What expenses are tax deductible for companies in the Netherlands?

april 9, 2026

For foreign companies operating in the Netherlands, understanding which costs reduce your taxable profit is one of the first practical questions to get right. Dutch corporate income tax—known as vennootschapsbelasting, or CIT—applies to the worldwide profits of Dutch resident companies, and the rules around what you can and cannot deduct directly affect your effective tax rate. The system is largely principle-based, which means context and documentation matter as much as the expense itself.

The general rule under Dutch tax law is straightforward: a cost is deductible if it is incurred in the course of running the business and has a genuine connection to generating taxable income. But within that principle, there are specific rules, caps, and exclusions that can catch foreign companies off guard—particularly around financing costs, intercompany transactions, and mixed-use expenses. Here is a clear breakdown of how it works in practice.

What does ’tax deductible’ mean for companies in the Netherlands?

A tax-deductible expense is a cost that a company can subtract from its gross revenue when calculating taxable profit for Dutch corporate income tax purposes. The lower the taxable profit, the lower the CIT liability. Under Dutch tax law, a cost is deductible if it is genuinely incurred for business purposes and has a direct connection to the company’s income-generating activities.

This principle sounds simple, but the Dutch tax authorities look at substance over form. It is not enough to record a cost in the books. The expense must reflect a real transaction, at a genuine price, for a real business purpose. For foreign-owned companies in particular, this means that intercompany charges, management fees, and financing arrangements all need to be structured and documented in a way that can withstand scrutiny from the Belastingdienst.

Dutch CIT applies at a rate of 19% on the first bracket of taxable profit and 25.8% above that threshold. Getting deductions right therefore has a direct and measurable impact on your tax position.

Which everyday business expenses are tax deductible in the Netherlands?

Most ordinary operating costs are deductible for Dutch corporate income tax purposes, provided they are incurred in the course of business. This includes office rent, utilities, professional service fees, marketing and advertising costs, travel expenses with a business purpose, software subscriptions, insurance premiums, and costs related to maintaining business relationships.

The key test is whether the expense serves the company’s business operations. Costs that are personal in nature, or that benefit shareholders rather than the business, are not deductible. Gifts and entertainment costs are subject to specific limitations—only a portion of these costs is deductible, and the rules distinguish between costs that benefit employees and those that benefit external parties.

For foreign-owned companies, management fees charged by a parent company or related entity also fall into this category, but they require additional justification. The Dutch tax authorities expect intercompany service charges to reflect market rates and to be supported by documentation showing what services were actually provided and how the fee was calculated.

Are salaries and employee costs deductible for Dutch companies?

Yes, salaries and employee-related costs are fully deductible for Dutch corporate income tax purposes. This includes gross salaries, employer social security contributions, pension contributions, and other employment-related benefits paid to staff employed in the Netherlands.

Dutch payroll carries significant employer costs beyond gross salary. Employer contributions to social insurance schemes—including WW (unemployment), WIA (disability), and ZVW (healthcare)—are all deductible as business expenses. Pension contributions made to a qualifying Dutch pension scheme are also deductible in the year they are paid.

One area to watch is the 30% ruling, which allows qualifying internationally recruited employees to receive up to 30% of their salary tax-free as a cost reimbursement. While this benefits the employee, it does not reduce the employer’s deductible salary costs—the full gross salary remains deductible regardless of whether the employee benefits from the ruling.

For companies employing staff across borders, it is worth confirming whether employment costs relate to activities performed in the Netherlands, as this affects both deductibility and payroll tax obligations.

What are the rules for deducting interest and financing costs?

Interest deductibility in the Netherlands is subject to specific restrictions, most notably the earnings stripping rule introduced under the EU Anti-Tax Avoidance Directive. Under this rule, net interest costs are only deductible up to 20% of EBITDA (earnings before interest, taxes, depreciation, and amortisation), with a minimum threshold of EUR 1 million. Interest above this cap is not deductible in the current year, though it can be carried forward.

This rule applies to both third-party and intercompany debt, which means that even legitimate financing arrangements with banks can be affected if the company carries significant leverage. For holding companies and finance vehicles within international structures, this is one of the most consequential rules to model before finalising a financing structure.

Intercompany loans and transfer pricing

When interest is paid on loans from related entities, the Dutch tax authorities apply additional scrutiny. The interest rate must reflect what independent parties would agree to under comparable circumstances—the arm’s length principle under Article 8b of the Corporate Income Tax Act. If the rate is too high relative to market conditions, the excess interest will be disallowed. Documentation supporting the rate is not optional; it is expected from the outset.

Anti-abuse rules

Beyond the earnings stripping cap, the Netherlands also has specific anti-abuse rules targeting interest on loans used to fund certain transactions, such as acquisitions of group companies or dividend distributions. These rules can deny deductibility entirely in specific circumstances, making early-stage structuring advice particularly relevant for acquisition vehicles and holding companies.

