The Netherlands. In the Heart of Western Europe

Transcription

1 Limburg Province The Netherlands In the Heart of Western Europe 1500 km 500 mln consumers 1000 km 220 mln consumers 500 km 160 mln consumers Limburg Province Blue Banana The map shows the economic activity in Europe. The light blue area is the so-called Blue Banana in which 75% of all economic activity within the European Union takes place. The Netherlands lies in the heart of this banana and is located very close to the main economic centers London, Amsterdam, Brussels, Paris and Frankfurt. In the core of the Blue Banana is the so-called Euro-Delta, stretching from the North Sea in the west, covering the Netherlands and Belgium and including North Rhein Westphalia in Germany. Limburg Province is located in the center of this economic area.

2 Contents Expand your business in Limburg, the Netherlands most European region Limburg Development and Investment Company Facts and figures about Limburg Province Where we are Social-economic outlook Wages and labour conditions Education Accessibility International highway connections Air transport Rail transport Inland shipping and container terminals Selection of logistics service providers Investment incentives Research & Development Incentives WBSO and RDA Environment: Energy Investment Allowance (EIA) Education, training and labour % Ruling for expats Taxes and tax benefits Corporate income tax Value Added Tax Innovation Box Tax benefits Investment costs Land and real estate Construction costs Foreign Companies in Limburg US companies Japanese companies Chinese, Taiwanese, Korean companies Editor Limburg Development and Investment Company Foreign Investment Department P.O. Box BH Maastricht, The Netherlands T +31 (0) Limburg Province, the Netherlands 2

3 Expand your business in Limburg, the Netherlands most European region Limburg, the most southern province of the Netherlands, is strategically situated in the heart of Western Europe. With 1.12 million inhabitants, Limburg accounts for 7% of total Dutch population. Major urban regions are Maastricht, the oldest city in the Netherlands, Heerlen, Venlo, Sittard-Geleen. Limburg borders Germany for a distance of 212 kilometres and Belgium for a distance of 140 kilometres. Limburg is strategically located between the main metropolitan areas of Europe: London; Randstad Holland with Amsterdam, Rotterdam, Le Hague, Utrecht; the Flemish Diamond with Brussels, Leuven, Antwerp, Ghent to the west, the German Rhine-Ruhr area with Düsseldorf, Cologne, Duisburg, Essen, Bochum, Dortmund and the Frankfurt Rhine Main area to the east, Luxembourg, Paris, Geneva and Milan to the south. When considered in relation to the socio-economic factors outlined in this brief description, this geographical situation promotes Limburg as the prime choice for any enterprise intending to start its new activities in a new and favourable location in the EU-market. Your guide and mentor is LIOF, the Limburg Development and Investment Company. We assist foreign investors firstly by supplying any detailed information required for your appraisal of the opportunities Limburg offers, and secondly by giving advice and support whenever requested in almost all aspects of your European business operations. In the past four decades more than 500 international companies choose Limburg as a base for their, often pan-european, operations. The growth of foreign-owned share in those investments has been of particular interest. We believe that the advantages of Limburg's geographical location and the skills of its labour force, combined with other strong location factors, produce valuable rewards for those who have the imagination to exploit the entrepreneurial opportunities offered today. This profile is merely meant to give an overall view of the opportunities Limburg has to offer. The information given has been kept within the scope of a first and general orientation. Details and upto-date facts concerning location factors and conditions in Limburg can be supplied on request. Maastricht, the Netherlands Edition 2014 Limburg Province, the Netherlands 3

4 1. Limburg Development and Investment Company LIOF is the regional development and investment company covering the province of Limburg, in the south eastern part of the Netherlands. LIOF was established in 1975 and headquartered in Maastricht. We are an independent authority concerned with the development of the Limburg economy and the promotion of its business climate. Our shareholders are the Ministry of Economic Affairs, the Provincial Government, several Limburg municipalities and the Chamber of Commerce. Our core activities are: acquisition of foreign investors and carry out investor development participation in innovative and potentially viable projects through venture capital; organizing and managing the development and restructuring of business parks; stimulating knowledge-driven and innovative projects by SMEs. Our services for foreign investors include: providing up-to-date facts and figures about the business climate; organising fact-finding and site selection tours; coordinating contacts with government bodies and tax authorities; giving support with investment plans, operational costs and cash flow calculations investor development: support the expansion or relocation of foreign companies already located in Limburg. Our extended network enables us to set up contacts for you with all kinds of representatives in the financial sector, professional services, scientific organisations and government bodies. You will find more information on We stay in close contact with the offices of the Netherlands Foreign Investment Agency, which are located all over the world ( LIOF: your partner when entering Europe! Global Competitiveness Index rankings and comparisons The Netherlands continues to progress in the rankings, moving up to 5th place this year. The improvement reflects a continued strengthening of its innovative capacity as well as the heightened efficiency and stability of its financial markets. Overall, Dutch businesses are highly sophisticated (4th) and innovative (9th), and the country is rapidly and aggressively harnessing new technologies for productivity improvements (9th). Its excellent educational system (ranked 5th for health and primary education and 6th for its higher education and training) and efficient markets especially its goods market (6th) are highly supportive of business activity. And although the country has registered fiscal deficits in recent years (5.0% of GDP in 2011), its macroeconomic environment is more stable than that of a number of other advanced economies. Last but not least, the quality of its infrastructure is among the best in the world, reflecting excellent facilities for maritime, air, and railroad transport, ranked 1st, 4th, and 9th, respectively. Source: World Economic Forum, Geneva, Switzerland 2012 Limburg Province, the Netherlands 4

