NETHERLANDS Law and Practice Contributed by: Michael Molenaars, Jeroen Smits, Reinout de Boer and Rogier van der Struijk, Stibbe
intangible assets are R&D activities for which a so- called R&D certificate has been issued or that have been patented (or for which an application to this effect has been filed). Software can also qualify as an intangible asset. Wage withholding The second main tax incentive is the wage withhold - ing tax credit. This allows employers to reduce the amount of wage withholding tax that has to be remit - ted to the tax authorities, with a rate of 36% up to an amount of wage expenses in relation to R&D activities of EUR391,020, and 16% for the remainder in 2026. The wage withholding tax credit for start-up entre - preneurs in 2026 is, under certain conditions, 50% up to an amount of wage expenses in relation to R&D activities of EUR391,020. Tax Incentives for Sustainability In addition, special tax incentives apply to stimulate sustainability. For example, businesses that invest in energy-efficient assets, technologies or sustainable energy may benefit from the Energy Investment Allow - ance ( Energie Investeringsaftrek , or EIA). As for envi - ronmentally sustainable investments, the Environment Investment Allowance ( Milieu Investeringsaftrek , or MIA) and the Arbitrary Depreciation of Environmental Investments ( Willekeurige afschrijving milieubedrijfs - middelen , or VAMIL) may apply. 2.3 Special Incentives Shipping companies can apply for the so-called ton - nage tax regime, whereby the income from shipping activities is essentially determined on the basis of the tonnage of the respective vessel, which should result in a low effective corporate income tax rate. Qualify - ing income from shipping activities is, for example, income earned from the exploitation of the vessel in relation to the transportation of persons and goods within international traffic. 2.4 Loss Relief Before 1 January 2022, taxable losses could in princi - ple be carried back one year and carried forward six years. From 1 January 2022, tax loss carry-forwards are limited to 50% of the taxable income exceeding EUR1 million for that year. At the same time, the six- year tax loss carry-forward period has been abolished
so that tax losses can be carried forward indefinitely (but limited to 50% of the taxable income in a financial year). A waiver of debt may lead to taxable income at the level of a Dutch debtor. Dutch tax law provides for a debt waiver exemption if certain specific conditions are met. The concurrence between the above-men - tioned loss relief rules from 2022 and the so-called debt cancellation profit exemption ( kwijtschelding - swinstvrijstelling ) meant that tax would still have to be paid if the taxable income exceeded EUR1 million, even if this profit stemmed from a debt cancellation profit. This levy impeded the restructuring of compa - nies and therefore, from 1 January 2025 onwards, new legislation has entered into force to fix this unintended outcome for situations in which the taxpayer has past- year tax losses available that exceed EUR1 million. In such a case, the adverse effect for taxpayers should be removed by a full debt waiver exemption (ie, the requirement to first utilise past-year tax losses will be removed and only in-year losses should be taken into account). However, the available loss carry-forward will be reduced by the amount of the debt waiver exemption. If the tax losses available for carry-forward do not exceed EUR1 million, nothing will change for taxpayers. Specific anti-abuse rules may apply in some cases, due to which, losses cease to exist in the case of a substantial change of ultimate ownership of the shares in the company which suffered the tax losses. For financial years starting on or after 1 January 2019, the so-called holding and financing losses regime has been abolished. Such losses before that date are ring- fenced and can only be offset against holding and financing income. 2.5 Deduction of Interest As a starting point, arm’s length interest expenses should in principle be deductible for Dutch corporate income tax purposes. A remuneration only classifies as interest if the financial instrument is considered debt for tax law purposes. In addition, a number of interest deduction limitation rules have to be observed to determine whether interest expenses are deduct - ible in the case at hand. The most important rules are detailed below:
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