax regime for expatriates (30% ruling), which provides a substantial income tax exemption for a period up to 120 months. As reimbursement of the extra costs involved in living abroad, employers are allowed to grant expatriate managers a tax-free allowance of 30% of their total gross salary (taxable income + 30% allowance).

Another great advantage is that the Netherlands has a very extensive treaty network for the avoidance of double taxation compared to other countries. Dutch policy aims to remove obstacles to international flows of goods and capital as far as possible. To achieve this objective, withholding taxes on dividends, interest and royalties need to be as low as possible, preferably zero. In line with this policy, national Dutch legislation does not impose withholding taxes on ordinary interest and royalties. Furthermore, most tax treaties lower the withholding tax on outgoing dividends. The Netherlands has signed treaties for the avoidance of double taxation with respect to taxes on income and capital with more than 60 countries. In addition, dividends received by resident corporations that qualify for the “participation exemption" or "affiliation privileges" are exempt from corporate income tax. This exemption is one of the most important provisions of Dutch tax legislation.