5 2. Facts and figures about Limburg Province 2.1 Where we are Limburg is the southernmost province of the Netherlands and borders Germany to the east and Belgium to the west and south. From south to north the river Meuse flows through Limburg for 160 kilometres providing a direct link with main ports Rotterdam and Antwerp. Cologne Luxembourg The central location of Limburg in Western Europe is reflected by the short distances to the major European metropolitan areas. Table 1: Distances from Limburg to major European cities City Km s Miles City Km s Miles Amsterdam Berlin Rotterdam Munich Brussels Luxembourg Antwerp Paris Cologne London Düsseldorf Geneva Frankfurt Prague Limburg Province, the Netherlands 5

6 2.2 Social-economic outlook This paragraph highlights several social-economic indicators for Limburg: population, regional economy and income, labour market and employment. Table 2: Social-economic indicators for Limburg Indicator Limburg Netherlands Population ,120,015 16,826,225 Total labour force 508,000 7,894,000 Unemployment rate January % 8.6% GDP growth 2013* -1.0% -1.0% Average spendable household income 32,400 34,300 Source: CBS, CPB, *preliminary Population Limburg has more than 1 million inhabitants: 55% live in the southern part of the province, where several cities form a densely populated urban area. The population in the central and northern part is more scattered with 21% and 25% of the total population respectively. Table 3: Inhabitants major cities in Limburg Region City Inhabitants Limburg North Venlo 91,830 Venray 38,781 Central Weert 47,374 Roermond 55,094 South Maastricht 114,914 Sittard-Geleen 94,702 Heerlen 87,241 Kerkrade 47,229 Limburg 1,120,015 The Netherlands 16,826,225 Source: CBS The Limburg population has a multicultural composition: 45 different nationalities live in our province. 57,000 people or 5% are of foreign origin. European citizens make up the majority of foreigners in Limburg with people from neighbouring Germany and Belgium being the front runners. Other major foreign communities are Polish, Turks and Moroccan. The multicultural compilation of Limburg is of significant advantage for companies doing business in the global economy. Figure 1: Main nationalities in Limburg in 2013 of total foreign population of 57,200 (source: CBS) Limburg Province, the Netherlands 6

7 Regional economy and income The Limburg economy used to have an industrial profile: industrialization in the Netherlands started in the 19 th century in Maastricht. The end of the 20th century showed a rapid change towards a serviceoriented economy with logistics, commercial services and health care being the main drivers. However, Limburg s industry cluster is still an important sector of employment in the region. Figure 2: Employment structure Limburg and the Netherlands: jobs per sector in % of total economy, December 2012 ( source: CBS) Agriculture Industry & Energy Limburg 2,2 14,6 3,4 16,5 5,1 5,0 19,4 18,9 14,9 Construction Trade & Repair Catering Transport & Communication Netherlands 1,2 10,5 4,3 16,6 4,3 4,8 24,1 17,5 16,6 Commercial Services Healthcare Other non-commercial Services 0% 25% 50% 75% 100% Because of its strong export orientation, Limburg s economy is influenced by global trade and investment developments, and is severely hit by the world economic downturn since Table 4: Regional economic growth in Limburg in % (GDP) (source: CBS) Limburg Netherlands ,9 2, ,2 2, ,5 3, ,5 3, ,0 1, ,8-3, ,6 1, ,4 0, ,0-1, ,0-1,0 % Limburg Netherlands Limburg Province, the Netherlands 7

8 The spendable income per household in Limburg is slightly below the national average. Figure 3: Average spendable income per household in Limburg and the Netherlands (source: CBS) Netherlands Limburg Labour market and employment The labour force in Limburg is made up of more than 500,000 people and is well educated: the number of people with secondary education level is comparable to the national figure, and the number completing higher education is significant. Tables 5 to 7 highlight some labour statistics. The total labour force is defined as persons who work for at least 12 hours per week plus all those who are willing, available and actively seeking to find a job for at least 12 hours per week. The part of the total labour force that actually has a job of at least 12 hours per week is called the employed labour force. Table 5: Labour force by gender and education level in Limburg 2012 (abs. * 1.000) (source: CBS) Total Primary education Secondary education Higher education Unknown Men and women % % % 5 1% Men % % 81 29% 3 1% Women % % 64 28% 2 1% Table 6: Labour force by gender and age in Limburg in 2012 (age 15-65, * 1.000) (source: CBS) Total Men and women Men Women The difficult economic situation since 2008 raised unemployment levels in Limburg above Dutch average. Many jobs were lost in the relatively large industrial sector in Limburg. Table 7: Unemployment rate (%) in Limburg and the Netherlands (source: CBS) Limburg 6,4 6,5 5,5 4,5 3,8 4,8 5,4 5,4 6,4 8,3 Netherlands 7,4 7,4 6,3 5,7 4,6 5,9 6,1 5,1 5,5 8,3 Limburg Province, the Netherlands 8

