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Netherlands Oil and Gas Extraction Tax Guide

Dutch oil and gas extraction taxation — the Netherlands has one of the largest natural gas fields in the world (the Groningen gas field, discovered in 1959, operated by the NAM — Nederlandse Aardolie Maatschappij — a joint venture between Shell and ExxonMobil). The gas extraction is governed by the Mijnbouwwet (Mining Act) and the Mijnbouwregeling (Mining Decree). The tax regime for gas extraction is a three-tier system: (a) the corporate tax (Vpb) at the standard 25.8% rate on the gas extraction profit, (b) the state participation (staatsdeelneming) — the state (EBN — Energie Beheer Nederland) holds a 40% share in all gas extraction projects (both onshore and offshore) — the 40% is a direct participation that gives the state 40% of the profit after Vpb, and (c) the gaswinningsbelasting (specific gas extraction tax — the Rijksbijdrage gaswinning — a levy of ~50% on the additional profit above a benchmark return on investment). The Groningen gas field production has been reduced from ~50 billion cubic metres per year (bcm/y) in the 1970s to ~4.5 bcm/y in 2022–2023, and the government has announced the final closure of the Groningen field by 2023/2024 (the Afbouwfonds — the phase-out fund — the compensation for the loss of gas revenues). The offshore oil and gas extraction (the Nederlandse Exclusieve Economische Zone — the Dutch EEZ in the North Sea) is subject to the same Vpb and state participation rules — the small offshore fields (kleine velden — the small gas fields in the North Sea) are taxed under the standard Vpb regime without the additional gaswinningsbelasting. The CO2 emission rights for gas extraction — the platform emissions are covered by the EU ETS — the free allocation of CO2 allowances is based on the sector benchmark. The compensation payments for earthquake damage (the gaswinning-schade — the earthquakes caused by gas extraction in Groningen) are tax-free for the recipients (the schadevergoeding is not taxable income).

Related Guides

Corporate Tax GuideRenewable Energy GuideGreen Business Tax GuideCross-Border Tax GuideExcise Duties Guide

Gas Extraction — Three-Tier Tax Regime

  • Vpb at 25.8%: The gas extraction company (NAM for Groningen, other operators for smaller fields — TotalEnergies, ONE-Dyas, Dana Petroleum) pays corporate tax (Vpb) at the standard rate of 25.8% (21% for the first €200,000). The taxable profit is the revenue from gas sales minus: (a) production costs (drilling, platform operation, pipeline transport), (b) depreciation of extraction assets (the Mijnbouwwerken — wells, platforms, pipelines — depreciated over the field life, typically 10–30 years), (c) the gas purchase cost (the inkoopkosten — if the operator buys gas from the state or other partners), and (d) the compensation payments (the schadevergoeding for earthquake damage — deductible for Vpb purposes).
  • State participation — EBN 40%: The state (through EBN — Energie Beheer Nederland) holds a 40% participation (staatsdeelneming) in all gas and oil extraction projects in the Netherlands (both onshore and offshore). The 40% share gives the state 40% of the revenues after Vpb — the state effectively receives 40% of the post-Vpb profit. The operator pays the state's share to the Ministry of Economic Affairs and Climate (the Ministerie van Economische Zaken en Klimaat). The state also receives the cijns (the mining royalty) — a small fixed payment per unit of gas extracted (the cijns is approximately €0.01 per cubic metre of gas).
  • Gaswinningsbelasting (Rijksbijdrage): The gaswinningsbelasting (the specific gas extraction tax) is a levy on the additional profit above a benchmark return on investment (the Rijksbijdrage gaswinning — the state contribution for gas extraction). The levy applies to the Groningen gas field and other large fields (the small fields are exempt from the gaswinningsbelasting). The levy is approximately 50% of the profit above a 15% return on capital — the operator pays the levy to the state on top of the Vpb. The gaswinningsbelasting is deductible for Vpb purposes. The levy has been reduced as the Groningen production has been scaled down.

Groningen Gas Field — Phase-Out and Compensation

  • Afbouwfonds — the phase-out fund: The Groningen gas field has been in phase-out since 2018 — the production was reduced from ~50 bcm/y to ~4.5 bcm/y. The government established the Afbouwfonds (the phase-out fund) to compensate the state, the operator (NAM), and the region for the loss of gas revenues. The fund receives the remaining gas revenues and uses them to: (a) compensate the state for lost gas revenues, (b) pay for the final closure of the field (the ontmanteling — decommissioning costs), and (c) invest in the Groningen region (the nationale programma Groningen — the national programme for economic development of Groningen). The fiscal treatment: the Afbouwfonds is a government fund — payments from the fund are not taxable for the recipients (the payments are a capital grant, not business income).
  • Earthquake damage compensation — schadeafhandeling: The Groningen gas extraction has caused earthquakes (the Groningen bevingen — earthquakes up to 3.6 magnitude). The NAM (the operator) pays compensation for property damage (schadevergoeding) through the Tijdelijke Commissie Mijnbouwschade Groningen (TCMG — the Temporary Commission for Mining Damage Groningen) and later the Instituut Mijnbouwschade Groningen (IMG). The compensation payments are tax-free for the recipients — the homeowner does not pay income tax on the schadevergoeding. The compensation is also not subject to gift tax (schenkbelasting). The NAM can deduct the compensation payments as a business expense for Vpb purposes.

Offshore Oil and Gas — Small Fields

  • Kleine velden — standard Vpb only: The small offshore gas fields (the kleine velden — fields in the Dutch EEZ with reserves under ~10 bcm) are subject to standard Vpb (25.8%) and the 40% state participation (EBN), but are exempt from the gaswinningsbelasting (the specific gas extraction tax). The small fields include: the K, L, and blocks in the Dutch North Sea. The small fields benefit from the MIA/Vamil/EIA deductions for offshore infrastructure and the SDE++ subsidy for offshore wind integration with gas platforms (the winning van gas onder de zeebodem — gas extraction from the seabed).

For the full corporate tax regime and the 25.8% rate, see our Corporate Tax Guide →. For the renewable energy transition and the SDE++ subsidy for offshore energy integration, see our Renewable Energy Guide →. For the CO2 emissions trading and the EU ETS allocation for gas extraction, see our Green Business Tax Guide →. For the hydrocarbon excise duties (accijnzen op minerale olie), see our Excise Duties Guide →.

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