Tax Plan 2027: Important measures for international companies

Tax rate

As in previous years, the Dutch corporate income tax rates remain unchanged. The reduced rate of 19% continues to apply to taxable profits up to €200,000, in line with the rate applicable in 2026. Taxable profits exceeding €200,000 remain subject to the higher rate of 25.8%. 
The 2027 Tax Plan does not propose any changes to the corporate income tax rates. The development of the rates and profit thresholds can be summarised as follows: 

During the parliamentary consideration of the 2027 Tax Plan in the coming months, the proposed rates and tax brackets may still be amended. 

Adjustment to the tax treatment of foreign exchange results under the participation exemption 

The participation exemption ensures that benefits derived from a qualifying participation are, subject to certain conditions, exempt from corporate income tax. Conversely, losses on participations are generally not deductible. At the taxpayer’s request, the participation exemption may also apply to hedging instruments, such as loans entered to hedge foreign exchange risks relating to participations. A welcome change is that the request will no longer have to be submitted in advance, thereby codifying certain approvals included in the Participation Exemption Decree. Taxpayers may therefore request the tax inspector to apply the participation exemption even after entering a hedging instrument. This provides greater flexibility and better reflects business practice. 

According to the Dutch government, the current treatment may give rise to a tax imbalance. Interest expenses on such a hedging instrument are generally deductible, while the expected foreign exchange result priced into the interest remuneration may fall within the scope of the participation exemption. Economically connected elements are therefore treated differently for tax purposes. 

The 2027 Tax Plan proposes to eliminate this imbalance. Going forward, the participation exemption would apply only to unpriced, unexpected foreign exchange results. By contrast, the expected foreign exchange result priced into the interest remuneration in advance would fall within the taxable realm. This measure is also linked to the judgment of the Dutch Supreme Court of 21 March 2025 (ECLI:NL:HR:2025:417). 

Practical impact 

For companies that hedge foreign exchange risks relating to participations, the proposed measure will require a reassessment of existing financing and hedging positions. Particular attention should be paid to the distinction between priced-in and non-priced-in foreign exchange results, as only the latter would continue to qualify for the participation exemption. Given the complexity of this assessment and the announced transitional rules for existing cases, companies should promptly identify their existing hedging instruments and review the supporting documentation. 

Expansion of the innovation box regime 

The innovation box allows income derived from qualifying self-developed intangible assets, such as new products, production processes and software, to be taxed at an effective rate of 9% instead of the regular corporate income tax rate of up to 25.8%. For smaller taxpayers, the innovation box benefit may be determined on a lump-sum basis for a maximum period of three years at 25% of the profit, insofar as that profit is attributable to qualifying intangible assets. 

The current maximum lump-sum amount of €25,000 has applied since the introduction of the regime in 2013 and has not been adjusted since. In practice, the limited tax benefit may therefore not always outweigh the administrative burden and implementation costs associated with applying the regime. It is proposed to increase the maximum lump-sum amount to €100,000 with effect from 1 January 2027. The Dutch government aims to make the innovation box simpler and more attractive for innovative SMEs. 

Practical impact 

The expansion of the lump-sum regime may prompt SMEs to reconsider their current innovation box position. Increasing the maximum lump-sum amount from €25,000 to €100,000 makes the lump-sum method attractive in a wider range of situations. Companies will need to assess whether the simplicity of the lump-sum method outweighs a regular allocation of profits to the innovation box, considering factors such as the expected tax benefit, the available documentation, the administrative burden and the anticipated development of innovation-related income during the three-year lump-sum period. 

Dividend withholding tax refund scheme for Dutch underlying investors in foreign investment institutions 

The 2027 Tax Plan contains a proposal for a dividend withholding tax refund scheme for Dutch investors who invest in Dutch shares through a foreign investment institution. The proposal follows the judgment of the Dutch Supreme Court of 13 September 2024 (ECLI:NL:HR:2024:1176). That judgment provides that Dutch investors who, in economic terms, invest in Dutch shares through a foreign investment institution may not be taxed more heavily than Dutch investors who invest through a Dutch fiscal investment institution (fiscale beleggingsinstelling or in short: ‘FBI’). 