9 % 9,0 8,0 7,4 Netherlands 8,3 7,0 6,0 6,4 6,1 5,0 4,6 5,4 Limburg 4,0 3,0 3, Wages and labour conditions Wages In a great number of Dutch industries wages are fixed by collective labour agreements that regulate working conditions and are applicable to a whole branch of industry. Collective wage agreements are usually agreed upon in negotiations between the employers associations and the unions and usually valid for one year. Membership of a trade union is not obligatory; less than 25% of all workers are member of a union. The base of the wage structure is the legal minimum wage for an employee aged 23 years and older. For workers aged years the minimum wage ranges from 30% to 85% of this amount. The statutory minimum wage is adjusted every 6 months to reflect general wage changes in the preceding 6 months. The law provides for a minimum annual holiday allowance of 8% paid in June. Table 8: Statutory minimum gross wages in the Netherlands in Euros (Ministry of Social Affairs ) Age % of minimum wage Month Week Day % 1.485,60 342,85 68, % 1.262,75 291,40 58, % 1.077,05 248,55 49, % 913,65 210,85 42, % 779,95 180,00 36, % 675,95 156,00 31, % 586,80 135,45 27, % 512,55 118,30 23, % 445,70 102,85 20,57 The employer's total labour costs comprise, in addition to the basic wage, social security premiums, additional pension premiums and fringe benefits. For social security contributions, paid leave, vacation allowance etc. approx. 30% must be added to the basic wage costs. Fringe benefits include medical expenses, cafeteria subsidies and travelling allowances. Since fringe benefits vary widely between employers it is not possible to indicate their likely level. The wage scales collectively agreed upon (called CAO-wages) usually apply to lower and medium level personnel only. Higher level employees and executives negotiate individual contracts with the employer. Limburg Province, the Netherlands 9

10 Labour conditions The annual negotiations on collective labour agreements cover most employment conditions, like working hours, bonuses, overtime, paid holidays, pension, profit sharing, redundancy notices etc. The agreements reached on those matters often vary between the various branches of industry. Working hours At present normal working time varies between 36 and 40 hours per week. According to the Working Hours Act and the Working Hours Decree ( ) the maximum working day is nine hours and the maximum working week is 45 hours. The maximum number of hours that may be worked within a period of 13 weeks is 520. The employer may occasionally allow overtime to a maximum of 11 hours per shift, 54 hours per week and 520 hours per 13-week period. In every 24-hour period employees must have a rest period of 11 hours. Shift premiums range from 12 to 37 per cent depending on whether 2, 3, 4 or 5 shifts are in operation. There is a rotation scheme for employees concerned. Public holidays are paid, varying from 4 to 7 days a year depending on whether they fall at a weekend or not. The legal minimum number of holidays per annum is 20 for a 5-day working week. However, the usual number of holidays in the Netherlands varies from 23 to 26 per annum. Works Council Companies that employ 35 workers or more are required by law to have Works Councils. Such councils are not directly involved in wage negotiations. They play an important role in dealing with the working conditions and social problems within a company. The Works Councils generally function in close collaboration with the company's management in the day-to-day operations. Private pension plans Under the Pension and Savings Fund Act the government supervises private pension schemes. The employee is free to choose his own pension plan, unless the company for which he works is covered by an industry-wide pension fund in which membership is obliged by the minister of Social Affairs and Employment. At present there are about 65 industry-wide pension funds where participation is compulsory. Pension rights are based on salary levels and years of service (max. 40 years). Most schemes supplement the state retirement pension (AOW) to 60-70% of the last 3 years' average earnings. Employers and employees pay the pension plan premiums. Generally, the employer's contribution amounts to about 6% of gross wages. Social security contributions All persons who work in the Netherlands and pay income tax are required by law to be insured under the national insurance schemes. The national insurance schemes provide for old age pensions, widows and orphan's pensions, child subsidies, disability benefits and insurance against special costs of long term medical care. The social security system provides two categories: national insurance programmes covering both employees and other individuals; employed persons insurance programmes for employees only. Trade unions The Netherlands have one of the best records in Europe and other western countries with regard to days lost through strikes, primarily because of the harmonious relationship between workers unions and employers organisations. Research by the International Labour Office in 2008 showed that the number of working days lost by strikes per 1,000 inhabitants in the Netherlands is one of the lowest in the world: 2,45 days lost. Compared with Germany 2 days; France 4; Ireland 4,5; USA 5,7; UK 10; Denmark 13; Belgium 34. Limburg Province, the Netherlands 10

