Cyprus vs Netherlands: Tax Comparison for Founders

If you run a company in the Netherlands, the tax system works in two layers. Corporate tax takes the first share of profit, and Box 2 tax takes another share when you pay yourself a dividend. Combined, they reduce what you keep. Cyprus taxes the same profit once at 15% and, for non-domiciled residents, leaves the dividend almost intact. Here is how 200,000 euros of profit is treated in each country.

Netherlands vs Cyprus: the headline numbers

How the Netherlands taxes company profit

A Dutch BV pays 19% corporate tax on the first 200,000 euros of profit and 25.8% on anything above. That is the first layer.

When the owner takes profit out, it falls under Box 2, which taxes income from a substantial shareholding of 5% or more. The Box 2 rate is 24.5% up to a threshold and 31% above it. There is also a 15% dividend withholding tax, though it is creditable or relieved under treaties and the EU Parent-Subsidiary Directive.

200,000 euros of profit: a worked comparison

Take 200,000 euros of company profit and distribute all of it to the owner. The figures below are illustrative and ignore personal allowances and timing.

The corporate rates are not far apart. The difference is the second layer.

How Cyprus taxes the same profit

A Cyprus company pays 15% corporate tax. After that:

• Ordinary dividends paid to non-residents generally carry nil Cyprus withholding, subject to statutory defensive measures and recipient-country tax.
• A non-domiciled Cyprus tax resident pays no income tax or Special Defence Contribution on dividends.
• The only charge is the General Healthcare System contribution at 2.65%, capped at 180,000 euros of annual income.

What actually changes the outcome

Both countries can support holding structures where the participation, substance and anti-abuse conditions are met. Cyprus's ordinary outbound dividends generally carry nil withholding, subject to defensive measures; Dutch and recipient-country tax and treaty or EU relief must be compared on the actual structure.

The right choice depends on the group structure, where you are tax resident, and whether the Cyprus company has genuine substance. For how a Cyprus holding structure is built, see why Cyprus works as a holding company jurisdiction, or contact us to compare the two for your business.