Permanent establishment in the Netherlands

When a foreign company pays Dutch corporate income tax

A company that is not established in the Netherlands pays Dutch corporate income tax only on Dutch income (Article 3 of the Dutch Corporate Income Tax Act 1969). The main item is profit from a business carried on through a permanent establishment or a permanent representative in the Netherlands (Article 17(3)(a)).

Selling to Dutch customers from abroad does not by itself create a permanent establishment. An office, people or a long project in the Netherlands can.

What counts as a permanent establishment

Since 2020, Dutch law follows the definition in the tax treaty with your country. Without a treaty, the Act has its own definition, based on Article 5 of the OECD Model Tax Convention 2017 (Article 3(4) to (12) of the Act).

• A fixed place of business through which your business is wholly or partly carried on, such as an office, a branch, a workshop or a factory. The place needs a certain permanence. The OECD Commentary uses six months as a rule of thumb; the Dutch Supreme Court does not treat that as a fixed minimum
• Not a permanent establishment: a place used only to store, display or deliver your own goods, to purchase goods or collect information, or for other activities of a preparatory or auxiliary character. This exception does not apply when your company or a related company carries out other activities in the Netherlands that together are more than preparatory or auxiliary
• A dependent agent: a person who habitually concludes contracts for your company, or plays the principal role leading to them. An independent agent acting in the ordinary course of its own business does not create one, unless it acts exclusively or almost exclusively for your company or related companies
• An employee working from home in the Netherlands: a home office is usually not at the disposal of the company, and then it is not a permanent establishment. With structural home working this can change. The 2025 OECD Commentary gives a test for this, with a threshold of 50% of working time

Under a treaty, the treaty wording decides. The Netherlands has made a reservation for its treaties on the broader agent test of the multilateral instrument (MLI). Under many Dutch treaties the question is therefore whether the agent has the authority to conclude contracts in the name of your company, and habitually uses it.

Construction and installation projects

• Without a treaty: a building site or a construction or installation project is a permanent establishment only if it lasts more than twelve months. If you work on the site for more than 30 days, periods of more than 30 days in which related companies carry out connected work on the same site are added (Article 3(4)(b) and (7))
• Under a treaty: the treaty sets the period. In most Dutch treaties it is twelve months; some treaties, mostly with developing countries, use three, six or nine months

How much profit belongs to the permanent establishment

The Netherlands taxes only the profit that belongs to the permanent establishment. It is determined as if the permanent establishment were a separate and independent enterprise: the Authorised OECD Approach, which the Dutch tax authorities apply under a decree of 14 June 2022.

• Step 1: which functions the people of the permanent establishment perform, which assets and risks belong to it on that basis, and how much capital is allocated to it
• Step 2: dealings between the permanent establishment and the head office are priced at arm's length, by analogy with the OECD Transfer Pricing Guidelines

The profit is taxed at the normal rates: in 2026, 19% on the first € 200,000 and 25.8% on the rest.

Registration and the return

• KVK (the Dutch Chamber of Commerce): a foreign company with a branch in the Netherlands registers it in the KVK Business Register, with forms 6, 11 and 13 in Dutch, a proof of registration from its home country no more than one month old, certified copies of the deed of incorporation and the articles of association, and a certificate of incumbency showing its directors. A director registers in person by appointment; a director living abroad can send the documents instead. KVK passes the details to the Dutch tax authorities
• Dutch tax authorities: if your company has not filed a Dutch corporate income tax return before, the Dutch tax authorities ask you to register it first with their Registration form Foreign companies. According to the Dutch tax authorities, you then usually receive an RSIN within eight weeks. With that number you can apply for eHerkenning (the Dutch business login)
• The return is due before 1 June after a calendar financial year, or within five months after the end of a different financial year. An extension can be requested; online, up to 1 November
• No invitation to file received within six months after the end of the financial year? Then you must ask the Dutch tax authorities for one within two weeks. If you do not, a penalty of up to € 6,709 can be imposed
• Staff in the Netherlands: a foreign employer with a permanent establishment here must withhold Dutch payroll taxes

VAT: a separate test

For VAT, a fixed establishment needs a sufficient degree of permanence and a suitable structure of people and technical resources to make supplies. A place that only supports the head office, for example with administration or advertising, is not one. The answer for VAT can therefore differ from the answer for corporate income tax.

• With a fixed establishment for VAT, the branch is treated as a Dutch business for its own activities. The VAT on supplies in which it is involved is not reverse-charged to your Dutch customers; the branch charges and reports it
• Without one, your company registers as a foreign business, and on many supplies to Dutch businesses the VAT is reverse-charged to the customer

This is why we check both before you apply for a VAT number: the answer decides the route of the registration.

Without a fixed establishment, the application follows the route described on our page on VAT registration in the Netherlands for foreign companies.

Example

A company from the United States opens an office in Rotterdam in 2026. Three employees there negotiate and sign contracts with Dutch customers. The office is a permanent establishment.

• Profit attributed to the office for 2026: € 240,000
• Corporate income tax at 19% on the first € 200,000: € 38,000
• At 25.8% on the remaining € 40,000: € 10,320
• Dutch corporate income tax for 2026: € 48,320, with the return due before 1 June 2027 unless an extension is granted
• The office is registered with the KVK, and the company withholds Dutch payroll taxes for the three employees

This is a worked example, not a client case. How the United States relieves the double taxation follows from the treaty and US rules.

What we do

We go through your activities, premises, people and contracts in the Netherlands, check the treaty with your country and give you a written conclusion for corporate income tax and VAT: whether there is a permanent establishment, and which registrations, returns and payroll obligations follow. One-off € 245, excl. VAT.

If there is a permanent establishment, we prepare its corporate income tax return: the profit attribution, the return and the check of the assessment, based on the figures of the permanent establishment. € 495 per year, excl. VAT. In the first year this includes registering your company with the Dutch tax authorities. Ongoing accounting is not included. The VAT registration (€ 275) and the VAT returns (€ 150 per month in our package) are separate. Transfer pricing documentation or a ruling request is priced beforehand.