11 2.4 Education Limburg has several universities and institutes for higher professional education as well as some international schools for children of expats. A unique feature in Limburg is the international scope of the education offered. Students from all over the world attend courses at Maastricht University, and at Fontys University of Applied Sciences in Venlo 50% of the students are German. Higher education Maastricht University ( Almost 16,000 students study at Maastricht University of which 7500 international students together representing about 70 different countries. Maastricht University is known for its innovative education system Problem-Based Learning (PBL). This education system challenges students to actively develop their talents and interests through working together with others. Maastricht University was the first in Europe to adopt this system. English has a place in nearly all educational programmes and most of its programmes are taught completely in English: arts and social sciences, economics and business administration, health, medicine and life sciences and law. Schools belonging to Maastricht University are Maastricht ICT Competence Centre, Maastricht Graduate School of Governance, School of Health Professions Education, University Maastricht Business School and University College Maastricht (offering complete courses in English to support young people who are living in the region). Maastricht School of Management (MSM) ( MBA and MSc full and part-time courses and a range of shorter Executive Programmes in English in Maastricht for up to 250 students annually from all over the world. Also offering these courses in partnership with colleges in many countries, with some 500 graduates each year, and carry out research projects in collaboration with many other institutions world-wide. Furthermore, MSM has one of the largest DBA programmes (4-year Doctorate of Business Administration) in the world. Hogeschool Zuyd in Heerlen, Sittard and Maastricht ( University of applied sciences offering 13,500 students (1900 international) students, programs in healthcare, engineering and technology, applied management, education, behaviour and society, economics, languages and communication. Part of Hogeschool Zuyd is Maastricht School of Translation and Interpreting (650 students). Fontys Hogeschool in Venlo ( University of applied sciences (1100 students) offering programs in mechanical, electrical, mechatronical engineering, software engineering, business management, international business economics. National Academy for Transport and Logistics ( Belonging to Fontys in Venlo with study programs in logistics and transport technology, logistics and economics, European course in Logistics Management (graduation specialization in logistics and transport technology). Approximately 400 students. RWTH in Aachen ( Rheinisch Westfälische Technische Hochschule in Aachen, Germany is one of the world's top five technical universities and is located only 20 km s from Heerlen. This technological powerhouse with more than 30,000 students (5600 international) produces 2300 graduate engineers annually. Main programs are mathematics, computer science and natural science, civil, mechanical, electrical and materials engineering, information technology, business administration and economics, medicine. TU Eindhoven ( Technical University Eindhoven, 50 km s west from Venlo, is a top technical university in the Netherlands and Europe with more than 7200 students (500 international), offering graduate programs in electrical and mechanical engineering, mathematics, computer science, applied physics, technology management and industrial design. Senior vocational education All major cities in Limburg have colleges for vocational education, the main being Leeuwenborgh Education, Arcus College and Gilde Education (approx. 30,000 students in total). Limburg Province, the Netherlands 11

12 Primary and secondary education Children of expatriates who are living in the region can attend international schools with lessons given in English or even in their native language: United World College Maastricht: preschool, primary and secondary education, English and support for mother tongue language programmes ( AFNORTH International School in Brunssum, primary and secondary school, English and German ( Porta Mosana College in Maastricht, English/Dutch bilingual stream, secondary school Charlemagne College in Landgraaf, English/Dutch bilingual stream, secondary school ( The Maastricht Japanese Supplementary School ( Chinese schools in Heerlen, Maastricht and Venlo, Saturday school classes Extra language support classes may be arranged for specific language groups, possibly in combination with local bilingual families Language courses There is a wide range of language courses available, both throughout the Province and in the adjoining province of Belgian Limburg, including Dutch as a foreign language. Although there are jobs available for non-dutch speakers in the area, even a fairly basic knowledge of Dutch can vastly improve the position of trailing spouses on the labour market, and help enormously with adjustment to life in the Netherlands. Limburg Province, the Netherlands 12

13 3. Accessibility Limburg is a crossroads of major European transport routes. Several international highways traverse Limburg as well as railway lines linking the western provinces of the Netherlands with Germany's Rhine-Ruhr industrial region and Central Europe. Via the river Meuse and the Juliana Canal inland shipping terminals are connected to main ports in Rotterdam and Antwerp. This excellent infrastructure and accessibility make Limburg the gateway to Europe. (Inter)national infrastructure Road Waterway Logistics hub Main train station Düsseldorf Born Cologne Bonn Limburg Province, the Netherlands 13