Under the current system, an FBI may apply the dividend withholding tax remittance reduction. This allows the dividend withholding tax withheld on Dutch dividends received by the FBI to be considered when determining the dividend withholding tax payable by the FBI on onward distributions to its investors. A foreign investment institution does not have a comparable mechanism because, in principle, it does not withhold Dutch dividend withholding tax on distributions to its investors. This may result in a difference in the economic tax burden borne by Dutch investors who invest through a foreign investment institution. 

The proposed measure aims to eliminate this difference. To that end, a refund scheme will be introduced under which Dutch underlying investors may, subject to certain conditions, request a refund of Dutch dividend withholding tax withheld on Dutch dividends at the level of the foreign investment institution. 

Practical impact 

The scheme is expected to enter into force on 1 January 2027. Dutch investors who invest in Dutch shares through a foreign investment institution should assess whether they may qualify for a refund under the new scheme. This assessment should consider the extent to which Dutch dividends have been received through a foreign investment institution, the Dutch dividend withholding tax withheld on those dividends and the information available to substantiate a refund request. In practice, obtaining adequate information from the foreign investment institution is likely to be a key consideration. In addition, it may be appropriate to assess whether relief or a refund may still be available for earlier years considering the Dutch Supreme Court judgment, depending on the specific facts and the applicable statutory and procedural time limits. 

Removal of the presumption of non-business motives for mergers and demergers 

The Dutch Corporate Income Tax Act 1969 provides rollover relief for qualifying business mergers and demergers. Under these facilities, taxation of gains arising in the context of a reorganisation may, subject to certain conditions, be deferred. An important condition is that the transaction is not predominantly aimed at avoiding or deferring taxation. 

Under the current rules, a statutory presumption applies if shares in an entity involved in the reorganisation are transferred to an unrelated party within three years after the business merger or demerger. In that case, it is presumed that the reorganisation was not based on valid business reasons. The taxpayer may rebut this presumption by demonstrating that the reorganisation was nevertheless based on valid business reasons. 

On 27 February 2026, the Dutch Supreme Court ruled that this statutory presumption under the demerger facility is incompatible with the EU Merger Directive (Directive 2009/133/EC) and relevant case law of the Court of Justice of the European Union (ECLI:NL:HR:2026:298). In response, the Dutch government proposes to abolish the statutory presumption for both the demerger facility and the business merger facility. 

The removal of the statutory presumption does not prevent the Dutch tax authorities from challenging the application of these facilities. If a reorganisation is predominantly aimed at avoiding or deferring taxation, the facility may still be denied. However, the burden of proof will no longer shift as automatically to the taxpayer. 

Practical impact 

The proposal strengthens the evidentiary position of taxpayers in business mergers and demergers that are followed within three years by a disposal to an unrelated party. Such a disposal will no longer automatically trigger a statutory presumption of tax avoidance. At the same time, the general anti-abuse test will continue to apply. It therefore remains important to carefully document the valid business reasons underlying the reorganisation and any subsequent disposal. Proper documentation of the commercial, strategic and operational rationale may remain crucial if the Dutch tax authorities challenge the application of the facility. 

Clarification of the concept of public funding under the education and research exemption 

The Dutch Corporate Income Tax Act 1969 provides a subjective exemption for entities that carry out education or research activities for at least 90% of their activities, provided that at least 70% of those activities are funded directly or indirectly from public funds. For entities that meet these conditions, the resulting profits are exempt from corporate income tax. 

The Dutch government proposes to further clarify the term “public funds”. Under the proposal, funding would not qualify as public funding if a contractual consideration is required in return for providing those funds. As a result, commercial education and research activities performed on behalf of a public-law legal entity or a private-law government body, involving specifically agreed services, would no longer fall within the scope of the exemption. 

The proposal follows ongoing proceedings concerning the education and research exemption and indications that taxpayers are claiming the exemption for commercial education and research activities. According to the Dutch government, the exemption is not intended to cover such activities, and the proposal clarifies how the term “public funds” should be interpreted. 

The Dutch government emphasises that the proposal does not constitute a substantive change to the existing legislation, but rather codifies the interpretation that it considers already applicable. At the same time, it may be questioned whether the proposed provision is solely a clarification, as it explicitly provides that funding received in exchange for contractual consideration does not qualify as funding from public funds. 

