Income Box 2: Shareholders as Foreign Taxpayers

The income included in Box 2 for foreign taxpayers includes the eligible Dutch income (calculated in the same way as for residents) from local companies, except in cases where the shareholding belongs to an enterprise’s equity.

Fiscal partners are subject to special requirements.

The income that must be declared in Box 2 includes the capital gains and/or dividends (main income items) obtained by a foreign taxpayer with substantial interests (>5% shareholding) in a resident company minus any losses related to the shareholding and monumental building tax deductions.

The deductions and personal allowances (“persoonsgebonden aftrek” in Dutch) do not apply for foreign taxpayers that only have income qualifying for Box 2.

The Dutch rollover/tax deferral for eligible legal mergers/demergers and share mergers is not applicable to foreign taxpayers in case the surviving/acquiring company is established outside of Holland. If a Dutch corporation changes its tax residence, then its relocation is considered as a (taxable) substantial shareholding transfer.

An entity established under foreign jurisdiction that has qualified as a resident corporation in Holland for a minimum period of five years but has relocated to another country for the purposes of taxation is considered a resident corporation in Holland for another ten years.

In case the total amount in Box 2 is a negative number, the income is considered as a substantial shareholding loss for foreign residents. Such losses are deductable and can be compensated (loss carryforward or carryback) following the same rules as for resident taxpayers. These losses can be aggregated with any qualifying losses from tax liabilities for resident taxpayers.

The taxable base is determined by special rules if the taxpayer emigrates or the Dutch corporation where he/she is a substantial shareholder transfers its tax seat to a different country.

Our Dutch specialists in taxation can provide consultancy on your tax position. We can prepare and submit your yearly income tax report and take care of other matters related to tax compliance. Please, contact us, if you need further information or tax-related assistance.

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Sources

• Belastingdienst - income tax for private individuals
• KVK - registering with the Business Register
• Belastingdienst - tax treaties and double taxation