14 3.1 International highway connections Limburg province is an international hub for trans-european road traffic in north-south as well as east-west directions, the main highways being: E-25/A-2 from Rotterdam/Amsterdam to Eindhoven via Maastricht/Liege to Basle, Geneva and Genua. This is the arterial highway of Limburg; E-34/A-67 from Antwerp to Eindhoven via Venlo into the German Rhine-Ruhr area; E-31/A-73 from Rotterdam to Nijmegen via Venlo/Roermond to Maastricht/Liege and the German Rhine-Ruhr area; E-314/A-76 from Brussels-Leuven via Sittard-Geleen to Heerlen and Aachen/Cologne; E-313 from Antwerp to Maastricht/Liege. Because of this easy accessibility to the main West-European markets, Limburg hosts many 3PL s and logistics companies that operate European distribution centres from here. A great additional advantage of being at the border is the use of local feed-in networks of the nearby locations of integrator hubs such as DHL, TNT, FedEx and UPS. 3.2 Air transport Maastricht Aachen Airport ( is the international airport in Maastricht that in 2004 became the first fully privatized Dutch airport. MAA has the second longest runway (2500 meters) in the Netherlands after Schiphol Airport. MAA focuses on passenger and freight transport and the development and property management of Business Park MAA. In 2013 a total of 465,000 passengers used the airport and 79,000 tons of cargo was handled. In addition to Maastricht Aachen Airport, several international airports are located within acceptable travelling distance, giving access to almost all international destinations. Also three main express integrator hubs are located within one hour drive: TNT Liege, UPS Cologne and DHL Brussels. Table 9: Overview of international airports near Limburg Airports km s miles Maastricht Airport - - Liège Airport Brussels Airport Düsseldorf International Airport Cologne Bonn Airport Brussels South Charleroi Airport Amsterdam Schiphol Frankfurt Airport Rail transport Limburg has excellent rail connections for both freight and passengers. Maastricht is linked to the international high speed train networks of ICE, TGV, Eurostar and Thalys. Table 10: Average travel time from Maastricht to major European cities by high speed train. From Limburg to Hours From Limburg to Hours Amsterdam 2.30 Hamburg 6 Brussels 1.20 Berlin 6.15 Cologne 2.10 Munich 7 Düsseldorf 2.15 Paris 3 Frankfurt 3.30 London 4 Limburg Province, the Netherlands 14

15 International high-speed train connections from Maastricht 3.4 Inland shipping and container terminals Along the river Meuse Limburg offers extensive inland shipping facilities that improve the hinterland connections of the main European seaports of Rotterdam and Antwerp. Because of this excellent infrastructure and the strategic location close to the market, the inland terminals in Limburg act as a direct extended gateway of the deep-sea terminals. Intermodal Terminal in Wanssum near Venray ( The container terminal in Wanssum is located in the north of Limburg province directly at the river Meuse and near highway A73. Inland barges offer daily connections to Rotterdam, and weekly to Antwerp and Amsterdam. Trimodal Container Terminal Venlo ( TCT Venlo has on-site facilities for the efficient handling of both inland shipping and trains. Each day four shuttle trains connect Venlo with the container terminals in Rotterdam. Since 2010 Venlo has its own fully fledged inland barge terminal. Inland barges will provide a direct link between TCT Venlo and Rotterdam, and connect the terminal to Antwerp. Barge and Rail Terminal Born ( Barge and Rail Terminal Born is primarily a maritime terminal for deep sea and short sea containers. Three barges with capacities of 150 and 300 TEU sail continuously between Born and Rotterdam / Antwerp, transporting in access of 2000 TEU per week. The quay length of 340 meters enables handling of two vessels at a time. Next to the terminal > m 2 warehouse is available. 3.5 Selection of logistics service providers Limburg Province, the Netherlands 15

16 4. Investment incentives In general the national and European subsidy schemes of interest to foreign companies can be divided into three groups: research & development, environment, schooling & training and labour. 4.1 Research & Development Incentives: WBSO and RDA The purpose of the national incentive scheme WBSO is to promote corporate R&D work through a tax deduction of R&D wage costs. The mentioned amounts are valid for 2012 only. Contribution The R&D allowance takes the form of deductions of wage tax and social-insurance contributions. As a rule, the so-called R&D deduction will be 42% of the first 110,000 in R&D wage costs per calendar year, and 14% of the remaining R&D wage costs. The maximum allowance per calendar year is 14 million for each company (or corporate entity); The R&D allowance for start-ups (so-called techno starters) amounts to 60% of the first 110,000 of the wage bill for R&D per calendar year, and 18% of the remaining R&D wage bill. The maximum allowance per calendar year is 14 million for each company (or corporate entity). Self-employed entrepreneurs spending at least 500 hours on R&D within one calendar year, are eligible for an income tax deduction: Tax deduction for self-employed persons amounts to EUR 12,310 For a self-employed techno starter, the tax reduction is EUR 18,467 Conditions R&D work is defined as systematically organized activities, performed within the EU, related directly and exclusively to: technical scientific research the development of: o physical products and parts of physical products o physical production processes and parts of physical production processes o software and software components The R&D work definition excludes: feasibility studies software upgrading; modifying software for different hardware or software platforms development of services routine activities market research organizational or administrative work policy and strategy studies adaptation or deployment of purchased goods quality control and assurance adaptation or implementation of existing technology pilot plants on production scale with commercial value Who is the target group? Businesses with employees who perform R&D Non-commercial organizations with employees who conduct R&D on the instructions and at the behest of another business, an alliance of businesses, or a product or industrial board. The R&D allowance for non-commercial organizations is expected to be passed on to the customer (business) in the form of a reduction in the amounts invoiced Self-employed persons operating a company who are entitled to an income tax deduction for self-employment, provided they carry out research and development activities themselves for at least 500 hours per year. Information The facility can be requested only via an application form available from NL Agency. Applications can be submitted three times a year. The activities for which an application is submitted must be carried out in the period to which the application relates. Limburg Province, the Netherlands 16

