Overview of Dutch Taxation and the 2025/2026 Tax Changes

This article explains the overall Dutch tax system and developments in the 2025 and 2026 tax changes, based on information available in January 2026.

The Netherlands is often regarded as an attractive location for European regional headquarters from a tax perspective. At the same time, recent developments—including a scaling-back of expatriate tax relief—require close attention from Japanese companies. This article is not intended as a detailed guide to tax-return procedures. Its purpose is to highlight how these developments affect management decisions concerning business planning, investment and people strategy at European subsidiaries.

Overview of Dutch taxation

Corporate income tax (Vennootschapsbelasting)

In 2025, Dutch corporate income tax is charged at 19% on taxable income up to €200,000 and 25.8% on the excess. Unlike Japan, the Netherlands does not levy separate local corporate or enterprise taxes.

The tax year is generally the calendar year. Returns are due within five months after the financial year-end, although extensions are available and widely used. Tax losses may be carried forward indefinitely, subject to a deduction limit: the first €1 million can be offset in full, while only 50% of taxable income above €1 million can be offset.

Table 1: Dutch corporate income tax at a glance (2025)

The participation exemption is a particularly important feature. Where the conditions are met, dividends and capital gains from subsidiaries in which at least 5% is held are exempt. This is one of the principal reasons the Netherlands is selected for European holding companies.

The Japan–Netherlands tax treaty and the EU Parent–Subsidiary Directive may also reduce the standard 15% withholding tax on dividends paid to a Japanese parent to 0% or 5%. This can support tax-efficient repatriation through a European subsidiary, Dutch regional headquarters and Japanese parent structure. These benefits are, however, subject to strict substance requirements and anti-abuse rules and must be assessed case by case.

The innovation box provides an effective 9% rate for income from qualifying assets such as patents and software. A government-issued R&D qualification is required, and advance consultation with the Dutch Tax Administration is common in practice.

Personal income tax (Inkomstenbelasting): the Box system

Dutch personal income is divided into three “Boxes”, each with its own tax treatment. Rates and thresholds change annually and should be confirmed on the Dutch Tax Administration (Belastingdienst) website.

Table 2: Personal income tax Boxes (2025)

Box 3 is a major difference from Japan. Rather than taxing actual investment profits, it applies deemed rates of return to asset balances and taxes the resulting deemed income at 36%. Expatriates should be aware that holding assets may therefore result in tax even where no actual profit has arisen.

Expatriate taxation and differences from Japan

The most significant regime for Japanese expatriates is the 30% ruling. It allows qualifying employees recruited from outside the Netherlands to receive up to 30% of employment remuneration free of wage tax, recognising additional costs associated with working abroad. Conditions include expertise scarce in the Dutch labour market and a minimum salary threshold—€46,660 in 2025. Many Japanese expatriates meet the conditions. Because it gives foreign workers preferential tax treatment, however, the regime remains politically debated; recent developments are discussed below.

Unlike Japan, the Netherlands does not generally have an equivalent statutory tax-free per diem for business travel. Travel expenses are ordinarily reimbursed at actual cost, and fixed allowances under the wage-tax framework raise complex issues.

Private use of a company car triggers an income addition known as bijtelling. In 2025, the addition for a zero-emission vehicle is 17% of list price up to €30,000 and 22% above that amount; conventional vehicles are generally subject to 22%. Company-car policies should account for this additional tax cost.

Employers may also use the Work-related Costs Scheme (Werkkostenregeling or WKR). In 2025, a tax-free budget equal to 2% of the first €400,000 of total payroll and 1.18% of the excess may be used for benefits such as staff trips, condolence or celebration payments and internal events. Some Japanese companies do not yet use this allowance fully.

A Dutch Tax Administration focused on dialogue

The Belastingdienst uses “Horizontal Monitoring”, a cooperative compliance approach aimed mainly at larger businesses. The authority and taxpayer share information to identify and resolve tax risks in advance. Advance Pricing Agreements and Advance Tax Rulings also make it possible to confirm transfer-pricing and international-transaction positions in a comparatively predictable environment.

The author has dealt directly with the Dutch Tax Administration in tax audits and in discussions about rescheduling overdue taxes during periods of business difficulty. A notable feature was the emphasis on dialogue. Materials explaining the commercial background to transactions and the basis for accounting treatment were submitted, and the issues were organised through two-way communication rather than unilateral findings. The corresponding expectation is that a company can explain the economic rationale and background of its transactions. This extends beyond tax compliance to a fundamental management question: whether head office understands the subsidiary’s activities and exercises effective governance.

Current developments: false self-employment and a change of government

False self-employment (Schijnzelfstandigheid)

Enforcement against “false self-employment” was strengthened from January 2025. This describes arrangements presented as freelance contracts even though the relationship is substantively employment, thereby avoiding social-security contributions and wage tax.

The tax authority assesses the actual relationship rather than the contract label. Relevant factors include direction and supervision, independence in performing the work and how remuneration is determined. If employment is found, wage tax and social-security contributions become payable. The rules generally apply to periods from 1 January 2025, although a different approach may be taken in abusive cases.

Japanese companies should review contracts and risk where work has been outsourced to a particular individual for a long period or where that individual works under the company’s effective direction and control.

Political change and tax uncertainty

The Dutch political environment remains fluid. The right-wing coalition formed in July 2024 was short-lived, and a more centrist government took office in early 2026 following the October 2025 general election. A change of government can alter the direction of tax and other policy, and the measures discussed here may be revisited as politics develops.

Principal 2025/2026 tax changes

Gradual scaling-back of the 30% ruling

Against domestic criticism that foreign workers receive excessive advantages, the 30% ruling is being reduced.

Tax legislation debated at the end of 2023 introduced a proposal for employees entering the regime from 2024: 30% relief for the first 20 months, 20% for the next 20 months and 10% for the final 20 months of the maximum five-year term. A remuneration cap—€246,000 in 2025—was also introduced. Following strong opposition from businesses and practitioners, the stepped reduction was withdrawn. The relief is currently scheduled to remain at 30% in 2025 and 2026 and fall to a flat 27% from 1 January 2027.

The effect on Japanese companies may be substantial. Many guarantee expatriates a net salary, so reduced relief directly increases employer costs. The issue is broader than expenses: if the Netherlands becomes less cost-competitive as a regional headquarters location, other countries may be reconsidered; and a changed cost balance between expatriates and local hires may affect workforce composition. Companies should therefore recalculate expatriate assignment costs and review gross-up calculations.

Other principal changes

The current two-tier corporate income tax rates of 19% and 25.8% remain in place, with no major change scheduled.

For Box 3, a move from deemed-return taxation to taxation based on actual returns is under discussion. The existing approach has been criticised for taxing taxpayers when no profit is earned, and Supreme Court decisions have also identified legal defects. The technical challenges are considerable, however, and the implementation date remains uncertain.

In environmental taxation, the company-car bijtelling rate for electric vehicles is gradually increasing. As electric vehicles become more widespread, the preferential margin is narrowing.

Please contact us if you would like to assess how tax changes may affect your business or people strategy.

This article is provided for general information only and does not constitute legal advice regarding any specific transaction or circumstance. Please consult an appropriate professional about individual matters. The information is based on conditions as of January 2026; consult the Dutch Tax Administration and other official sources for current information.

For advice on the effect of tax changes on business planning and people strategy, please contact us.