A Dutch limited liability company (besloten vennootschap, ‘BV’ or naamloze vennootschap, ‘NV’) is subject to Dutch corporate income tax on its profits earned.
The corporate income tax rate in The Netherlands for the year 2018 is 20% for profits up to EUR 200,000 and 25% on the excess. As from 2019 until 2021 the corporate income tax rates will reduce to 16% for profits up to EUR 200,000 and 21% on the excess. Certain types of income are exempt from corporate income tax, including income from qualifying participations. This participation exemption generally applies to income (including dividends and capital gains) from shareholdings of at least 5% in an active or not-low taxed subsidiary. The Dutch corporate income tax acts contain various facilities to stimulate research and development activities, including a corporate income tax reduction for income from innovations (the Innovation Box).
Dutch limited liability companies, are obliged to file an annual corporate income tax (‘CIT’) return regardless of whether (taxable) activities are performed by such company. These resident Dutch limited liability companies have to report their worldwide income in this corporate income tax return. Non-resident companies are only obliged to file a corporate income tax return in case they have Dutch sourced income. Other resident entities, like foundations or associations, are only obliged to file a corporate income tax return under specific circumstances.
Based on the corporate income tax return filed, the Dutch Tax Authorities will assess the amount of corporate income tax due for the reporting period, first by a provisional assessment and then by a final assessment. In the latter situation, the Dutch Tax Authorities has ‘fully’ examined the return whereas the provisional is automatically issued.
A corporate income tax return should normally be filed within five months after the financial year has ended. The filing deadline of the annual corporate income tax return maybe extended when the taxpayer or its representative applies for an extension. Companies represented by a tax advisor may be included in the general extension program of its tax advisor. This general extension provides companies with an additional extension period of eleven months (on top of the standard period of extension of five months). The aforementioned implies that a Dutch corporate income tax return for a period ending 31 December 2018 must be filed ultimately before 1 May 2020.
When the deadline has been passed, the Dutch Tax Authorities starts by sending a reminder, and – in the case of no response – an urgent reminder will be sent with a new deadline to file the corporate income tax return. When a company then fails to timely file the corporate income tax return, the company will receive an ex officio assessment including a penalty for late filing amounting up to EUR 5,278. Another consequence of late filing is that the extension for the next corporate income tax return will be reduced.