Reduction in Dutch corporate tax interest 

Submit a timely objection based on a recent court ruling

On November 7, the District Court of Groningen issued a key ruling on the interest charged for Dutch corporate income tax (vennootschapsbelasting) 2021. The court judged that the interest rate for corporate tax, which had been increased from 4% to 8% in 2022, was disproportionate, as the rate for other tax categories remained at 4% that year. Accordingly, the court ruled that the corporate tax interest rate should also be set at 4%. This decision offers welcome relief for companies that have been impacted by the higher rate. 

Dutch corporate tax interest explained 

Until 2021, the Dutch corporate tax interest rate was set at 4%. However, starting in 2022, it was increased to 8% and then raised again to 10% in 2023. The purpose of this increase was to encourage corporate taxpayers to file promptly or request a preliminary tax assessment (voorlopige aanslag). Although this measure seems logical, the reality for businesses is more complex: they often must wait for final numbers or navigate intricate tax calculations. Therefore, this increase drew considerable criticism, as it is not always feasible for companies to file an accurate return in time and thereby avoid the interest charge. 

In line with this critique, the recent judgment from the District Court of Groningen found this increase to be in violation of the proportionality principle (evenredigheidsbeginsel), given that corporate tax interest represents an added financial burden often unrelated to actual market interest rates and significantly higher than, for instance, the income tax interest rate. 

Judicial review of the interest rate decision 

One key reason why this recent court decision is so significant lies in the change to the legal basis for setting the Dutch corporate tax interest rate. Previously, this interest rate was stipulated directly in law (wet), but it is now determined in a regulatory decision (besluit). This subtle yet important shift allows for judicial review, as seen in this case. For businesses, this ruling provides concrete hope for a more realistic corporate tax interest rate aligned with other tax categories. 

Paid Dutch corporate interest tax recently? Consider filing an objection 

For businesses that received a corporate tax assessment in the past six weeks where interest was charged, it may be beneficial to file an objection (bezwaar) against the imposed interest. Such an objection must be filed within six weeks of the date of the tax assessment (dagtekening van de aanslag). A successful objection may result in a partial reimbursement of the interest paid. However, the Dutch deputy minister for finance may still appeal this ruling, and it is likely that he will do so. As a result, the tax authorities will not immediately process the objection but will wait until a higher court has issued a decision.

If your company has recently paid this interest or you are uncertain about whether an objection is advisable, contact our tax consultants. They can provide strategic advice tailored to your organization’s circumstances.