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Dutch corporate income tax and dividend payment

The Dutch corporate income tax rate is currently 25% over the first EUR 250.000. In 2014 you can have a discount on dividend withholding tax, can you or should you use this discount?

The 2014 discount on dividend withholding tax implies that the rate is 22% instead of 25%. Can you pay yourself a dividend and use the lower dividend withholding rate? That depends.

If you have on the credit side of your balance a pension obligation to yourself, then chance is likely you cannot pay yourself a dividend. The moment you pay yourself a dividend and due to this payment the executing of the pension in time can be in danger, the tax office will take the standpoint that you have waived the pension right and they will levy 72% tax over the rights you build up so far. This is a tricky situation and considered unfair.

If you have no pension obligation you need to check if you have met your salary obligation. Your salary cannot be lower than EUR 44.000, or not lower than the highest paid employee if that is higher than EUR 44.000. If you are the only person working in the company, or if you generate yourself 90% of the turnover of the company, then your salary cannot be lower than 70% of the profit excluding your own salary costs. If you have met this obligation, then you notice there is little room for a dividend payment.

We can therefore concluded that the dividend rate discount offered by the Government is a cheap bonus, it will hardly be used.

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