Reduction in corporate income tax rate

The low rate of corporate income tax in the Netherlands will be reduced in 2020. This will increase the difference between the high rate and the low rate. A relatively simple adjustment to your company structure will let you achieve a tax benefit of 8.5%. We recommend that you take a look at your company structure.

The corporate income tax rates will be reduced with effect from 2020. As it stands, profits up to € 200,000 are subject to 19% corporate income tax; anything above that amount is liable to 25% tax. In 2020, the lowest rate will be reduced from 19% to 16.5%, meaning that the difference between the low rate and the high rate will be as much as 8.5%.

Take a look at your company structure

Because of this difference, you might want to reconsider your organisation’s group structure. You could, for instance, be better off breaking up a corporate income tax group to allow you to spread profits and capitalise on the low tax rate. Another option would be to incorporate a new company and transfer some of the profit to it. If your group profit is € 400,000, spreading the profit would result in a tax benefit of as much as € 17,000.

Interested in finding out whether spreading your company’s profit would be a tax-efficient option for you? Please contact your Accon International tax adviser on international@acconavm.nl to learn more.