- Basic data
- Public finances and the state budget
- Banking system
- Tax system
According to cheeroutdoor.com, the Dutch economy is likely to moderate its growth rate in 2022 compared to 2021, as the conflict in Ukraine, rising inflation and labor shortages slow the recovery process from the coronavirus pandemic. According to local economists’ estimates, all Dutch regions will experience economic growth, but regional differences will be significant. The region of the capital city of Amsterdam is likely to see the greatest economic growth this year. The area, which includes Schiphol International Airport, has been hit hard by the pandemic’s impact on tourism and hospitality, but is already rapidly recovering. The economies of the regions of Zeeland, Haarlem, Zuidwest and The Hague will also grow more than the national average thanks to a recovery in the hospitality and leisure sectors. On the other hand, last year’s strong growth in industrial regions is unlikely to continue at the same pace this year, mainly due to the high prices of raw materials and energy. For example, the economies of Delfzijl and surrounding areas, Zuidoost-Brabant, Zeeuws-Vlaanderen and IJmond are expected to grow at a significantly lower rate than the national average. At the same time, the impact of the war in Ukraine and the associated economic sanctions against Russia are among the major uncertainties. These are affecting the Dutch economy with disrupted exports, high raw material and energy prices and new problems in supply chains. Regions in which these industries are strongly represented are likely to experience very low economic growth.
The Netherlands is the 6th largest economy in the EU and at the same time a country with one of the highest levels of GDP per capita in the world. It is highly dependent on services and international trade, which make up about 70% or 160% of GDP. As for GDP growth, it should remain relatively strong in 2022 despite some volatility, supported by a high level of digitization and a reasonably diverse export base. The immediate damage to the economy caused by the COVID-19 pandemic should be overcome as early as 2022. The new Dutch government plans to focus mainly on green initiatives, tax and social system reforms, and measures to address rising property prices. After the Russian invasion of Ukraine, attention will also turn to protecting the economy from the negative effects of the conflict, especially higher energy prices.
|GDP growth (%)||1.6||-4.4||4.8||3.7||2.4|
|Export of goods (billion USD)||576.8||551.6||736||798.5||820.1|
|Import of goods (billion USD)||514.9||484.6||652.2||702.8||725.1|
|Trade Balance (Billion USD)||76.4||74.2||93.2||105.6||105.4|
|Industrial production (% change)||-0.9||-4||4||2.4||1.8|
|OECD export risk||ON||ON||ON||ON||ON|
Source: EIU, OECD, IMD
Public finance and state budget
|State budget balance (% of GDP)||-2.5|
|Public debt (% of GDP)||52.1|
|Current account balance (billion USD)||83.6|
|AFTER||15% to a profit of 395 thousand EUR; further 25.8%|
|F.O||37.1% up to an income of €69,400;
|VAT||21% base rate; 9% reduced rate|
The Netherlands has traditionally run large trade and current account surpluses. The reason is not only the historically anchored position of the country, largely dependent on successful foreign trade, but also the role of the Netherlands as a natural gateway to Europe and therefore a distribution center for significant re-exports throughout Europe. In terms of the national budget, in 2021 the Dutch government reported a budget deficit of almost €22 billion, which corresponds to 2.5% of GDP.
In 2021, the NL government saw revenue increase by more than €25 billion to €377 billion. Income from taxes and contributions increased by more than EUR 22 billion, (i.e. by 7%). In 2021, VAT brought in almost EUR 6 billion more than a year earlier (an increase of 9%). Income from corporate income tax increased by almost EUR 9 billion, i.e. by 40%. Non-tax revenues increased mainly due to higher revenues from the sale of natural gas.
In 2021, government spending increased by almost €18 billion, which is less substantial than the increase in revenue. Government subsidies fell by €4.5bn after a sharp rise in 2020, mainly due to lower spending on temporary emergency measures to save jobs. Interest expenditure continued to fall in 2021, despite rising public debt. Lower spending was offset by much higher government consumption; compared to the previous year, they increased by almost EUR 18 billion, mainly due to the purchase of various services and goods to fight the coronavirus epidemic, such as tests, vaccines and the operation of call centers. Remuneration of public sector employees increased by 4% in 2021.
