How to Earn Profits in a Tax-Friendly Way?

The sole mission of any business is to earn profits. The companies pay attention to both the revenues as well as the costs. An efficient management and a flexible decision making allows the company to generate consistent profits. Profits are the main yardstick for measuring the success of any company. However, an important aspect that you need to consider is the tax that you pay. The Netherlands is one country which is very attractive among investors for conducting their businesses because of the flexible taxation system. Most foreign businessmen choose to open a BV company in the Netherlands because of the several benefits it offer. The Dutch BV business in Holland has a lower tax burden and having such a company helps to reduce the associated business risks. They also act as an additional layer between the owner and the business activity.

Strategies to protect your income from taxes:

• Take advantages of personal deductions such as charitable donations, study expenses, healthcare cost (if not covered by insurance) etc which can be deducted from the tax. It makes sense to cluster them into one year as much as possible so that you meet the threshold for the tax break.
• Investing can be an important tool in growing your long-term wealth. If you have savings or investments, there are ways to avoid taxes on the income from those investments. The dividends received by a Dutch company are exempt if the participation exemption applies.
• Municipalities impose an annual tax at varying rates on owners of real property related to the value of the immovable property. Real estate tax is deductible for corporate income tax purposes.
• Special investments can also contribute to tax reductions. The contributions made to retirement plans, for example, should be carefully controlled. Other tax planning strategies may include donating different assets, rather than selling them or, if deciding that they should be sold, to use the capital gains deduction. Securities should be sold in years when other capital assets can yield long-term capital gains. These gains earned may be exempted if certain requirements are met.
• A special regime applies with respect to profits, including royalties, derived from a self-developed intangible asset. The taxpayer may opt, under certain conditions, for the application of a lower effective rate on taxable profits derived from these intangible assets. This is also known as the Innovation box regime.
• The tax structure also offers complete exemption from taxation for income from eligible foreign subsidiaries through the participation exemption regime.

The profits your company earn reflect its success. However, corporate tax is an inevitable entity that can put a dent on your profits. There are several acceptable and legal options when it comes to reducing your tax burden. The Dutch BV business in Holland is renowned for having several benefits in this aspect.

Most of the above-mentioned strategies are applicable while operating a BV company in the Netherlands. Other than this, there are several agents who can guide the foreign entrepreneurs more about the efficient tax planning and tax minimizing strategies. These benefits have allowed to maintain this position the Netherlands has invested in the past few years to create a business-friendly climate to attract foreign investors. No matter what type of business you own, having adequate strategy to ensure your profits is the way to stay ahead of your competition.

Fredrick Sam works for a company that offers support to foreigners for setting up company in Holland. He is a pro at managing at various tasks associated with registering, legalizing, and finalizing the office space for the foreign investors.