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The Netherlands reduces corporate tax for small businesses with new budget proposals.

The Dutch government finalized budget proposals for the 2021 fiscal year and the final version was enacted beginning December 2020. The budget for 2021 will continue with the top rate at 25%, however, the “basic rate” will be reduced to 15%. The threshold of the first bracket taxable amount for the basic rate is raised from EUR 200,000 to EUR 245,000.

Personal income tax rates

The income tax rate on incomes of up to EUR 68,507 will be lowered from 37.35% to 37.10% in 2021.

VAT

Beginning July 2021, VAT rules for distance of selling goods will be simplified in The Netherlands, upon implementation of the EU VAT e-commerce Directive.

Employer Considerations
Corporate taxpayers’ burden will be reduced with these lower tax rates, and with the increased threshold more taxpayers will be able to benefit from a lower tax rate. Individual taxpayers with a maximum income of EUR 68,507, will also have a reduced basic income tax rate from 37.35% to 37.10%.

The information shared in this article provides general information only, and not professional advice. If you need to consult on international expansion of your business or have specific questions about local policy compliance, contact us today to speak to one of our experts.

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