Netherlands Tax Treaties with China
Email: ams4ww@evershinecpa.com
The Engaging Manager from Headquarter
Ms. Anna Wang, Speak Dutch English, and Chinese.
skype: burlinna
CN-Q-10:
China Parent Company, can apply for zero tax rate without PE under DTA in Netherlands?
CN-A-10:
Yes.
China has DTA with Netherlands, and if China Legal Resident company is without PE (Permanent Establishment), it will be deemed as “non-Netherlands Domestic Sourced Income”.
That means Netherlands will levy zero-tax.
However, China Legal Resident company still need to send zero-tax application to Netherlands Tax Bureau for being approved.
CN-Q-20:
When China Parent Company as an Investor, set up a Netherlands subsidiary, and provide services from China to Netherlands Subsidiary, can apply for zero tax rate without PE under DTA in Netherlands?
CN-A-20:
According DTA Article 5 item 7, a Netherlands subsidiary will not be treated as PE of China Parent company as an investor because it is a separate legal entity.
That means if a Netherlands Subsidiary pay service fee to China Parent Company through service contract signed between subsidiary and China Parent company
as an investor, China Parent Company can apply zero tax.
As for if paid amount being reasonable, it will get involved TP (Transfer Pricing) judgement by Netherlands Tax Bureau.
CN-Q-30:
What is the procedure for Netherlands to apply for a zero tax rate under DTA without PE?
CN-A-30:
Dutch companies withhold tax from the dividend they pay to shareholders: dividend tax.
The dividend tax rate is 15%.
In case of full or partial exemption, a company will already withhold less or no dividend tax from the dividend to be paid.
If you have not requested an exemption, you may (afterwards) request a refund of any dividend tax paid in excess.
You can file a digital request for a refund of the Dutch divided tax withheld.
You must register first in order to request a dividend tax refund.
https://mijn.belastingdienst.nl/ppa/
Send in the form ‘Registreren voor teruggaaf dividendbelasting’ (Registering for a dividend tax refund).
By using the above form, residents of treaty countries other than the USA, Aruba, the Netherlands Antilles, Belgium, the United Kingdom of Great Britain and Northern Ireland, the Irish Republic, Israel, Japan, Malaysia, Malta, and Singapore, may apply for a (partial) exemption from, or refund of, Dutch dividend tax.
CN-Q-40
When China Resident company has Netherlands domestic sourced income, what are the withholding tax rates for various incomes in Netherlands?
CN-A-40:
China has DTA with Netherlands, and if you are with PE (Permanent Establishment) in Netherlands, your income will be considered as Netherlands domestic sourced income.
As for levying Tax Rate, please be aware:
if Netherlands Tax rate > DTA Rate, adopt DTA Rate; if Netherlands Tax rate < DTA Rate, adopt Netherlands Rate.
If DTA applied, the DTA rates between China and Netherlands are as below:
| No. | Type of Payments | DTA rates | Netherlands Rates | Applicable Rates |
| 1 | Business profits (with PE) | 25.8% | 25.8% | 25.8% |
| 2 | Dividends | 5% | 15% | 5% |
| 3 | Interest (General) | 10% | 0% | 0% |
| 4 | Royalties fee | 10% | 0% | 0% |
| 5 | Technical services | 0% | 0% | 0% |
| 6 | Professional services (Individual) | 0% | 0% | 0% |
*The withholding tax rate under domestic law may apply rather than the treaty rate where the domestic law rate is lower than the treaty rate.
CN-Q-50
When China Tax Resident has Netherlands domestic sourced income, what is Netherlands’s application procedure based on the DTA preferential tax rate?
CN-A-50:
Dutch companies withhold tax from the dividend they pay to shareholders: dividend tax.
The dividend tax rate is 15%.
In case of full or partial exemption, a company will already withhold less or no dividend tax from the dividend to be paid.
If you have not requested an exemption, you may (afterwards) request a refund of any dividend tax paid in excess.
You can file a digital request for a refund of the Dutch divided tax withheld.
You must register first in order to request a dividend tax refund.
https://mijn.belastingdienst.nl/ppa/
Send in the form ‘Registreren voor teruggaaf dividendbelasting’ (Registering for a dividend tax refund).
