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.
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.
The Netherlands has become a main gateway to European talent for companies expanding abroad and as a magnet for business ventures from the United States, Australia, China and India.
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.
There are speedier and more cost-effective alternatives, with Bradford Jacobs opening the door to a hassle-free route into the Netherlands.
Work alongside our Professional Employer Organization (PEO) recruitment specialists, then utilize our Employer of Record (EOR) in-country experts to handle every aspect of compliance. Employers can depend on our in-depth knowledge of the Netherlands and how to navigate its challenging legislative issues.
Here we have set out some basic summaries of what you need to make the transition into the Netherlands market, whichever sector you operate in.
Starting a Business in the Netherlands
The usual choice for foreign companies establishing a legal entity in the Netherlands is a private limited liability company, known as a Besloten vennootschap, BV. The subsidiary is a separate legal entity from its parent company, due to having its own capital and independent administration.
Set procedures include the following steps:
- Submit an application to obtain a ‘certificate of non-objection’ from the Dutch Ministry of Justice in order to register a subsidiary.
- Check the business name is valid and unique and register with the Chamber of Commerce and the tax authorities.
- Open a corporate bank account to deposit any initial capital and receive certificate of deposit.
- Obtain the ‘declaration of non-objection’ from the Ministry of Justice.
- Have the Articles of Association and all relevant documents notarized by a Dutch lawyer and then submitted to the Chamber of Commerce.
- All documents are submitted to Chamber of Commerce with the certificate of bank deposit and declaration of non-objection.
- The subsidiary must register with tax and social insurance authorities.
Once the company has been cleared to operate, in order to employ and payroll staff other procedures must be followed, including:
- Registering with the tax authorities through the Dutch Tax and Customs Administration (Belastingdienst).
- Registering with the Social Security Bank (SVB) which coordinates the social insurance systems – national insurance for individuals legally living in the Netherlands and employee insurance for those working in the country.
- Registering with the Employee Insurance Agency (UWV), which operates under the Ministry of Social Affairs and Employment (SZW) and handles benefits covering such as unemployment and sickness.
- Obtaining the Citizen Service Number (BSN) for all employees so they can interact and liaise with national, regional and municipal authorities.
Expanding Business into the Netherlands
Foreign companies expanding into the Netherlands are entering one of Europe’s leading economies, in a prime geographical location for extending their reach into the continent’s massive consumer market numbering hundreds of millions. The World Bank ranks the Dutch economy as 17th largest in the world and fifth in the European Union with a Gross Domestic Product (GDP) expected to reach 1,012 billion US dollars by the end of 2021.
Leading sectors include agriculture and agri-food research, creative industries, chemicals, energy and high-tech systems and materials.
The Netherlands is a popular target for expansion with its internationally-focused economy, strong financial sector, quality of life, a pro-business government and its geographical location as a gateway to the rest of mainland Europe and further east.
Incoming companies have to toe the line in terms of compliance with employment laws and Collective Labor Agreements that provide unbreakable protections for the workforce. There are other questions too: where will you find distributors, manufacturers and offices? Before you make your move – speak to Bradford Jacobs.
Netherlands Business Facts
- Capital City – Amsterdam
- Population – 17 million
- Official language – Dutch, Frisian (spoken only in Friesland).
- Economy and world ranking – 2021 - €862 (US$1,012) billion; 17th-largest economy in world; 5th-largest in EU
- Leading sectors – Agriculture and agri-food research, creative industries, chemical industry, energy and high-tech systems and materials
- Main exports – includes machinery, transport equipment, refined and crude petroleum, broadcasting equipment, food, packaged medicaments, computers, office machine parts
- Main imports – includes electrical machinery and computers, mineral fuels and oil, food and live animals, vehicles, pharmaceuticals, optical, technical and medical apparatus
- Main trading partners – EU, UK, USA, China
- Government – The Hague. Constitutional monarchy – parliamentary democracy
- Currency – Euro
Advantages and Challenges of the Netherlands’ Market
Advantages of expanding into the Netherlands market include:
- Logistics: Ranked second best globally for logistics by the World Bank
- Innovation: The Global Innovation Index ranked the Netherlands fifth-best in the world in 2020
- Workforce: Highly-skilled and multi-lingual from an outstanding education system
- Location: Ideally placed for further expansion into the wider European market
- Trade: Over 90% of Europe’s most lucrative consumer markets are within 24 hours by road or rail
- Communications: More than 90% of households have high-speed broadband
- Taxation: Double taxation treaties with over 80 nations
Challenges of operating in the Dutch market:
- Property: 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
- Taxation: Dealing with corporation taxes can take up to 10 payments annually
- Permits: Construction licenses involve 14 separate procedures and can take up to five months to obtain
Limited Company / Subsidiary or Branch in Netherlands?