17 RDA Deduction As of 1 January 2012, an R&D deduction ("RDA") can be applied by companies which derive income from qualifying R&D activities. The RDA is complementary to existing incentives to stimulate research & development activities. The RDA covers the missing part of the R&D expenditures, i.e. the remaining R&D expenses (not wage costs) and the R&D investments. The implementation of the RDA is in the hand of Agentschap NL, which determines the so-called R&D declaration. In the R&D declaration the amount of the R&D activities shall be included. A percentage of this amount is additionally deductible for tax purposes. The RDA is applicable to costs and/or expenses in respect of R&D activities that are performed after 31 December Agentschap NL determines the basis of the directly attributable R&D costs and fixed investments, and multiplies it by a certain percentage. The outcome is recorded in a so-called RDA declaration. For 2012 the rate is 40%. That means that 40% of the Agentschap NL determined base can be set off against the taxable profit. The net benefit is thus the product of the amount available on the RDA declaration and the marginal rate of the corporate income tax (e.g. effective net benefit is 10% (25% of 40%)). Example In 2012, Agentschap NL determines the RDA base on 10 million. The percentage in 2012 is 40%, so the RDA declaration states an RDA of 4 million. This latter amount can be deducted in the tax return and as such there may be a net benefit of 1 million (e.g. 25% of 4 million). The exact basis and the applicable percentage are specified in a Decree, called the RDA Decree. Except for rules regarding the basis and the percentage, the RDA Decree also provide for rules concerning the application and the issuance of the RDA declaration, guidelines for keeping records, any penalty provisions and rules regarding objections and appeals. With respect to the RDA declaration, it is noted that the definition is the same as for the WBSO. The RDA declaration can be requested at the same moment as the WBSO declaration. Further information is available on the website of NL Agency: Environment: Energy Investment Allowance (EIA) The Energy Investment Allowance (EIA) is a tax-relief program. Companies that invest in energysaving installations, or that make use of sustainable energy, may deduct a certain percentage of the invested sum from their taxable profits from the year in which the goods are purchased. Contribution: 44% of the relevant expenditures is deductible from the taxable earnings in the year in which the equipment is purchased The minimum amount of energy-saving investment is 2200 a year. This amount can consist of several individual investments, but each individual investment must exceed 450. No allowance is granted for investments exceeding 115,000,000 in a tax year (figures 2010). 4.3 Education, training and labour Education and employment incentive programs in the Netherlands consist, among others, of the following: Wage Costs Subsidies: special programs to increase job opportunities and work participation by offering financial benefits to employers Taxation of Expatriates: special tax regime for expatriates, the so-called 30%ruling. Wage cost subsidies The Dutch government has set up special programs in an effort to increase job opportunities and work participation by offering financial benefits to employers. The relevant legislative Act WVA (Wet vermindering afdracht loonbelasting en premie volksverzekeringen) contains various provisions, the most important one being WVAOW: education tax reduction. Limburg Province, the Netherlands 17

18 Contribution: In the Netherlands, employers withhold taxes on wages for all their employees. Every month, the total withhold amount is to be transferred to the Tax Department. The WVA reductions allow the employer to transfer less money to the government. The total sum of the various WVA reductions is subtracted from the total sum of withheld taxes. The WVAOW education tax reduction is 325 up to 3247 per employee per annum for a period of two to four years, depending on the qualification of the employee. The WVAOW applies to employees earning less than 23,507 per annum. The WVAOW education tax reduction is available when there are employees: who attend lower to intermediate vocational education; who attend a special program in higher vocational education (HBO) where students will interrupt their studies twice to work for a six-month period each time; who get paid by their employer to carry out research required before they will be awarded their degrees. Furthermore local authorities offer certain wage cost subsidies depending on the investment amount and the growth expectation of the operation. Most of them provide subsidies for the training and schooling of unemployed people % Ruling for expats Favourable tax regime for expatriates (30% ruling) The Netherlands has a special tax regime for expatriates, the so-called 30% ruling, which provides a substantial income-tax exemption (up to 30%) for a period of up to 96 months. This is viewed as a reimbursement of the extra costs involved in living abroad. In addition, the employer may reimburse certain costs tax free. This includes international school fees, relocation expenses and a moving allowance up to a certain limit. According to the rules, the employer may grant the employee a tax-free allowance up to a maximum of 30% of his remuneration. The State Secretary of Finance clarified the term remuneration as 'wage from current employment.' This means that incidental and flexible forms of income such as bonus payments and stock options are also included. Termination and pension payments, however, are excluded. In order to qualify for the 30% ruling, the following conditions must be met: The employer must make a reasonable case that the employee possesses specific expertise that is not available or scarce in the Dutch labour market; The employee must be recruited from abroad, from more than 150 km from the Dutch border; The employer must be a Dutch wage tax-withholding agent. If the employee has a Dutch resident employer (Dutch corporation or branch of a foreign corporation) this condition is usually met. If the employee has a foreign based employer which has no taxable presence in the Netherlands, it will be required that the employer has one or more employees working in the Netherlands, carries out payroll administration in the Netherlands, and has registered as a withholding tax agent with the tax inspector. In addition, the employer and employee have added specific wording in the employment contract, under which the 30% ruling, once granted, can actually be implemented (this also implicates that the employee is aware that the 30% ruling reduces his gross salary). The application for the 30% exemption should be filed within four months of the date of the employee's arrival in the Netherlands. If the application is not filed within four months, the 30% ruling becomes effective as of the first day of the month subsequent to the month in which the application has been filed. The request, jointly made by the employee and the domestic employer, must be filed with the tax authorities in Heerlen, Limburg province. LIOF can assist you with the process. Limburg Province, the Netherlands 18

