Netherlands: Additional amendments regarding corporate income tax rate, earnings stripping rules

One proposal would increase the top corporate income tax rate to 25.8% (from 25%).

One proposal would increase the top corporate income tax rate to 25.8% (from 25%).

Further amendments to the “2022 Tax Plan” were presented on 15 October 2021 to the lower house of Parliament.

Separate amendments were presented on 5 October 2021 (read TaxNewsFlash) following tax plan memoranda announced on Budget Day (read TaxNewsFlash).

Corporate income tax rate

One proposal would increase the top corporate income tax rate to 25.8% (from 25%), effective 1 January 2022. The lower income tax rate of 15% for profits up to €395,000 (as of 1 January 2022) would be maintained.

For 2022, this would result in the following:

For the part of the taxable amount


Up to and including €395,000


Greater than €395,000


The withholding tax rate on interest and royalties is linked to the top corporate income tax rate. The withholding tax rate, therefore, would also equal 25.8% (effective 1 January 2022).

Generic interest deduction limitation

Another proposal would tighten the generic interest deduction limitation (“earnings stripping measure”) for corporate income tax. This interest deduction limitation currently means that the interest, on balance, payable by a taxpayer can only be deducted up to 30% of the earnings before interest, taxes, depreciation, and amortization (EBITDA) for tax purposes, or up to €1 million if that is higher.

  • As proposed, the interest payable on balance would only be deductible up to 20% of the EBITDA for tax purposes.
  • The threshold of €1 million remains unchanged.
  • The measure would apply for the first time to financial years beginning on or after 1 January 2022.

KPMG observation

The explanatory memorandum to the proposed amendment acknowledges that reducing the deduction percentage to 20% of EBITDA for tax purposes may reinforce the already existing incentive to “split up” companies in order to make use of the €1 million threshold. In this regard, two possibilities are suggested to reduce this incentive: (1) reduce the €1 million threshold; and (2) include a specific and complex anti-abuse rule to combat fragmentation. Neither of these measures is expected to be introduced for the time being. The government is expected to examine whether there is reason to take legal measures to combat this undesirable fragmentation.

Other proposals

Other proposals would

  • Increase the maximum general tax credit by €14, effective 1 January 2022
  • Further reduce the landlord levy rate to 0.332% in 2022 (instead of the reduction to 0.485% as proposed on Budget Day)
  • Extend the deadline to 12 years for imposing additional tax assessments with regard to establishing a (review) decision concerning withholding tax
  • Introduce transitional rules if the private motor vehicle and motorcycle tax rate changes (to provide a “level playing field” for imports and the domestic market)

KPMG observation

The proposed measures concerning the corporate income tax rate and generic interest deduction limitation may significantly affect the business sector. Increasing the top corporate income tax rate would affect the timing of recognizing costs and income. The earnings stripping and withholding tax measures would prompt a reconsideration of the means of financing—especially in the case of non-resident investment funds that invest in Dutch property.

Read an October 2021 report prepared by the KPMG member firm in the Netherlands


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