Government debt as a percentage of GDP, also referred to as the gross debt ratio, was 52.1% at the end of 2021. This is percentage points less than at the end of 2020, when the debt-to-GDP ratio was 54.3%. This decrease is due to the fact that in 2021 nominal GDP grew significantly faster than the euro debt. Debt in nominal value increased by EUR 13 billion to EUR 448 billion. In addition to the bond premium, a favorable cash position at the end of 2020, from which the deficit in 2021 could be partially financed, contributed to the low debt growth in 2021. On the other hand, the government’s support measure to extend maturity also led to higher debt in 2021 taxes.
The banking sector in the Netherlands is very extensive, comprising approximately one hundred banks. The ratio of consolidated banking assets to gross domestic product (the most commonly used indicator of the size of the banking sector) for the Netherlands shows that the Dutch banking sector is almost four times the size of the national economy. The Dutch banking sector is mainly made up of domestic banks: the total assets of domestic banks make up more than 90% of the total assets of all banks operating in the Netherlands. The banking sector of the Netherlands is also characterized by a high degree of concentration: the three largest banks (ING Bank, Rabobank and ABN AMRO Bank) account for 80% of the total volume of banking assets.
ING Bank is the largest bank in the Netherlands. ING Bank’s strategic goals strengthen the position in the field of digital banking (the so-called Think Forward strategy) cost-benefit ratio. ING Bank strives to be a leader in digital banking based on ease of access, simplified products and services and tools that help customers make smart financial decisions.
Rabobank is the second largest bank in the Netherlands and is a cooperative bank. Starting in 2016, all branches form one cooperative structure that owns one banking license and issues one set of financial statements. These changes do not affect the Rabobank Group’s cooperative principles or the way it does business with its clients. Rabobank’s strategic intent is excellent customer service, improving its financial results and achieving a more flexible and stronger balance sheet.
ABN AMRO Bank is the third largest bank in the Netherlands with a primary focus on the domestic market while conducting selected operations internationally.
De Volksbank (formerly SNS Bank) is the fourth largest bank in the Netherlands and the largest Dutch bank not under the direct supervision of the European Central Bank. The bank operates on the Dutch market with a focus on mortgages, savings and payments.
NIBC Bank operates in the Benelux countries and in Germany with a focus on providing mortgage loans and savings products for corporate and individual customers.
The Dutch tax system is advantageous, stable and clear for foreign entities, so the country is often used as a formal headquarters for companies from many countries around the world, including the Czech Republic. However, significant changes have taken place in recent years, the government wants to get rid of the negative label of a “tax haven”. This is also helped by pressure from international institutions and the European Commission. The Dutch tax system allows for a number of tax breaks for foreign entities that establish a company headquarters in the Netherlands in the form of a holding company. Specific information about these incentives can only be obtained by dealing with the tax authorities, for which it is recommended to have a tax advisor. It can be, for example, an advantageous transfer of dividends from abroad to the headquarters of the holding in NL.
Personal income taxes – 3 categories (boxes) of taxable income are distinguished, each with its own tax rate. The resulting tax is the sum of these three parts after reduction by tax-deductible items. (Box 1 includes income from employment and income from real estate, which are taxed progressively between 37% and 52%. This section includes entrepreneurs without their own employees. Box 2 includes income from companies in which the recipient has more than 5% share, the rate is 25% Box 3 includes income from savings and investments: from securities, interest from deposits and income from real estate, which are taxed at 30%).
Corporate income tax
In 2022, a corporate income tax rate of 15% applies to the first €395,000 of profit. The tax rate on profits above €395,000 is set at 25.8%. There are a number of exceptions and detailed rules, it is recommended to consult a tax professional on these matters. Dividends are taxed at a rate of 15%.
Value Added Tax (BTW) – the basic VAT rate is 21%. The reduced rate of 9% is generally applied to food and medicine, medical devices, some labour-intensive services, books and magazines, passenger transport, entrance fees to cultural and sporting events, water, various goods and services used in agriculture.
In September 2021, the Dutch Ministry of Finance published the government’s tax plan for 2022. This plan contains several tax proposals that affect international companies. Substantial changes are proposed to the corporate tax rules relating to transfer pricing mismatches, including informal capital. The reverse hybrid entities would be treated as Dutch tax residents for corporate tax purposes and the reverse hybrid entities would be the withholding agent for the purposes of the Dividend Withholding Act and the Interest and Royalties Withholding Tax Act. Following the judgment of the Court of Justice of the EU in the Sofina case, the withholding tax credit on dividends for shareholders of portfolio companies would be limited. At the same time as the tax plan for 2022, an amendment to the tax legislation was proposed.