The Netherlands’ economic influence stretches well beyond the borders of what is a relatively small country. The Dutch economy is considered the most competitive in Europe, fourth most competitive in the world according to the World Economic Forum and 2020 IMD rankings, as well as fifth in the 2020 Global Innovations Index
This competitive environment revolves around a highly-educated, dynamic and innovative workforce and a pro-business government that helped attract a record number of foreign companies to invest and expand into the Dutch market in 2019.
Geographically, the Netherlands is ideally placed with 95% of Europe’s most lucrative markets reached within 24 hours by road from Amsterdam or Rotterdam, plus an infrastructure of airports, railways, waterways and ports that connects the country domestically and internationally.
Expansion into a developed economy such as the Netherlands involves huge challenges - from finding highly-qualified staff to complying with strict employment laws and tax and payroll regulations. These challenges can be overcome working alongside a Professional Employer Organisation (PEO) such as Bradford Jacobs and relying on our complete understanding of the Dutch market, its culture, customs and business practices. Here we have set out some basic summaries of what you need to make the transition into the Dutch marketplace, whichever industry you are in.
Starting a Business in the Netherlands
Companies must register with the Dutch Chamber of Commerce (KVK) and register for paying Dutch taxes. Businesses must also:
- Verify employees are legally allowed in the Netherlands and which visas / permits must be obtained
- Open a business bank account
- Select a legal business structure, such as limited company
- Select a trade name for your company
- Register with the Dutch Commercial Register and Tax Administration
- Register as an employer for payroll taxes and social security
- Check whether you need professional qualifications to run your business
- Report to the municipality if any employees work from home as this can have tax implications
Instead of attempting to create your own legal entity in the Netherlands, outsource your recruitment needs to Bradford Jacobs. We are perfectly placed to recruit your staff and steer the most efficient course through the complex procedures when expanding operations into the Netherlands, including compliance with taxation, payroll, employment, filing and banking, set-up and registration.
Follow the links for your essential briefing on expanding into the Dutch market, ‘fast facts’ about the sector, plusses and minuses and why companies like doing business in the Netherlands. Other items on the agenda for expansion concern whether to form a limited company / subsidiary or open a branch, legal structures, corporate and business taxes, banking and registration. https://business.gov.nl/starting-your-business/checklists-for-starting-a-business/how-to-start-a-business-in-the-netherlands-a-checklist/
Netherlands Business Facts
- Capital City – Amsterdam
- Population – 17 million
- Official language – Dutch, Frisian (spoken only in Friesland). Business language – Dutch and English
- Economy and world ranking – €686 billion; 17th largest economy in world; 7th largest in EU.
- Leading sectors – Agriculture and agri-food research, creative industries, chemical industry, energy and high tech systems and materials
- Main exports – Refined petroleum, broadcasting equipment, packaged medicaments, computers and optical readers, integrated circuits
- Main imports – Mineral fuels and oil, electrical machinery, vehicles, pharmaceuticals, optical, technical and medical apparatus, plastics
- Main trading partners – EU, USA, China, Norway, Poland, Sweden, Russia
- Government – The Hague. Constitutional monarchy – parliamentary democracy
- Currency – Euro
Advantages and Disadvantages of the Netherlands’ Market
Reasons to do business in the Dutch market include:
- Highly innovative: The Netherlands is rated second in the world for logistics performance and third for innovation by the World Bank and fifth in the 2020 Global Innovations Index
- World-class education: A highly-skilled, multi-lingual workforce and outstanding education system are central to Dutch society
- Ideal location for expansion: Its size and location make the Netherlands an ideal trial market for businesses seeking expansion into the European market
- Gateway to key markets: 95% of Europe’s most lucrative markets are within 24 hours by road of Amsterdam and Rotterdam
- Well networked: The Netherlands boasts a 100% digital communications network, with 99% of households able to access broadband
Challenges facing companies planning to establish a subsidiary in the Dutch market include:
- If setting up a subsidiary requires registering a property, this involves a notary conducting a title search at the Land Registry, transferring the deed and notifying the tax authorities
- Paying business taxes in the Netherlands is particularly time consuming, with nine corporate tax payments required each year taking an average of nearly 30 company hours to file
- Dealing with construction permits can take around 150 days and 14 separate procedures. It can take around 100 days to be connected to an electricity supply
Linking with a PEO and Employer of Record (EOR) organisation such as Bradford Jacobs will bring you into daily contact with our in-country experts who will negotiate the most efficient route through difficulties such as these. In addition the vital sectors of tax laws, visa and permit applications, payroll and employment regulations can be crossed off your ‘to do’ list as Bradford Jacobs take control – leaving you to concentrate on daily interaction with your employees and running your business.
Why Companies like doing Business in the Netherlands
The Netherlands is among the world’s most open economies and among the best for technology and innovation. The outstanding infrastructure includes Europe’s largest port in Rotterdam, a competitive business climate and a strong treaty network.
