The Netherlands compared to other European countries
This article will delve into a comprehensive ranking and comparison of the Netherlands with its fellow European nations, focusing on key business indicators, such as ease of doing business, innovation indices, economic stability, digital infrastructure, and tax regimes. By juxtaposing these factors, we aim to provide a nuanced understanding of where the Netherlands stands in the European business ecosystem and what other countries can learn from this thriving economy. For further reading we recommend our guides on doing business in Europe.
The size of the Dutch market
The population of the Netherlands is the 7th in the EU. Below you can see the total size of the market in GDP corrected by purchasing power parity. This shows that the Netherlands is in fact of the larger markets in Europe with a relatively very high output per person. The GDP figures are adjusted for PPP (Purchasing Power Parity) meaning adjusted for the relative price level of goods and services and inflation.
|Country||Population estimate||GDP - PPP (billion $)||GDP - PPP per capita (billion $)|
Online Business - The Netherlands versus Europe
The Dutch market for online shopping and digital services is one of the largest in Europe. Take a look at the relatively large size of the Dutch search population compared to the other. (Source: Google Ads)
|Country||Reach (search population)|
Online shopping in the Netherlands
The Netherlands has a very mature e-commerce market. The country's population are extremely used to ordering goods, food and services online. Only the Nordic countries and parts of the UK come close to the Netherlands in that respect, as you can see in the figure below.
Advantages to obtaining residency or visa in the Netherlands
If you are a EU citizen you can enjoy the four freedoms of the EU: free movement of people, capital, goods and services.
Those who are do not have a EU/EEA passport do not have this right automatically. They will need to apply for a residency permit.
For example an American needs to apply for a residence permit in the particular European country to be able to stay there. Do note that you are normally not required to have a residency permit to register a business in an EU/EEA country. A good example is the Dutch-American-Friendship-Treaty (DAFT) that allows American entrepreneurs to set up their business, work and stay in the Netherlands. The same goes for the Dutch Japanese Trade Treaty.
Quality, availability and flexibility of the workforce
The Dutch population ranks in the top of European countries with populations with highly developed digital skills.
A similar result can be seen in the EU's DESI Index. This ranking measures the status and progress of European countries' digital performance.
Education level of the Dutch workforce
The Dutch workforce has a relatively high percentage of people with higher education as can be seen in the chart below. This OECD data compares European countries and the percentage of the population between 25 and 64 years old that has completed the highest level of education.
Infrastructure quality in the Netherlands
The Netherlands has a highly-developed physical infrastructure. This is reflected in the World Economic Forum's annual country's competitiveness report. The Netherlands comes second, just after Switzerland on the infrastructure category.
Arguably just as relevant for businesses involved in importing and exporting physical goods is the quality of a country's port infrastructure. These countries are ranked based on the quality of their infrastructure, not the amount or value of goods that pass through them.
This is where the Netherlands takes the top spot. The best example is Europe's largest harbour, the Port of Rotterdam.
The NRI Index is a comprehensive ranking that measures among other things a country's digital readiness. In other words: how likely is it that a country, its people, government and businesses makes use of the opportunities that technology hands them. The Netherlands ends up third in Europe.
The ease of starting and running a business
Setting up a business can be a bureaucratic process. This is somewhat different in the Netherlands, where a business can be up an running in a matter of days. See the World Banks figure below to get an idea of the time it takes in other countries. Please note that this table does not take into account all aspects of a setup, such as opening a bank account and obtaining full tax registration.
Taxes in the Netherlands
The Netherlands has a very competitive tax climate for international businesses. First of all, the corporate income tax is relatively low.
Corporate income tax compared
|Country||Corporate Income Tax Rate||Patent Box Regime (R&D rate)|
|Germany||30% on average. Combination of federal and municipal tax.||-|
|United Kingdom||19 - 20%||10%|
|Italy||28% approximately, based on national and regional taxes||-|
|Netherlands||19 - 25,8%||9%|
|Lithuania||5 - 15%||5%|
Corporate income tax in the Netherlands
Especially for small and medium-sized businesses will pay very limited corporate tax:
|SME tariff||15% (up to €395.000)||19% (up to €200.000)|
|Standard tariff||25,8% (profits exceeding €395.000)||25,8% (profits exceeding €200.000)|
|Innovation Box||9% on profits derived from qualifying innovative activities||9% on profits derived from qualifying innovative activities|
Personal income tax
This is the tax you will pay over any salary you take from the company. This tax is relatively low if you earn under a certain amount, and comparable with other Western and Northern European countries if you earn a higher salary.
