Corporate income tax rates
The corporate income tax rates will remain unchanged, being 19% for profits up to EUR 200,000 and 25.8% for profits exceeding EUR 200,000.
Earnings stripping measure for real estate investment entities
Where it was initially announced that the EUR 1 million threshold in the earnings stripping measure would no longer apply to real estate entities with real estate leased to third parties, after long political debate it was decided that the threshold remains intact for real estate entities. Furthermore, the current limit of 20% tax EBITDA will be increased to 24.5% tax EBITDA.
A motion was passed requesting the government to analyse whether, and if so, which anti-abuse measures other EU countries have implemented to combat tax schemes that exploit the earnings stripping measure (in particular to split investments to make use of the threshold multiple times), and to inform the House by 1 July 2025.
Changes to Dutch tax qualification of open CVs, open mutual funds, and foreign incorporated entities
As from 1 January 2025, the Dutch tax qualification of open CVs, open mutual funds, and foreign incorporated entities will change. These changes aim at reducing qualification conflicts resulting in hybrid situations. Entities that are now considered as tax transparent for Dutch tax purposes may become opaque and vice versa. The amendments affect the tax laws where the qualification of legal forms is relevant (e.g., personal income tax, corporate income tax, dividend withholding tax and conditional withholding tax). The proposed changes on tax qualifications should not impact Dutch real estate transfer tax.
Dutch open CV's
Under current law, a Dutch CV or comparable foreign partnership can be either transparent or non-transparent depending on whether the admission and replacement of limited partners requires the consent of all partners (limited and general). As of 2025, this so-called unanimous consent requirement will be abolished and both Dutch CVs as well as comparable foreign partnerships will in principle be classified as transparent for Dutch tax laws mentioned above (unless the Dutch CV will be qualified as a reverse hybrid).
Dutch open mutual funds
Dutch open mutual fund (‘open fonds voor gemene rekening’ or FGR) will be redefined for the Dutch tax laws mentioned above. Specifically, a Dutch mutual fund (as an opaque entity subject to Dutch corporate income tax) must qualify as an investment fund (‘beleggingsfonds’ or ‘fonds voor collectieve belegging in effecten’) as defined in article 1:1 of the Dutch Financial Supervision Act. Additionally, for the Dutch mutual fund to be considered an opaque corporate taxpayer, the units must be transferable in any way other than solely through the redemption by the fund itself. All other mutual funds will qualify as transparent. Following this amendment, it will in principle no longer be possible to use the mutual fund when investing private assets within the family circle.
Priority rule and FGRs
Under the new law’s priority rule, the FGR-qualification takes precedence over the legal form’s qualification (refer below). Therefore, if a foreign entity qualifies as both an FGR and a partnership, it will be treated as an FGR and may stay opaque for Dutch tax purposes from 1 January 2025 onwards. This means that if a partnership is transparent under the current law, the priority rule could have the effect that it becomes opaque as from 2025. We therefore recommend that entities potentially affected by these changes review their current structure and assess the impact of the new rules, especially whether the entity meets the FGR criteria and the priority rule’s implications. In this context we note that a transitional rule is introduced, in short entailing that a mutual fund is deemed to be a fund with redemption mechanism (“inkoopvariant”) with effect from 1 January 2025, if there was already an intention to restructure before that date and the fund meets the condition for being a redemption fund by 31 December 2025.
Foreign incorporated entities
Foreign entities are qualified as transparent or non-transparent based on an analogy with the tax treatment of a comparable Dutch legal form (legal form comparison method). For application of the method the changed qualification of Dutch open CVs and Dutch mutual funds is also of relevance. Additionally, two methods for the Dutch tax qualification of foreign legal entities in specific circumstances are introduced: the fixed method and the symmetrical method. These two methods only apply to foreign entities with a legal form that is not comparable to a Dutch legal form.
The fixed method will be used if such an entity is incorporated or set up under foreign law and is established in the Netherlands. In that situation, the entity is always considered a domestic taxpayer for Dutch corporate income tax purposes.
