The new Germany-Netherlands tax treaty was signed on April 12, 2012 after many years of negotiations. The new treaty will replace the current treaty which dates from the year 1959. It is expected that the new treaty will take effect on January 1, 2014. When anyone already entitled to the 1959 tax treaty would have been entitled to greater treaty benefits under the ‘old’ treaty compared to the new, such a person may opt to apply the 1959 treaty for one more year starting from the date on which the new treaty enters into force.

Thanks to a number of economic, geographical, cultural and socials factors The Netherlands has traditionally stood out as an attractive country for setting up a new business location. The Dutch economy is internationally oriented. The major industries of The Netherlands consist of natural gas, high tech, electronics, life sciences and various service industries.

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As per 1 January 2007 the Dutch IP innovation box was introduced to stimulate R & D activities in The Netherlands. Recently the Dutch ministry of Finance has made some adjustments in the regime making it even more attractive.

In this article several essential points such as the IP included in the regime and the requirements to enjoy the attractive 5% tax rate of the Dutch IP tax regime will be discussed.

The tax advise services of Innovative Tax fit to the extensive experience and expertise of our tax advisors. We provide high-quality tax advise to corporate and individual clients, both very often with cross-border activities. On the basis of our many years experience we advise our clients practically and purposeful in (inter) national tax matters. Having tax control contributes to a better management of the business of our clients. If necessary we will advise to obtain certainty in advance from the tax authorities on tax matters. We are able to realize good results for our clients in case of longstanding complex negotiations with tax authorities.

If a company plans to extend its operations through an (international) acquisition or merger, numerous business, legal and tax issues are involved. How will the transaction be funded? Is it possible to structure the (international) acquisition or merger such that no tax will be due in the Netherlands or elsewhere? Will it be an asset deal or a share for share deal? How will you deal with current tax risks or claims from clients of the company which has been taken over? Is it necessary to conduct due diligence research preceding the merger or the acquisition? What options are available to offset the losses belonging to the company which has been taken over or merged after this transaction? 
 
We are experienced in dealing with the (international) tax consequences of such transactions. Innovative Tax is at your disposal to provide tax counseling and to add value to your deal. With regard to international tax issues involved in mergers & acquisitions, together with our network of reliable independent local tax advisors, we can meet your expectations.

Innovative companies in the Netherlands which invest for their own account and risk a great deal in research and development activities can claim tax benefits if they comply with the conditions. The benefits constitute an 80% discount on corporate income tax due on the net income from qualifying intellectual property which has contributed to the innovation box. This net income is effectively taxed at a rate of 5% Dutch corporate income tax, to the extent that the net income exceeds the total development costs of the qualifying assets.

A taxpayer can opt for the innovation box for any intangible asset that meets requirements. As such, it must have been developed by the taxpayer and be patented in the Netherlands or abroad. It is also expected that the patent will contribute at least 30% of the earnings generated from the intangible asset and lastly that the intangible asset was not developed prior to 1 January 2007. Breeders’ rights to newly developed plant varieties do qualify as a patent for the innovation box.

Besides patented intellectual property, certain designated and pre-approved assets such as software qualify for the innovation box too. The Dutch Ministry of Economic Affairs gives approval with a so-called R&D certificate. In this respect, it is relevant that the result of the research and development activities is a technical innovation at taxpayer level.

It is preferable to conclude an agreement with the Dutch tax authorities for a term of four years in which all the tax consequences of the innovation box are described in detail. Relevant in this agreement is, amongst others, which part of the total profit can be allocated to the innovation box and will therefore be taxed against the effective corporate income tax rate of 5%.

As an employer, the company may further be entitled to a substantial discount on the wage tax due on wages related to the employees who are actively involved in research and development. Lastly, there is a ‘research and development’ deduction in the (corporate) income tax which is based on the amount of investments and expenses related to the research and development activities.

We have broad experience in applying and implementing the innovation box in diverse branches such as the high tech industry, life sciences, seed refinement, oil and gas industry and mechanical engineering. In our experience, in branches with intense research and development efforts as in the life sciences, it is possible to allocate more than 50% of net taxable income to the innovation box and thus be taxed at an effective tax rate of 5%.

There may be many reasons for emigrating (seen from the perspective of the Netherlands) You may offered a new job in another country, the company you work for is moving to that country or you may just want to retire to somewhere with a warmer climate. Some popular emigration destinations are France, Germany, Spain, Switzerland and Sweden.

Certain employees who are posted to a foreign country or who are recruited from abroad by an employer in the Netherlands are eligible for a special wage tax ruling known as the 30% allowance regulation. Under this regulation, the employer is allowed to pay the employee up to 30% of his/her total remuneration income tax free as a reimbursement for “extraterritorial costs”, i.e. costs related to working cross border regardless of whether these costs are actually incurred. If the employee is granted a tax-free allowance of 30% of gross salary, this means that only 70% of gross salary is subject to Dutch income tax. This results in an effective tax rate of approximately 36%.