19 5. Taxes and tax benefits Taxes in the Netherlands are levied primarily by the central government. The main aspects of Dutch taxation are: Renewed focus of legislator on attractiveness of the Netherlands; Statutory corporate income tax rate of 25%; Favourable participation exemption regime; No statutory withholding tax on interest and royalties; Dividend withholding tax lowered from 25% to 15%; No capital tax, no tax on share capital, facilitating take-overs and expansion; Extensive worldwide tax treaty network (approx. 92 treaties); Possibility to obtain (favourable) advance tax rulings from Dutch tax authorities; Favourable tax treatment for foreign employees (30% ruling for expats, see 4.4). 5.1 Corporate income tax In recent years a lot of OECD countries introduced cuts in their corporate income tax rates. In line with this trend, the Dutch corporate income tax rate was lowered as well. The tax rate is 20% on the first EUR of taxable income, and 25% on taxable profits in excess of EUR The rates in Europe in 2013 (source: KPMG): Country Tax rate Country Tax rate Ireland 12.5% Portugal 25.0% Sweden 22.0% Luxembourg 28.8% United Kingdom 23.0% Germany 29.55% Finland 24.5% Spain 30.0% Austria 25.0% Italy 31.4% Denmark 25.0% France 33.33% Netherlands 25.0% Belgium 33.99% Note: a low rate does not necessarily mean a low tax burden. The tax rate must be applied to the tax base in order to measure the effective tax burden. Furthermore, a cut in one tax often leads to an increase in another. Dutch corporate income tax is imposed on the worldwide income of a corporation resident in the Netherlands (resident taxpayers) or on the profits attributable to a Dutch permanent establishment of a foreign entity (non-resident taxpayers). In the case of a branch of a foreign entity, corporate income tax may be avoided if the activities in the Netherlands do not constitute a permanent establishment (i.e. a fixed place of operation through which the business of a foreign company is carried on) or a permanent representative (i.e. a person who has the authority to conclude contracts on behalf of the foreign principal) as defined in the tax treaty concluded between the Netherlands and the state of residence of the foreign corporation. More important than the statutory corporate income tax rate are the effective tax rates, i.e. what tax payments effectively will amount to as a percentage of commercial profits. In this regard, there are various tax planning techniques available when operating in or through the Netherlands to mitigate the effective tax rate on the warehousing, distribution, sales and manufacturing activities of your company in the Netherlands. In order to know in advance what the corporate income tax profile of your Dutch office will be, an advance tax ruling from the tax inspector may be obtained (see 5.3). 5.2 Value Added Tax Value added Tax (VAT) is a multi-stage tax, being chargeable at every stage in the supply chain. In its simplest form, a business will charge VAT ("output tax") on its sales ("supplies"), but will be entitled to deduct the VAT ("input tax") it has paid on its purchases. The business will then file a return at regular intervals with the tax administration and will deduct the input tax from the output tax and pay the balance. Where the input tax exceeds the output tax, the business will receive a refund. In the Netherlands the standard VAT rate is currently 21% and applies to most goods and services. There is also a lower rate of 6%, which applies principally to food, books and newspapers, medicine, newspaper advertisements, passenger transport, and hotel accommodation. Exports of goods are zero-rated, as is the export of certain services, although special procedures must be followed. The procedures are different for exports of goods to other EU member states and to third Limburg Province, the Netherlands 19