Are depreciation and amortisation costs tax deductible?

Yes, depreciation on tangible fixed assets and amortisation of qualifying intangible assets are tax deductible in the Netherlands. The deduction is spread over the useful life of the asset, and Dutch tax law sets specific rules on the minimum depreciation period for certain asset categories.

For buildings, the rules are more restrictive than many foreign companies expect. A building used in the business can only be depreciated down to its WOZ value (the Dutch municipal property valuation), not to zero. This is a notable difference from accounting depreciation under Dutch GAAP, where the book value may differ from the tax-deductible floor.

Goodwill acquired in a business combination can be amortised for tax purposes over a minimum of ten years. Internally developed intangibles follow different rules, and the deductibility of costs related to developing intellectual property depends on how those costs are classified and whether any IP regime applies.

For companies acquiring Dutch business units or entering through asset deals, understanding the depreciable base of acquired assets is directly relevant to the post-acquisition tax position.

What business expenses are not deductible under Dutch tax law?

Several categories of costs are specifically excluded from deductibility under Dutch corporate income tax rules, regardless of whether they appear as legitimate business expenses in the accounts. The most relevant for foreign-owned companies include fines and penalties imposed by Dutch or foreign authorities, bribes and illegal payments, and costs that primarily benefit shareholders rather than the business.

Mixed-use costs—such as company cars used for both business and personal purposes—are subject to partial disallowance rules. The non-business portion is not deductible, and Dutch rules prescribe how to calculate the split in certain cases.

Costs related to exempt income are also non-deductible. If a Dutch holding company receives dividends that qualify for the participation exemption, costs directly attributable to holding and managing those participations may be restricted. This is a structural issue for holding companies that also have operating activities, and it requires careful allocation between deductible and non-deductible cost pools.

Finally, excessive charges from related parties—whether for services, royalties, or financing—will be disallowed to the extent they exceed what an independent party would have paid. The arm’s length standard applies to costs as much as to income.

How does the participation exemption affect deductible costs?

The participation exemption (deelnemingsvrijstelling) exempts dividends and capital gains received from qualifying subsidiaries from Dutch corporate income tax. While this is a significant benefit for holding structures, it also has a direct effect on cost deductibility: expenses that are directly attributable to exempt participations are generally not deductible.

In practice, this means that a Dutch holding company cannot deduct financing costs, management costs, or other expenses to the extent those costs relate to income that is itself exempt from tax. The Dutch tax authorities expect companies to make a reasonable allocation between costs related to taxable activities and costs related to exempt participations.

For international groups using the Netherlands as a holding location, this allocation can be complex. A Dutch intermediate holding company may have both operating subsidiaries generating taxable income and passive holding interests generating exempt dividend income. The cost allocation between these two functions affects the company’s effective tax rate and needs to be documented consistently.

Where a participation does not qualify for the exemption—for example, because it fails the subject-to-tax test or the asset test—losses on that participation may become deductible, but the income also becomes taxable. The interaction between the exemption and deductibility is a core planning consideration for any group with a Dutch holding layer.

How should foreign companies track and document deductible expenses in the Netherlands?

Foreign companies operating in the Netherlands should maintain clear, contemporaneous records that link each significant cost to a business purpose and, where relevant, to the income it supports. Dutch tax law does not prescribe a single documentation format, but the Belastingdienst expects companies to be able to substantiate their deductions promptly—typically within a matter of weeks if questions arise during a tax review.

For intercompany transactions in particular, documentation should be in place before the transaction occurs, not assembled after the fact. This includes transfer pricing documentation for management fees, intercompany loans, and royalty arrangements, as well as service agreements that describe the nature and scope of what is being charged.

Practically speaking, good documentation for Dutch corporate income tax deductions includes the following:

Invoices and contracts that clearly describe the service or cost and link it to the Dutch entity’s business activities
Intercompany agreements for any charges from related parties, with pricing supported by a benchmarking analysis where relevant
Loan agreements for any intercompany financing, specifying interest rates, repayment terms, and the arm’s length basis for the rate
Cost allocation schedules where shared costs are split between the Dutch entity and other group companies
Depreciation schedules that reconcile accounting depreciation with the tax-deductible amounts under Dutch rules

For foreign companies that manage their own day-to-day bookkeeping, the annual accounts and tax return preparation stage is often where gaps in documentation become apparent. Working with an experienced firm that understands both Dutch compliance requirements and the realities of internationally owned structures makes a significant difference—not just in getting the return right, but in building a defensible position if the tax authorities ask questions.

If your company is operating in the Netherlands and you want to make sure your cost deductions are properly structured and documented, we provide Dutch tax compliance services designed specifically for foreign-owned companies. And if you are still in the process of setting up your Dutch entity, we are happy to walk you through the full picture—from structure to ongoing compliance.