By using the above form, residents of treaty countries other than the USA, Aruba, the Netherlands Antilles, Belgium, the United Kingdom of Great Britain and Northern Ireland, the Irish Republic, Israel, Japan, Malaysia, Malta, and Singapore, may apply for a (partial) exemption from, or refund of, Dutch dividend tax.
Summary of TAX TREATY between Netherlands and CHINA
The Government of The People’s Republic of China and The Government of the Kingdom of The Netherlands concluded and signed an Agreement for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income (Double Taxation Agreements, DTA), on 31 May 2013 and takes effects from 1 January 2015.
Permanent Establishment
Article 5 states the term permanent establishment (PE) means a fixed place of business which generally includes the followings:
*A place of management
*A branch
*An office
*A factory
*A workshop
*A building site, a construction, assembly or installation project, or supervisory activities last more than 6 months.
*The furnishing of consultancy services through employees or other personnel for periods aggregating more than 183 days within any twelve-month period.
Withholding Tax
| No. | Type of Payments | DTA rates | Article in DTA | Netherlands Rates | Applicable Rates |
| 1 | Business profits (without PE) | 0% | Article 7 | 0% | 0% |
| 2 | Business profits (with PE) | 25.8% | Article 7 | 25.8% | 25.8% |
| 3 | Dividends | 5% | Article 10 | 15% | 5% |
| 4 | Interest (General) | 10% | Article 11 | 0% | 0% |
| 5 | Royalties fee | 10% | Article 12 | 0% | 0% |
| 6 | Technical services | 0% | Article 7 | 0% | 0% |
| 7 | Professional services (Individual) | 0% | Article 14 | 0% | 0% |
*Article 7 of DTA between Netherlands and China explained, Netherlands may not tax payments on general business services rendered by China corporation unless it is attributable to the permanent establishment situated in the relevant territory.
*In Article 10, 5% charged on the dividends if the beneficial owner is a company which holds directly at least 25% of the capital of the company paying the dividends. 10% in all other cases.
*Article 11 states that interest arising in Netherlands may be taxed in Netherlands according to the laws applicable in Netherlands, the tax so charged shall not exceed 10% of the gross amount of the interest. However, interest is not subject to withholding tax under Dutch domestic law.
*Article 12 explained royalties means payment for (a) the use of, or the right to use, any copyright of literary, artistic, or scientific work including cinematograph films and films or tapes for radio or television broadcasting, any patent, trademark, design or model, plan, secret formula, or process; (b) the use of, or the right to use, industrial, commercial, or scientific equipment; or (c) information concerning industrial, commercial or scientific experience; or (d) know-how. However, that royalties are not subject to withholding tax under Dutch domestic law.
*Technical services are covered by the business profits in Article 7. Netherlands corporations may not tax payments for technical services rendered by a China enterprise unless it is attributable to PE. Technical services rendered in an independent capacity should be covered in Article 14 (see professional services) instead. No withholding tax is anyway imposed on payments made to nonresidents for services under Dutch domestic law.
*A professional service or other activities provided by individuals of an independent character was explained in Article 14. Netherlands corporations may not tax payments for professional service rendered by a China resident unless the China resident has a fixed place or stay in Netherlands for 183 days or more. An independent activity includes physicians, lawyers, engineers, architects, dentists, and accountants. No withholding tax is anyway imposed on payments made to nonresidents for services under Dutch domestic law.
Elimination of Double Taxation
Article 22 of the DTA states that double taxation shall be eliminated by allowing tax credit to be made available to the home resident territory. It shall be credited against the tax levied in the first-mentioned territory on that resident. However, the amount of credit shall not exceed the amount of the tax in the first-mentioned territory.
Exchange of Information
Article 26 states that the competent authorities of the territories shall exchange such information (including documents or certified copies of the documents) relevant to the provision of this Agreement.
Please be aware of below Warning:
The above contents are digested by Evershine R&D and Education Center in December 2022.
Regulations might be changed as time goes forward and different scenarios will adopt different options.
Before choosing options, please contact us or consult with your trusted professionals in this area.
Contact Us
Amsterdam Evershine BPO Service Limited Corp.
Email: ams4ww@evershinecpa.com
The Engaging Manager from Headquarter
Ms. Anna Wang, Speak Dutch, English and Chinese.
skype: burlinna
or
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