International companies targeting Netherlands for expansion will generally choose a limited liability subsidiary (Besloten vennootschap, BV) as they have independent legal status from the parent company, which are generally free from responsibility for any debts or liabilities of the subsidiaries.
The parent company has the advantage of exploring the potential of the Netherlands’ market. There is also the potential to move further afield across Europe and into Scandinavia.
However, it is also important to see what other options are out there, such as a branch, and what their characteristics are before deciding what is the best option for you:
Main characteristics of a subsidiary:
- It is a separate legal entity to the parent company, which has little responsibility for the subsidiary’s debts or liabilities.
- Subsidiaries do not have to provide the parent company’s financial records or accounts.
- Can operate under a different name to the parent company and pursue its own contracts and business activities.
- The subsidiary is treated the same as a local Netherlands’ company. It pays corporate tax on its worldwide income and is also liable for VAT and social security taxes.
- Subsidiaries can have a totally different name from the parent company, pursue different business activities and form their own contracts.
- Subsidiaries are treated as resident for tax purposes but can benefit from double tax treaties.
Main characteristics of a branch:
- The branch is not a separate legal establishment but an extension of the foreign parent company, which is responsible for the branch’s, debts, and liabilities.
- Branches have the same name as the parent company and follow the same business activities.
- The branch is subject to Dutch laws and those of the parent company’s home country.
- Branches must adhere to all tax and employment laws and register with the tax and social security authorities and obtain a tax identification number.
- The branch must obtain licenses for the sectors in which it operates.
Expert guidance is vital when weighing the options between a subsidiary and branch in the Netherlands.
There is an alternative route – one that is quicker, stress free, cost effective and will have you up-and-running in days rather than weeks or even months. Bradford Jacobs will locate top talent for your company.
Once you select your new employee our Employer of Record (EOR) specialists will handle every aspect of employment law, including payroll and tax.
Legal Structure for Netherlands Market Entry
The legal structure for companies in the Netherlands is found in a specific section on corporate law in the Dutch Civil Code that covers the incorporation, structure, and the operation of legal entities.
The legal structure for a limited liability company:
- The legal structure for a subsidiary allows it to operate independently from the parent company, under its own name and able to follow its own commercial and business activities.
- Subsidiaries in the Netherlands are likely to be formed as a limited liability subsidiary (Besloten vennootschap, BV) as they have independent legal status to establish separate liability.
- The structure includes an unlimited number of shareholders with a board of directors in charge of day-to-day running of the company’s affairs.
- It is based on notarized documents including articles of incorporation.
The legal structure of a branch:
- Legally, the branch operates under the same name and follows the same business activities as the parent company, in effect a local office of a non-Dutch legal entity.
- The branch is established by a resolution of the parent company and then enrolls with the Dutch Trade Register.
- The owning company’s accounts also have to be submitted to the Dutch Trade Register.
- The branch has no equity or board of directors, but legally the parent company’s directors are responsible for its debts and liabilities.
Opening a Business Bank Account in the Netherlands
If you are planning on launching a business in the Netherlands, one of the initial steps will be to open a Corporate Bank Account with an International Bank Account Number (IBAN). This will allow your business to make international transfers and receive payments from customers, easily and securely. It will also allow you to apply for a business loan.
Although it is not a legal requirement, it is important to keep your personal finances separate from your business account as the tax office will want to see your records. With any bank, their due diligence and awareness of money laundering policies, they will want transparency and to be able to follow the money.
If you already have an account in the SEPA Zone (Single Euro Payment Area) then you do not need to open a new one.
- Registration with the Chamber of Commerce (KVK)
- National ID or passport
- A Dutch Citizen Service number (BSN) from the municipal offices of residence
- A Business address which may also be your personal address
Different banks may require more information, such as company papers, and most want you to pay a visit to the bank in order to open the account. Those who are popular with entrepreneurs and start-ups include ABN AMRO; ING; Bunq and Rabobank.
Are you aware of the Foreign Investment Agency (NFIA) which is part of the Netherlands Enterprise Agency (RVO)? They support entrepreneurs and new Start-ups, so you may be able to do the Quick Scan ‘Dutch Business Bank Account’. This is a program to help foreigners who are in the process of registering with the Dutch Chamber of Commerce (KVK). Non-EU residents will also require a residency permit e.g., through the Entrepreneur or Start-up scheme.
This is one of the benefits of working with a recognized facilitator, such as Bradford Jacobs, we are familiar with all of the banking procedures to allow your business to progress faster.
