Starting a business in another country is always tricky. However, there are a few countries in Europe where they are so used to setting up new companies that the process is almost effortless. One of those countries is the Netherlands. Compared to its neighbours, the Netherlands has very little bureaucracy and has a very friendly attitude towards international entrepreneurs. That friendliness becomes clear when looking at all the tax incentives and the low corporate taxes in general. This has made the Netherlands the largest recipient of foreign direct investment (FDI) in entire Europe.
Practical steps to set up a company in the Netherlands
The road to a BV is quite short. It usually takes a few weeks from start to being full operational. The process works as follows:
Legal form and structure
First of all, we need to establish if you meet all the requirements to set up a BV company.
These are the requirements to incorporating and running a BV company.
- The BV needs to hold a valid and unique business name.
- 0,01 euro (so only 1 eurocent!) minimum share capital.
- At least one share with a voting right.
- The Articles of Association and a Deed of Incorporation (in Dutch) must be drafted before a public notary. The notary needs to be sure you understand what you are signing. Therefore, a translation or translator is required.
- A registered address in the Netherlands. This can be a residential, office or other type of address. We do recommend you to make sure that the business’ address reflects the nature and scale of the business.
- Substance requirements. The Dutch Tax Authorities usually require you to comply with a set of rules to make sure that your company is legit and has sufficient ‘ties’ with the Netherlands.
Secondly, we need to choose the right legal form and structure. But which Dutch legal form is best?
There are several legal forms to choose from: the sole proprietorship (one-man company), partnership and the BV limited liability company are the most well-known. Besides that there is the foreign branch. The latter has been out of fashion and is hardly seen as a serious legal form. Of the before mentioned, only the BV can be managed from abroad. That is because the others require residency in the Netherlands. On top of that, the low corporate tax rate makes the BV the most interesting choice for most small, medium and large enterprises in the Netherlands. The Dutch BV is the equivalent of the Norwegian AS.
A foreign entrepreneur in the Netherlands has roughly three options:
- Either he has an existing entity abroad that will function as the mother company of the Dutch daughter company,
- Or he sets up a single BV with himself as the main shareholder.
- A third option is the so-called BV holding structure. This means in effect that the founder sets up two BV entities, a holding BV and an operating BV. The owner holds the shares in the holding which in turn holds the shares in the operating BV. This is the same setup as the Norwegian AS holding structure.
If the Dutch entity will not be a daughter company of a foreign entity, then the BV holding structure is usually the most plausible way to structure the company.
Dutch holding structure
The Dutch BV holding structure has two main advantages: lower risk-profile and a lower tax burden. The business activity will take place in the operating BV. The holding BV will deliver 'management services' for the operating bv. Any profits made in the operating bv can be transferred as dividends to the holding BV without having to pay dividend tax. You will also not pay double profit tax over this profit. Plus, there is no inter-company dividend taxed, so this transfer is tax-free. In case of bankruptcy of the operating BV, your assets that you have "moved up" (cash, IP etc.) to the holding will be protected.
Also, if you one day sell the operating company, you will receive the profits from the sale in the holding where you can keep the money without paying additional profit or dividend tax over the sale. You can reinvest this tax-free from the holding into another entity. If you do not have a holding in place, the sales profit will be paid out immediately to yourself and you will pay much higher personal income tax over the sale profit.
Incorporate and register the BV
Different than in the Nordic countries, the Netherlands has a special type of lawyer who has to sign off on the legal paperwork. This person is called a notary (or notary public). Although the process has become more and more digital, a lot of work is still manual. There are very many notaries and some are more modern than others. On top of that, you will have to be on the look-out for professionals who are used to working with international clients.
The notary checks all the required documents. It is possible to sign the documents remotely. If you opt for that, you might need to get some of your documents stamped in your home country. Among other things, the notary will provide you with a so-called power of attorney. The notary will instruct you on what documents you should get stamped (or legalized).
After you have signed everything, the notary will register the BV at the chamber of commerce. Unlike in some other countries, this is a mandatory registration. The costs for the chamber of commerce registration are around 50 euros. It usually takes 24 hours until the registration is finalized after which you will be able to find your company in the register.
Bank account and VAT
A bank account can be set up after the company has been registered in the chamber of commerce registrar. This is done within 24 hours post-incorporation. With the chamber of commerce (kvk) registration number, you can visit any bank and open a bank account.
If you are looking for large business banks where you can get a business loan and other business services, we recommend ING or ABN AMRO. Perhaps you only need a relatively simple business bank account. In that case you are best of with Bunq. This is a fully-licensed bank that is completely mobile. Their customer service is excellent and their products well thought through.
Finally, do not forget to deposit the share capital in the business bank account. If you fail to do that, you will still be personally liable instead of the company itself.
A VAT number follows on average 7 working days after registration at the chamber of commerce. Obtaining a VAT number has not proven to be a problem for most of our clients. However, you should be aware that opening a bank account is much easier if the company has a resident director on the board.
Furthermore, it is important to have a well-established address, not just any address.The office address is one of the factors looked at by the tax authorities when they review your application.
Tax, accounting, legal compliance & insurance
Now that you are the proud owner of a BV with a Dutch bank account, you will at least need to keep an orderly administration, file for corporate income tax return, file and deposit annual accounts. This is done by a Dutch accountant.
Second, you should check if you need to have any legal documents in place. And third, check well if you need to take out any insurance.
The administration and tax obligations are relatively simple and usually not too costly. On average you will pay between 1000 and 2000 euros per year for full administration and tax services. This should include:
- Full bookkeeping package
- Quarterly VAT (BTW) return
- Corporate income tax return
- Annual accounts
- Personal income tax for main director/shareholder
Legal compliance for a BV usually includes:
- Shareholders agreement (if more than 1 shareholder)
- Management agreement (between holding and operating BV)
- Employment contract (if anyone is employed by the company)
- GDPR privacy agreements (if the business deals with personal data)
- Many others!
Company insurance is not mandatory in the Netherlands. However, it is usually wise to take out insurance based on your company's activity and risk-profile. For example, you can take out liability insurance if you want to be sure that you are well protected from claims. These days there are even cyber security insurances to compensate damages from hackers or data leaks.
Business relations between Norway and the Netherlands
A large share of foreign investment in Norway comes either directly from or goes through the Netherlands. On the other side, the Netherlands is Norway's third-largest export market. The trade relationship between the two countries goes back centuries. A similar culture, commercial mindset and mutual trust has made their trade relationship thrive.
Interested in exploring Dutch business opportunities?
NordicHQ has an office in Amsterdam, specialized in guiding Norwegian and Nordic entrepreneurs in their business journey to the Netherlands and the European mainland. Feel free to contact us by email or contact us directly via our contact form.