Practical impact 

The proposed clarification makes it important for education and research institutions to critically assess their funding structures. Attention should be paid to whether amounts received qualify as public funding or, in substance, constitute consideration for contractually agreed services. Institutions performing education or research activities on behalf of government bodies should therefore reassess their existing agreements and funding arrangements. This review should focus on the nature of the agreed services, the contractual obligations and the potential consequences for the application of the education and research exemption. 

Minimum tax (Pillar Two) 

Expansion of safe harbour rules under the Minimum Tax Act 2024 

The legislative proposal on safe harbour rules under the Dutch Minimum Tax Act 2024 introduces several additional safe harbour rules for groups that fall within the scope of the Pillar Two global minimum tax rules. These rules stem from the international Side-by-Side package and are intended to simplify the application of the Dutch Minimum Tax Act 2024 in certain situations. The core of the proposal is that groups may, subject to conditions, rely on a simplified assessment, or that the top-up tax is set at nil in specific cases. This aims to reduce the administrative burden without undermining the principle that large multinational and domestic groups should be subject to an effective tax rate of at least 15% in each jurisdiction. 

Simplified effective tax rate safe harbour rule 

An important measure is the simplified effective tax rate safe harbour rule. Under this rule, a group may perform a simplified calculation for a jurisdiction based on the financial statements or financial accounting records, with only a limited number of adjustments. If this simplified calculation shows that the effective tax rate is at least 15%, no full calculation of the top-up tax under the regular rules of the Dutch Minimum Tax Act 2024 is required. The rule is therefore particularly relevant for groups that already pay sufficient tax in a jurisdiction but would otherwise still need to prepare a separate calculation under the regular system. 

Qualified Domestic Minimum Top-up Tax safe harbour rule 

In addition, a safe harbour rule is introduced for jurisdictions with a Qualified Domestic Minimum Top-up Tax (QDMTT). This rule is relevant for jurisdictions that have implemented a qualified domestic minimum top-up tax regime. If the conditions are met, the top-up tax for the Income Inclusion Rule (IIR) and the Undertaxed Profits Rule (UTPR) is set at nil. This prevents a group from being subject both to the Pillar Two global minimum tax rules and to a comparable qualified domestic minimum top-up tax. 

Ultimate parent entity safe harbour rule 

The legislative proposal also includes an ultimate parent entity safe harbour rule. This rule concerns the domestic activities of groups whose ultimate parent entity is established in a jurisdiction with a qualified domestic minimum top-up tax regime. In that case, the top-up tax for the Undertaxed Profits Rule (UTPR) is set at nil for entities established in the same jurisdiction as the ultimate parent entity. For group entities in other jurisdictions, the regular application of the Income Inclusion Rule (IIR) and the Undertaxed Profits Rule (UTPR) in principle continues to apply. 

Qualified tax incentive safe harbour rule 

A safe harbour rule is further proposed for qualified tax incentives. This rule is intended to prevent certain tax incentives for genuine economic activities from losing their effect because of the application of the minimum tax rules. Subject to conditions, the amount of covered taxes may be increased by the tax benefit associated with such regimes. These are regimes that are directly linked to expenses incurred or investments made in a jurisdiction. Regimes based on income, such as the innovation box, in principle do not qualify for this safe harbour rule. Investment deductions, by contrast, may fall within its scope. 

Practical impact 

For groups that fall within the scope of the Dutch Minimum Tax Act 2024, the proposed safe harbour rules may result in a significant reduction of the administrative burden. In practice, it will need to be assessed on a jurisdiction-by-jurisdiction basis whether a safe harbour rule can be applied and what documentation is required to substantiate this. Attention should be paid to whether a jurisdiction has implemented a qualified domestic minimum top-up tax regime or otherwise qualifies for a Pillar Two safe harbour, and whether tax incentives fall within the conditions of the new safe harbour rules. 

We recommend mapping out in good time the jurisdictions in which the group is active, the effective tax burden applicable there and whether one of the proposed safe harbour rules can be used. This can help make Pillar Two compliance more efficient and avoid unnecessary calculations.