Substantial reduction in corporate tax burden

In 2006, the burden of corporate tax for the largest non-financial companies in the Netherlands was 20.9 percent. This was 7.4 percentage points lower than in 2004. The average tax burden decreases as the size of companies increases.

Tax burden decreasing

There are some 1,600 non-financial companies in the Netherlands with net assets worth 23 million euro or more. These companies paid more than 8.4 billion euro in corporate tax in 2004. In 2005 this amount rose to more than 13 billion euro. In 2006 it fell again, to 10.4 billion euro. The tax burden of the largest non-financial companies fell from 28.3 to 20.9 percent in the same period.

The decrease in the tax burden was caused partly by a reduction in tax rates effective from 1 January 2006. The government cut the tax rate with the intention of improving the investment climate and reducing the private sector tax burden. In addition to this, the larger a company is, the smaller the relative tax burden. This may be connected with more advanced financing technicalities within the largest companies.

Corporate tax burden by net-worth category of company

Largest companies account for most tax revenues

In 2006, nearly 74 percent of corporate tax was paid by 14 percent of the largest companies. These are companies with a net worth of 454 million euro or more. Less than 9 percent of revenues came from companies with assets worth between 23 and 90 million euro. Companies with assets of ranging from 90 to 454 million euro accounted for 17 percent of revenues.

Revenues from corporate tax by net-worth category of company, 2006

Frank Bonger