20 countries. Important advantages regarding indirect taxes (import duties, VAT) in the Netherlands: VAT deferral scheme: if license is obtained no actual payment of VAT on importation. The VAT on importation is deferred to periodical VAT return and can be deducted at the same time (i.e. no cash-flow disadvantage); Netherlands customs authorities have a cooperative attitude towards rulings (classification, origin and valuation); Dedicated team within Netherlands customs authorities in order to implement a Single European Authorisation (SEA). SEA enables companies to maintain customs warehouses in various EU Member State under one customs license; Transparent and objective enforcement by Netherlands customs authorities of applicable VAT and customs legislation. VAT standard rates in EU and new EU member states in 2012 (source: European Commission): 5.3 Innovation Box Country VAT Country VAT Luxembourg 15.0% Belgium 21.0% Spain 18.0% Finland 23.0% Germany 19.0% Greece 23.0% France 19.6% Ireland 23.0% Austria 20.0% Portugal 23.0% United Kingdom 20.0% Denmark 25.0% Italy 21.0% Netherlands 21.0% Sweden 25.0% New EU members Cyprus 15.0% Slovenia 20.0% Malta 18.0% Lithuania 21.0% Bulgaria 20.0% Latvia 22.0% Czech Republic 20.0% Poland 23.0% Estonia 20.0% Romania 24.0% Slovakia 20.0% Hungary 27.0% As of 1 January 2010, companies can benefit from an effective tax rate of only 5% for income from intangible assets created by the Dutch taxpayer. It is no longer required that the intangible asset is patented. Also intangible assets that have been created by the taxpayer and for which the R&D tax credit was received may qualify for the Innovation Box. In practice this means that technological innovations qualify for the Innovation Box. Intangible assets such as trade names, trademarks and the like do not qualify. The lower tax rate of 5% is claimed in the corporate income tax return filed by the taxpayer. The low tax rate is actually an exemption of 80% of the profits that can be allocated to the Innovation Box. By applying the general Dutch corporate income tax rate of 25% this gives an effective rate of approximately 5%. Costs made with the development of the intangible assets and losses on the exploitation of the intangible assets can still be deducted against the general tax rate of 25%. The effective rate applies to profits exceeding the development costs and losses incurred. As of 2010, there is no longer a cap on the amount of profits that can be allocated to the Innovation Box, however, a taxpayer should be able to substantiate that the profit is related to the qualifying intangible assets. It is generally advised to agree upon the method used with the Dutch tax authorities in advance. The Dutch tax authorities are accustomed to do so upon request. The Innovation Box does not apply to intangible assets in respect of which a patent was obtained if the asset was already in existence before 1 January Furthermore, the Innovation Box does not apply to intangible assets in respect of which an R&D statement was obtained if the asset was already in existence before 1 January For 2011 the scope of the Innovation Box is somewhat broadened. Situations whereby the period between an application for a patent and the granting of the patent is unusually long are now also covered. Subject to certain conditions, profits that are attributable to the relevant patented asset may, during the period from the year in which the patent was applied for up to the year preceding the year in which the patent was granted, also be brought within the scope of the Innovation Box Limburg Province, the Netherlands 20

21 5.4 Tax benefits Participation exemption Dividends received by resident corporations that qualify for the "participation exemption" are exempt from corporate income tax. This exemption is one of the most important provisions of Dutch corporate income tax legislation. Dividends received by a resident company from a qualifying shareholding are exempt from corporate income tax. Furthermore, any capital gains derived from the disposal of such a qualifying shareholding are also exempt from corporate tax. This tax exemption is based on the principle that dividends paid out of profits that have already been subject to corporate income tax at the level of a subsidiary, should not be taxed again in the hands of the recipient company. A capital loss incurred on the disposal of a qualifying shareholding is deductible from the owner's taxable income only on the liquidation of the company whose shares are held. Avoidance of double taxation The avoidance of double taxation by treaty of the Unilateral Decree for the Avoidance of Double Taxation normally does not take the form of a foreign tax credit against Dutch corporate tax on worldwide income. Instead, an exemption is granted for Dutch corporate tax on the foreign source income, even if the foreign tax is very low or nil. Contrary to most treaties, however, the basic principle applied in the Unilateral Decree for the Avoidance of Double Taxation is, that income is exempt for Dutch tax purposes only if such income is subject to a tax on income by the foreign state. Advance tax rulings The possibility of obtaining an advance tax ruling is one of the most attractive features of Dutch tax law. This is an agreement between the tax authorities and the taxpayer in advance that binds the former to view the latter's tax situation in a certain way with respect to various cross-border situations. The aim of the Dutch government's advance tax ruling policy is to attract international investors to the Netherlands by providing them certainty about their future tax position. Generally, an advance tax ruling takes the form of a determination agreement about an international group's entire profit earned through activities in the Netherlands in cross-border situations. In particular, advance tax rulings may deal with the way in which the arm's-length remuneration for cross-border activities can be determined, taking into consideration the location of functions, intangibles and risks. Moreover, advance tax rulings may cover the apportionment of business assets, activities and results between the head office and its permanent establishment. For physical investments with a value of more than EUR 4.5 million, investors have access to a special tax inspector within the jurisdiction of the Rotterdam Revenue Service, who is specially charged with assisting foreign investors. This inspector has a relatively broad latitude in issuing tailor-made advance tax rulings. Rulings may cover a wide range of activities. Below, the options related to certain activities are discussed. Manufacturing A corporate tax rate of 25% has to be paid over company profits. However, there are cases in which the tax inspector is willing to discuss the possibilities for an informal capital ruling or a cost-plus ruling. Often a foreign investment in the Netherlands is prepared by a foreign principal, which either supplies capital or informal capital such as know-how, embodied technology or goodwill. In these cases the informal capital ruling may apply, assuming that some conditions are met. In cases where the manufacturing activities will take place under a manufacturing contract with the foreign principal, a cost-plus ruling may be possible if the activities meet the requirements for a cost-plus ruling and some other conditions. For example, the Dutch company may not run any business risks in this situation. Distribution If the distribution activities meet the criteria, they may qualify for a ruling. The ruling may include the following activities that may be performed in a distribution centre: Storage of goods and international distribution Light assembling and repair Repackaging Training Marketing, sales and sales support "Administrative" European head office activities Limburg Province, the Netherlands 21