Company Formation in the Netherlands
Companies in the Netherlands come under the ‘corporate and company law’ section of the Dutch Civil Code. Legal entities include these main company types:
- The Public Limited Liability Company (Naamloze vennootschap, NV)
- The Private Limited Liability Company (Besloten vennootschap, BV)
- The Foundation (Stichting)
- The Association with full or limited legal authority (Vereniging met volledige of beperkte rechtsbevoegdheid)
- The Cooperative Association (Coöperatie)
- The Mutual Insurance Company (Inderlinge waarborgmaatschappij)
Foreign companies will typically choose to register a limited liability company and must follow strict registration procedures. These include:
- Apply to obtain a ‘certificate of non-objection’ from the Dutch Ministry of Justice in order to register a subsidiary.
- Check the business name is valid and unique and register with the Chamber of Commerce and the tax authorities.
- Open a corporate bank account to deposit initial capital and receive certificate of deposit.
- Obtain ‘Declaration of non-objection’ from the Ministry of Justice.
- The notarized Articles of Association, application for establishing a subsidiary and the foundation deeds are submitted to the Chamber of Commerce with the certificate of bank deposit and declaration of non-objection.
Once the company is cleared to operate, other responsibilities include:
- Registering with the Dutch Tax and Customs Administration (Belastingdienst)
- Registering with the Social Security Bank (SVB), which coordinates the social insurance systems – national insurance for individuals legally living in the Netherlands and employee insurance for those working in the country
- Registering with the Employee Insurance Agency (UWV), which operates under the Ministry of Social Affairs and Employment (SZW) and handles benefits covering such as unemployment and sickness
- Obtaining the citizen service number (BSN) for all employees for liaising with national, regional and municipal authorities
Finding an office in the Netherlands
Companies targeting expansion will find optimum locations for setting up an office for all sectors of industry from those needing large modern premises down to office sharing spaces. Amsterdam for instance has a triple A status for ease of setting up, opening, and running a business. Netherlands as a whole is ranked as a ‘Happy economy with Happy people’. So, what do you want to look for when choosing a location for your office premises?
- What local government funding or tax breaks are available for Start-ups and new business?
- Is it near to wholesalers, manufacturers of distributors?
- Is it part of a business cluster / hub?
- Is the locality clean and good for mental health, provides services and accommodation to attract the best of the best?
- Do you need to be close to good travel links for people and product movement?
- Is it within budget, but still has room for expansion?
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 labor with appropriate skills
- Improve supply chains
- Maximize ideas, knowledge, research, and development opportunities
Dutch business cluster examples include:
The Hague – a safe and secure cluster with a high concentration of organizations and embassies surrounded by 400 security businesses. HackerOne is a security cluster.
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 innovation in 3D bio-printing, stem cell and 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.
Bradford Jacobs, as part of their international expansion services, can act as office brokers for companies expanding into the Netherlands.
Finding a Manufacturer in the Netherlands
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? Or can they outsource?
- 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.
You may also want to consider:
- Market Research to avoid manufacturing a product in a saturated market
- Licensing to a company that can handle manufacturing, marketing, and distribution
- Can the manufacturer build and test a prototype?
- Protecting your intellectual property
Research and check their reputation in the industry and explore links to Dutch manufacturers. You can also reach out to local business groups and check local business directories:
- ABC Netherlands - B2B information in Netherlands.
- BizAdee Netherlands Business Directory.
- BizIn Europe Netherlands Business Directory.
- Bizz Lister Netherlands Business Directory.
- Expat.com Netherlands Business Directory.
- MacRae's Blue Book Business directory, with detailed information of companies in Europe.
- PRLOG Netherlands Business Directory.
Finding a Distributor in the Netherlands
A successful move into the Netherlands will prove wasted without a front-line distributor to move the products around the country, or farther afield into 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, so translated introductory materials and an intermediary will be essential.
Once you have a meeting, you can engage in further explanation yourself. The Dutch are open and direct in their business dealings and expect their counterparts to be the same.
When looking for that perfect partner, use all of the facilities available such as: B2B networking, trade shows, directories, local magazines, and social media are all good sources for contacts to become familiar with your new general area.
You can also consider joining a trade mission from your home country – where the best companies should be targeted, events organized, and one-to-one meetings are more likely. Also, joining specific sectors on LinkedIn could enable you to access decision makers quicker. It is also advisable to investigate your competition, as they will have already been down this road and information may be available.
Or a better option would be to partner first with a facilitator such as Bradford Jacobs who have the know-how and save you trawling through the information when you should be on to the next step!
Explore links to distributors, such as:
At Bradford Jacobs, we mean business!
Treat Bradford Jacobs as your business consultant when planning your move into the Netherlands. Our in-country specialists will steer you towards the frontline manufacturers and distributors and help you locate your offices in prime locations for your specific business activities.
We find the staff, we get them working, and your company will be up and running in no time.
We are ready - contact us now!