Doing business in the Netherlands
If you are thinking of doing business in the Netherlands, you will need to familiarize yourself with the country's business culture and legal system. In this blog post, we will provide an overview of the Dutch business landscape, including information on starting a business, tax advantages, Dutch etiquette, and more. We also provide tips on finding office space and setting up a virtual office in the Netherlands.
Company formation in Holland
To set up a company in the Netherlands, you will need to go through the process of company registration. This process can be complex and there are a number of steps that you will need to take in order to complete it. The following steps will give you an overview of the process of company registration in the Netherlands:
- Choose a business name: In the Netherlands, you will need to choose a business name for your company. The business name must be unique and cannot be used by any other company in the country.
- In case of a limited liability company (BV), you register the company at a notary public first. The notary drafts the deed of incorporaiton. This document will outline the basic details of your company, such as its name, purpose, and shareholders. Afterwards the company is registered at the chamber of commerce (KvK).
- Register with the Chamber of Commerce: In order to register your company in the Netherlands, you will need to register with the Chamber of Commerce. In case of a sole proprietorship you go straight to the chamber of commerce. This is the organization that oversees business registrations in the country. Registration costs around 50 euros.
- Obtain a tax number: To do business in the Netherlands, you will need to obtain a tax number from the Dutch Tax Authority. This number is used to identify your company for tax purposes.
- Register with social security: You will also need to register with social security in order to pay employee social security taxes.
- Open a bank account: In order to conduct business in the Netherlands, you will need to open a bank account for your company. This Dutch bank account must be in the name of your company and it must be denominated in Euros.
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:
Requirements to setting up a company in the Netherlands
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.
Get your business in the Netherlands started?
Get in touch with us to learn more about our company services. Our network of professionals gladly helps you starting up your Dutch business.
Which legal structure is right for me?
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, German GmbH, the UK Limited company, the Norwegian AS and the Swedish AB.
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.
Let's take a small consulting business that wants to relocate to the Netherlands and will employ a small team. There is one shareholder and director. In the future, new partners or investors might come on board.
In this case you can either set up one BV or a holding structure.
- Single BV is directly owned by the shareholder (person). Profits are taxed with corporate income tax. Distributions of profits to the shareholder (person) will be taxed immediately.
- A BV holding structure consists of a holding BV (in case of several shareholders, several holding BV's) that hold the shares in the operating BV. Profits in the operating BV are taxed and can then be distributed to the holding BV tax-free. Capital built up in the holding BV is protected from bankrupcy in the operating BV. In case of a sale of shares in the operating BV (for example when the business is sold), the profits will be transferred to the holding BV where taxation can be postponed and profits reinvested free of tax.
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 for example 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.
Business opportunities in the Netherlands
The Netherlands is a great place to do business, thanks to its strong economy and favorable business climate. There are many opportunities for businesses in the Netherlands, including in the manufacturing, agriculture, and services sectors. The Dutch market is also well-connected with other markets in Europe and around the world, making it a good location for export-oriented businesses.
The best industries to start a business in the Netherlands vary depending on the specific sector and region. However, some of the most promising sectors for Dutch businesses include:
- IT products and services: If you are thinking of starting an IT business in the Netherlands, there are many opportunities waiting for you. The Dutch IT sector is thriving, with many companies offering innovative and cutting-edge products and services. In addition, the Dutch market is well-connected with other markets in Europe and around the world, making it a good location for export-oriented businesses.
- E-commerce: the Dutch market is very open to online commerce, with a extraordinarily high rate of internet penetration and a large number of online shoppers. In addition, the Dutch are comfortable making purchases online, and they are used to paying for goods and services with various payment methods.
- Agriculture: The Netherlands is a major producer of agricultural products, including meat, dairy, vegetables, and flowers. There are many opportunities for agri-businesses in the Netherlands.
- Manufacturing: The Netherlands is a leading manufacturer of machinery, chemicals, and other industrial products. If you are looking to start a manufacturing business in the Netherlands, there are many opportunities available.
- Services: The Dutch services sector is thriving, with many opportunities in sectors such as tourism, healthcare, and financial services. If you are looking to start a service business in the Netherlands, there are many opportunities waiting for you.
Challenges of doing business in the Netherlands
There are a few challenges to doing business in the Netherlands. Firstly, the Dutch business culture can be different than what you are used to. Dutch people are known for being very direct, which can be challenging for foreign entrepreneurs. It is important to remember that they are (usually) not being rude, it is simply the Dutch way of communicating.