The Dutch tax system features several incentives to stimulate innovation and attract foreign investment and expansion. As an internationally-oriented nation, the Netherlands is home to many highly-educated foreign workers. Both politically and economically the Netherlands has proved to be a stable nation. Other attractions include:
- 19% Corporate Tax (under €200,000 taxable profit) 25% above
- No VAT on transactions with EU member states
- The highest number of double taxation treaties worldwide
- Over 90% of locals speak English, with many also speaking French and German
- Outstanding international relations, political stability and strong legislature
Establishing a Limited Company / Subsidiary or Branch in the Netherlands
Foreign businesses establishing a presence in the Netherlands typically choose between setting up a branch or a subsidiary / limited company, which have substantial differences. Both have advantages and disadvantages.
- Easier to manage tax/accounting regime with no need to publish financial results
- No legal capacity as it is operated by parent company and is not a separate Dutch entity
- Parent company’s Articles of Incorporation are sufficient for the branch
- Losses can be offset against parent company’s profits
- The parent company will be responsible for the liabilities of the branch
Subsidiary / Limited Company:
- The parent company is not liable for the Dutch subsidiary and shareholders have limited liability
- More complex and costly to set up
- Medium to large companies must publish financial statements
- Dutch nationals may feel more comfortable dealing with a subsidiary
- Can engage in more commercial activities than the parent company
Setting up a subsidiary or a branch is a complicated and potentially hazardous venture. The sensible approach to have your business up-and-running in the shortest time possible is to use a global recruitment authority PEO such as Bradford Jacobs to source your staff. Your company can have a presence in the Netherlands within days rather than months.
Legal Structures for Netherlands Market Entry
When setting up a legal structure, a civil law notary has to draw up the relevant papers, including the registration at the Netherlands’ Chamber of Commerce (KVK). If your company is a legal entity, you will not be personally liable for the company's debts. There are some exceptions to this, for instance if grave mismanagement, recklessness or fraud on your part led to the debts.
If the business is a legal entity or partnership it will receive an RSIN number when registering at the Chamber of Commerce. This is the business equivalent of a citizen service number (BSN).
Legal structures with corporate (legal) status are:
- Private limited company (bv or besloten vennootschap)
- Public limited company (nv or naamloze vennootschap)
- Cooperative (coöperatie)
- Association (vereniging)
- Foundation (stichting)
Business structures without corporate (legal) status are:
• Sole proprietor or sole trader (eenmanszaak)
• General partnership (vof or vennootschap onder firma)
• Professional partnership (maatschap)
• Limited partnership (cv or commanditaire vennootschap)
If you choose a business structure without legal status, you will be personally liable for the debt of your company with your private capital and belongings.
Netherlands Business Taxes
Business owners in the Netherlands must pay tax in the Netherlands, which can include taxes on income, turnover and profit, municipal taxes and environmental taxes. If you own an international business, you may also have to pay import levies. The Dutch Tax and Customs Administration (Belastingdienst) supply detailed information on Dutch taxes and tax matters.
Numerous tax incentives are available to business owners in the Netherlands, but all businesses still need to pay tax. For example, anyone in business has to file annual tax returns – either income tax (inkomstenbelasting) or corporation tax (vennootschapsbelasting)
Turnover Tax / Value Added Tax: (BTW omzetbelasting is added to most goods and services (0%, 9%, or 21%). Businesses can usually reclaim VAT paid on goods and services they purchase. Turnover tax returns are filed monthly, quarterly or annually. If the business is established outside the Netherlands, but trades in the Netherlands, they still have to deal with Dutch VAT rules. The rules that apply to businesses outside the Netherlands differ from the rules applicable to businesses in the Netherlands.
Corporation Tax: A private limited or public limited company (besloten vennootschap, BV / naamloze vennootschap, NV), must file corporate income tax returns (vennootschapsbelasting).
€0 - €245,000 15%
€245,000 and above 25%
(As of January 1 2021)
Dutch Dividend Tax: A private or public limited company (besloten vennootschap, BV / naamloze vennootschap, NV) may distribute profits to shareholders. This usually takes the form of a dividend. If so, the company also have to pay Dutch dividend tax (dividendbelasting).
Opening a Business Account in the Netherlands
Expenses build up before launching a business ¬- make certain to create your business accounts as soon as possible. Foreign companies must have an International Bank Account Number (IBAN) and already be registered with the Dutch Chamber of Commerce (KVK), have a valid form of ID such as a passport or European Identity Card; non EU residents will also require a residency permit (e.g. a visa).
An IBAN enables account holders in SEPA countries to make national and cross-border Euro payments easily and securely. SEPA stands for: Single Euro Payments Area (SEPA). SEPA consists of the EU member states, plus, Iceland, Liechtenstein, Norway and Switzerland. After January 1 2021 the United Kingdom will no longer be part of the EU and may be affected in regard to payments. Bradford Jacobs will continue to monitor this situation.
A benefit of working with a recognized facilitator, such as Bradford Jacobs, is being able to utilise the Quick Scan ‘Dutch Business Bank Account’. The bank will let you know within five working days if you are eligible to apply for a business account. The scan is intended for entrepreneurs who are already in the process of registering with the KVK and obtaining a residence permit. Based on the information provided, the bank determines if an application can be dealt with.