The symmetrical method provides a solution for situations in which such an entity is incorporated or set up under foreign law and is established abroad. This foreign entity is considered non-transparent for the Dutch tax laws mentioned above if that foreign entity is independently taxable under the tax laws of a state that treats that entity as a resident. Foreign entities without a comparable Dutch legal form that are not considered independently taxable under the symmetric method are considered transparent for the Dutch tax laws mentioned above. However, we note that this does not apply if the entity qualifies as a mutual fund, due to the mentioned priority rule.
Introduction of general anti-abuse rule ATAD1
At the request of the European Commission, the government proposes to legally enshrine the general anti-abuse rule (GAAR) from ATAD1. This does not envisage any material change from the current application of the fraus legis doctrine which is already part of Dutch tax law.
Taxation interest
The taxation interest for corporate income tax and conditional withholding tax (CWHT) is set at the ECB interest rate as per 31 October + 5.5%, with a minimum of 5.5%. With the rate of ECB interest rate of 3.4% (amended per 23October 2024), a taxation interest rate of 9% will apply for 2025, where the current rate of this taxation interest is set at 10%. For other taxes the taxation interest will be set at the ECB interest rate + 3%, with a minimum of 4.5%, resulting in a taxation interest rate of 6.5% as of 1 January 2025. These interest rates underscore the relevance of filing correct and complete tax returns and requests for (revision of) provisional assessments within the set time frame.
On 7 November 2024, the Court of Northern Netherlands ruled that the high interest rate of 8% charged on corporate income tax assessments since 1 January 2022, violates the principle of proportionality. If (provisional) corporate income tax assessments for fiscal years as from 2022 have been imposed that include this high rate of taxation interest, it should be considered filing an objection.
WOZ value/local property taxes
1 January 2025 marks the date for the WOZ-values and local property taxes for 2025. The according valuation date being 1 January 2024 marks the valuation date for WOZ-purposes and could reflect the significantly changed real estate market conditions caused by the rapidly increased interest rates. If tax depreciation was (nearly) limited by the WOZ-value for 2024, it might be especially worthwhile to thoroughly check the 2025 WOZ-assessment, keeping in mind the six-week legal objection term for lodging an appeal. The majority of the WOZ-assessments are issued within the first two months of the year.
Impairments
In case in a book year the market value of a real estate asset lies below the tax book value of that property in that year, the asset could be impaired for tax purposes. The market value is the fair market value plus transaction costs (including RETT) and should be supported by a valuation report. In practice 11-12% should be added to the fair market value for purposes of the impairment calculation, but the exact percentage is to be confirmed by an appraiser.
The tax impairment is included in calculating the taxable income for the year and can thus be offset against positive results in the same year. Tax losses resulting from the impairment can be carried back for one year and carried forward indefinitely, subject to the current loss compensation rules.
In case a property has been impaired, it is in principle valued at market value going forward. As a result, any increase in market value in future years would be regarded as taxable income. At the same time, a further decrease in market value in subsequent years would be regarded as a taxable loss. An uplift would be taxed to the extent there are not sufficient tax losses available for compensation (or in case the limitation of the loss compensation rules would apply). In case the market value would be equal or exceed the historical cost price minus (continued) depreciation, no further taxable uplift would arise.
Adjustments to the regime for fiscal investment institutions
As from 1 January 2025 fiscal investment institutions (‘fiscale beleggingsinstellingen’) are no longer allowed to invest directly in Dutch real estate, whereas indirect investments in Dutch real estate through a shareholding in a regularly taxed real estate entity remains possible. This measure was included in the 2024 Tax Plan and is already adopted. Two amendments are now included in the 2025 Tax Plan . The first amendment entails a change in the definition of “real estate” for the application of the fiscal investment institution regime. The second amendment seeks to target structures where fiscal investment institutions try to evade the effect of the disallowance of direct investments in Dutch real estate. As from 2025, it is no longer allowed for fiscal investment institutions to provide profit participating loans to regular taxed entities holding Dutch real estate, of which the remuneration (i.e., interest) is for 70% or more depending on income from that Dutch real estate.