Additionally, the cost of living and doing business in the Netherlands is relatively high when compared to other countries in Europe. However, the cost of living is still lower than the Nordic countries and parts of the UK. Especially in the city of Amsterdam it can be hard to find housing.
Finally, the Dutch labor market can be quite regulated, which can make it difficult to hire and fire employees.
Business consultants in the Netherlands
Accounting in the Netherlands
When doing business in the Netherlands, you will need to keep accurate financial records and file regular tax returns. This can be a complex process, so it is important to seek the help of a qualified accountant.
There are a number of accounting services that a company can use in the Netherlands. For example, you can hire an accountant to help you with bookkeeping, preparing your tax returns, and advising on financial and business matters.
We recommend you to consult an accounting professional to find out which accounting services are best suited for your company.
Accountants and bookkeepers in the Netherlands
Tax advantages of doing business in the Netherlands
The Dutch tax system offers a number of advantages for businesses, including a low corporate tax rate for SME's and a wide range of tax incentives. Additionally, the Netherlands has double taxation agreements with many countries, which can help to reduce your tax bill.
Some of the other tax incentives available in the Netherlands include the research and development tax credit, the foreign-trade deduction, and the investment allowance.
Another well-used tax advantage is the "30 percent ruling" which allows foreign employees (including those setting up their own limited company and employing themselves in it) to get a large tax cut on their personal income tax.
Finally, the Dutch holding BV offers international businesses certain advantages in optimizing their legal and tax structure.
If you would like to find out how much you will need to pay as a business or person in the Netherlands, check out our tax guide for the Netherlands.
Tax advisors in the Netherlands
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.
Opening a business bank account in the Netherlands
Opening a bank account in the Netherlands can be a complex process, so it is important to seek the help of a qualified accountant or banker.
A bank account can be set up after the company has been registered in the chamber of commerce registrar (KvK). This is done within 24 hours post-incorporation. With the chamber of commerce registration number, you can visit any bank and open a bank account.
It is important to keep in mind that banks in the Netherlands often have specific requirements on who is allowed to open a business bank account. Some require a resident director, others even a Dutch national on the company. These requirements are continuously shifting, so make sure to apply at several banks.
There are a number of different banks in the Netherlands, each with their own set of products and services. It is important to research the different options and find a bank that best suits your needs. 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.
After you open the business bank account
First of all, 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.
Furthermore, 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.
Finally, 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.
Business banks in the Netherlands
Visa and relocation to the Netherlands
EU nationals can freely work, do business and live in the Netherlands. There are no restrictions on where they can work or live. Additionally, there is no need to apply for a visa or residency permit to live in the Netherlands.
If you are not an EU national, you will need to obtain a visa and residency permit in order to work or do business in the Netherlands. The process for obtaining a visa and residency permit can be complex, so we recommend you to consult a legal professional. You can also read more which rules, visas and advantages apply in your situation on the Dutch Immigration website.
Relocation and Visa Experts
Business licenses in the Netherlands
There are no business licences need to start up a business in the Netherlands. However, certain industries require businesses to have additional licences, certificates or other paperwork in order. Examples are parts of the logistics industry, the pharma and biosciences industry and selling financial or insurance products. We recommend you to consult a legal professional if you are active in a regulated industry.
Business contracts and legal compliance in the Netherlands
When doing business in the Netherlands, it is important to have a number of legal contracts in place. These contracts will help to protect your interests and ensure that your business is operating in accordance with Dutch law.
Some of the most important legal contracts for businesses in the Netherlands include:
Employment contracts: All employees in the Netherlands must have an employment contract. The contract should specify the terms and conditions of the employee's employment, including pay, hours, vacation, and benefits.
Contractor agreement: A service contract is a contract between a service provider and their client. The contract should specify the services that will be provided, as well as the price and payment terms.
Terms and conditions / terms of service: General terms and conditions are conditions that are intended to be part of multiple agreements. These terms and conditions are often referred to as the ‘small letters’. They describe conditions, such as delivery conditions and payment conditions but explicitly do not indicate the core of the agreement.
Browse all relevant business contracts in the Netherlands in our legal catalogue.