Registering a Company in the Netherlands
There is a standard process to be followed in registering a company in the Netherlands.
- Submit an application to obtain a ‘certificate of non-objection’ from the Dutch Ministry of Justice
- Check with the Dutch Chamber of Commerce that the business name is valid and unique and then register the name
- Register the company with the Dutch Tax authorities
- Open a corporate bank account to deposit initial capital and obtain an IBAN number
- Have the Articles of Association and all relevant documents above notarised by a Dutch lawyer and then submitted to the Chamber of Commerce
Before setting out on this road to establish a subsidiary, make a call to Bradford Jacobs to learn how we will take on board all of the above, plus all of the administration requirements necessary to have your business operating in the shortest time possible.
Finding an Office in the Netherlands
Companies targeting expansion will find optimum locations for setting up an office in the Netherlands for all sectors of industry. The Netherlands has thriving and rapidly-developing ‘business clusters’ where employers can draw on world-class academic and research talent and highly skilled employees. Locating in the relevant business cluster can help companies to:
- Access a larger pool of labour with appropriate skills
- Improve supply chains
- Maximise ideas, knowledge, research, and development opportunities
Dutch business cluster examples include:
- The Hague – a safe and secure cluster with a high concentration of organisations and embassies surrounded by 400 security businesses. HackerOne is a security cluster and the brainchild of security leaders from Facebook, Microsoft and Google
- Rotterdam – Netherlands’ second largest city and the home of Europe’s largest and busiest port with port-related tech start-ups
- Utrecht - boasts some 400 start-up companies. Utrecht Science Park fosters innovations in 3D bio-printing, stem cells, cancer research and sustainable city planning
- Amsterdam – the nation’s capital and home to some of Europe’s top accelerators
- Eindhoven - is a hub for high tech systems and design
Many Dutch entrepreneurs run enterprises from their home address. Others lease commercial offices, shops, or other premises. Depending on which option you choose, your protection and obligations will differ.
An alternative is to rent space in office units. The advantages are relatively low rent and flexible conditions and notice terms are usually short. This enables you to get out quickly. Instant Offices Ltd. can help you search for serviced offices, executive or small office suites and Regus Ltd. operate fully serviced private offices and business centres.
Bradford Jacobs, as part of their international expansion services, can act as office brokers for companies expanding into the Netherlands.
Find a Netherlands Manufacturer
Companies may need to partner manufacturers in the Netherlands. Checking the options before making the move is critical to success. Globally ambitious businesses and entrepreneurs must ask key questions in their search for a manufacturing partner.
- Do they hold relevant quality certificates?
- Can they deliver direct to customers?
- Can they keep up with demand?
- Are they financially sound?
- How will local customs impact production?
- How will language impact on communication?
- What is their minimum order quantity?
- Discuss possible penalties for poor quality service or late deliveries.
- Research and check their reputation in the industry and explore links to Dutch manufacturers.
Reach out to local business groups and check local business directories.
ABC Netherlands B2B information in Netherlands. https://abc-d.com/
BizAdee Netherlands Business Directory. http://nl.bizadee.com/
BizIn Europe Netherlands Business Directory. https://nl.bizin.eu/
Bizz Lister Netherlands Business Directory. http://www.bizzlister.nl/en/
Expat.com Netherlands Business Directory. https://www.expat.com/en/business/europe/netherlands/
MacRae'S Blue Book Business directory with detailed information of companies in Europe.
PRLOG Netherlands Business Directory. https://biz.prlog.org/nl/
In the Netherlands, the biggest segments within manufacturing are: refineries and chemistry (23% of total production); electronics, machinery (22%); food and beverages (20%); basic metals and products (12%); transport equipment (5%); paper and printing (5&); wooden and building material (4%); and textile, leather products (2%).
Find a Netherlands Distributor
A successful move into the Netherlands will prove wasted without a front line distributor to move the products around the country, or farther afield in mainland Europe. Finding the perfect match among the distributors is critical to accomplishing your objectives. Treat distributors as long-term partners and work with them to formulate goals and business plans.
Finding an agent or distributor requires clear to-the-point communications. The decisive part is getting to the right person initially by phone, which is still difficult to do in English. Therefore translated introductory materials and a Dutch intermediary will be essential. Once you have a meeting, you can engage in further explanation yourself. The Dutch are rather direct, and expect their counterparts to be the same.
Explore links to distributors, such as:
Enter new Markets with Bradford Jacobs
Bradford Jacobs are the gateway for companies seeking to enter new markets in the Netherlands, farther into mainland Europe and worldwide by recruiting the staff for your expansion plans. Our specialist teams have in-depth global knowledge of how to enter new territories, how to comply with laws relating to employment, registration, taxation and payroll. We provide ongoing consultation on human resources through our experience of individual cultures and customs of every county being targeted for international expansion. Work with Bradford Jacobs to expand in the Netherlands, to put the right staff in place.