|Personal Income Tax (IB)||2022||2023|
|Bracket 1||37,10% up to €68.508||36,93% up to €73.031|
|Bracket 2||49,50% from €68.508||49,50% from €73.031|
Any dividend can be paid out at one of Europe's lowest dividend taxes:
|Box 2: Substantial Interest||2022||2023||2024|
|Up to €67.000||26,9 %||26,9 %||24,5 %|
|Over €67.000||26,9 %||26,9 %||31 %|
A fair comparison
What you end up paying in tax depends on all sorts of variables. If you want to make a fair comparison, you should look at least at:
- Tax on your company's profits
- Tax on whatever you take out of the company, capital gains and dividends
- Taxes on your employee's wages and social security costs for employees
- Personal taxes (personal income tax, wealth tax)
- Any industry-specific taxes and levies
The Netherlands and its tax treaties
Holland has a large amount of tax treaties, as can be seen on the map below. We have written a blog post where the use of these tax treaties is described in more detail.
The cost and standard of living
The Netherlands has one of the world's highest living standards. This is demonstrated in the OECD's Better Life Index below:
|OECD Better Life Index ranking||Country|
The Netherlands also scores high on another very influential ranking: the UN's Human Development Index (HDI). The HDI compare populations based on lifespan, education and purchasing power.
Healthcare system in the Netherlands
Nothing is quite as important as your health. The Netherlands is structurally in the top of countries with the best healthcare system in the world. And it is affordable too!
Corruption (or the lack of it) in the Netherlands
To have a stabile and predictable business environment it is crucial to leave no room for corruption. That is Transparency International's Corruption Perception Index is a relevant indicator. This index ranks countries from lowest to highest on public sector corruption as perceived by business people.
Dutch entrepreneurial spirit
The Netherlands has a very entrepreneurial spirit. A relatively large part of the population is self-employed.
While this does not say everything, a more relevant indicator is the percentage of high-growth enterprises. The map below shows the percentage of businesses per country with at least 10 employees with employment growth of 10 percent or more over a 3 year period. The Netherlands performs in the top tier.
The Netherlands is part of basically every relevant European and international organization.
The Netherlands is part of the EU.
The Netherlands is a member of the Euro currency, which makes for seamless payments across large parts of Europe, see below:
Proficiency in English
Access to financing in the Netherlands
The European Investment Fund (EIF) publishes an annual ranking of access to capital for small and medium-sized businesses. The Netherlands performs considerably well given its size. There is a relatively well developed VC market and banks are eager to lend out money. In addition to those, there are many state-run subsidy and regional funding projects.
For more information on access to funding in the Netherlands, please read this in-depth article.
Best type of businesses to start in the Netherlands
One of the most popular businesses to start up in the Netherlands is a consulting firm. From very small and specialized to large strategy consulting firms: hardly any other type of business is growing faster than consulting. As a real knowledge economy, it makes sense that consultants thrive in the Dutch business landscape.
E-commerce and retail
The Netherlands has one of the best developed infrastructures of Europe for e-commerce and retail business. A perfect and dense road network, a large amount of transport companies that can bring your goods anywhere in the country within hours and anywhere in Europe within a few days. You are both close to the mainports of Rotterdam and Schiphol and to the large markets of Germany, France and the UK. Not in the least, the Dutch market itself is well adapted to online shopping.
Technology and highly-innovative businesses
The Netherlands is a highly innovative country, always reinventing itself through innovation and new technology. There is a large pool of skilled workers. In addition to that there are various visa programs that make moving talent to the Netherlands relatively easy. There is also great public-private collaboration, for example in the pharmaceutical industry.
Headquarters and holding companies
The Netherlands is a perfect base for a holding company owning subsidiaries in the Netherlands or abroad. This can be a useful way to structure several entities and centralize profits (and for example protect intellectual property).
You can read more about this on our page about the Dutch Holding BV structure.
Logistics / transport company
The most important reasons why the Netherlands is an attractive destination for your transport or logistics business are the availability of staff, a good infrastructure, affordable energy prices and easy access to entire Europe.