Legal advisors and lawyers in the Netherlands
Office, virtual office and real estate in the Netherlands
The Netherlands is a country in northwestern Europe with a population of more than 17 million people. The Dutch economy is the sixth largest in the world and is dominated by services, which account for more than three-quarters of GDP. The Dutch office market is one of the most expensive in Europe. Amsterdam is the most expensive city to rent office space in the Netherlands, followed by Rotterdam and Utrecht. Despite this high cost, the Dutch office market remains very competitive.
When looking for a virtual office in the Netherlands, it is important to choose a provider that is reliable and offers a range of services that meet your needs. Some of the most important services to look for include:
- A professional and business-like mailing address
- A local Dutch telephone number
- A range of office services, such as meeting rooms, secretarial services, and call forwarding
- The ability to work from anywhere in the world
(Virtual) office providers in the Netherlands
Get funding for your Dutch company
There are a number of ways to get funding for your Dutch company. One of the most popular methods is to raise money from private investors. Private investors can be individuals or companies that are interested in investing in your business. The Netherlands has a wide network of so-called Business Angels.
Another option is to seek funding from venture capitalists. Venture capitalists are investors who are willing to risk their money in order to help young or high-growth businesses grow. They typically invest in businesses that have the potential to generate a high return on investment.
You can also look for funding from government organizations or banks. Government organizations often provide funding to small businesses that have a strong track record and are considered to be high-growth businesses. Banks typically provide loans or lines of credit to businesses that can demonstrate that they have a sound business plan and are likely to repay the loan.
Investors and lenders in the Netherlands
Dutch business etiquette
It is important to be aware of the Dutch business culture and etiquette when doing business in the Netherlands. For instance, appointments are generally required for meetings, and punctuality is highly valued. Business dress is usually casual, but in some cases more formal wear is appreciated. Gifts are not typically given during business meetings.
When shaking hands, it is customary to shake hands with everyone in the room. It is also important to maintain eye contact when shaking hands and during conversations. Business cards are typically exchanged after the initial introductions. Post-covid it is accepted not to shake hands. However, in practice it is still the norm.
The business culture varies per industry. You should be aware of the business culture in your particular sector, especially your customers' behaviour. For example, if you selling products or services online in the Netherlands, it is important to understand the Dutch consumer mindset when it comes to online shopping. The Dutch are very price-conscious and they often do research before making a purchase. They also expect very good customer service, so make sure you have a strong customer service strategy in place.
Interested in exploring Dutch business opportunities?
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.
NordicHQ has an office in Amsterdam, specialized in guiding foreign entrepreneurs on their business journey to the Netherlands and the rest of the European mainland. Feel free to contact us by email or contact us directly via our contact form.
About the Netherlands
Company formation consultants in the Netherlands
Netherlands Euro Haulage License
Navigating the process of obtaining a Euro haulage license in the Netherlands can be a crucial step for businesses engaged in the commercial transport of goods. This article provides a comprehensive guide on the requirements, regulations, and application procedures to help you secure a license and stay compliant with the European Union’s transportation laws. Join…
R&D tax breaks and incentives for businesses in Europe
Governments all over Europe want to attract innovative business activity. Those are businesses that perform ground-breaking research and development (R&D) activities. European countries, and the EU as a whole, give incentives to these businesses. For example to create a more technologically advanced economy, stimulate job growth or tackle climate-related challenges. Such incentives are offered through…
Governing the Netherlands
The Netherlands has a long history of democratic governance. It has been a parliamentary constitutional monarchy since 1848. There has been a gradual transition from an absolute monarchy to a modern democracy, culminating in the 1946 Constitution that established the current form of government. Polder Politics The Dutch socio-economic system is an example of the…
The EU Blue Card: Everything You Need to Know
The EU Blue Card is a work permit that allows citizens of non-EU countries to work in the EU. It is a popular choice for many people who want to work in Europe, as it has many benefits compared to other visas. In this article, we will discuss who can apply for the EU Blue…
Business in the European Single Market 101
The European Single Market (ESM) is the largest internal market in the world. It allows for the free movement of goods, services, capital and people within the European Union and Norway, Iceland and Liechtenstein. These last 3 countries participate in the EU’s internal market without being members of the European Union. The Single Market works…
2023 – The European Year of Skills
The European Union is launching the Year of Skills in 2023, with a focus on upgrading workforce skills across Europe to ensure that the EU can be competitive in world markets. This bold project brings together a range of strategies and resources that both employers and employees can access to develop their skillsets. The EU’s…