In Holland, a joint venture is an agreement between at least two companies to unite resources in order to pursue a common commercial goal. Each company keeps its identity and carries liability for the losses and profits of the venture.

The investors involved in the creation of a Dutch joint venture first have to establish two companies in the Netherlands. Joint ventures are not specifically regulated for business arrangements of this type. Still, the companies forming the venture must comply with the national corporate law.

Our Dutch agents in company formation can assist you in forming a suitable joint venture meeting the current provisions for corporate control and management.

Joint Venture formation in Holland

A joint venture formed in Holland can be either corporate (between public or private companies or cooperatives) or contractual (of partnerships, limited or not). A corporate joint venture is formed between corporate entities that are legal persons (in contrast to partnerships) and therefore the companies must follow the Dutch Corporate Law. This important factor differentiates corporate from contractual joint ventures.

In Holland, companies and partnerships are subject to different requirements for annual financial reporting and accounting. Our agents in company formation can provide you with comprehensive information on this subject.

Requirements for joint venture establishment in Holland

All incorporated Dutch companies must undergo registration at the National Chamber of Commerce. Any joint venture performing commercial activities has to be formed by registered entities. In particular cases, joint ventures can be subject to the Dutch Act on Competition. On the other hand, contractual ventures must meet the requirements of the national contract law.

Holland has not enforced any commercial restrictions on joint ventures and they can be established in any area of business. This establishment type is not required to comply with specific duration. Still, if the entities forming a joint venture are meant to exist for a certain time period, then the same period will be valid for the joint venture.

If you need information on other legal entities or you want to incorporate a Dutch company, please, get in touch with our specialists in company formation.

If you reside in Holland or receive Dutch income, you need to follow the national laws on taxation. As a resident (living in Holland) or non-resident (foreign) taxpayer receiving Dutch income, you will need to pay income tax in Holland.

Taxable Dutch income types

The Dutch tax laws recognize 3 types of income that are subject to tax. These are classified into boxes. Box 1 concerns income related to home ownership or employment, i.e. salaries, business profit, pension, regular benefits and owner-occupied real estate. Box 2 covers substantial interest income and Box 3 represents income from investments and savings.

The taxation system in Holland is quite complex and you can end up paying up to one-fourth of your personal income in taxes, but all rates depend on the nature of the work you perform and your residency, among other factors. Persons taxable in accordance with the Dutch laws need to submit their returns in digital form by the beginning of April each year. If it is impossible to keep this deadline due to particular circumstances, an extension can be granted upon request.

Taxes levied on Dutch residents / non-residents

In the form for tax return Dutch residents are obliged to declare their income received worldwide, including amounts that Holland is unable to tax by virtue of international or national regulations. Employment income, business profits and capital gains obtained in foreign countries fall in the list of such revenues. Non-residents can choose whether to be treated as residents with respect to taxation. Persons with status of resident taxpayers must declare their worldwide income permitting the option of taxation of this income in another country. To avoid double taxation, Holland offers tax relief (or tax credit) against owned tax. An experienced Dutch attorney can advise you with regard to the most convenient possibilities for your business.

Dutch corporate income tax (CIT)

Companies in Holland and particular entities established elsewhere and receiving income from Dutch sources are liable for corporate income tax (CIT). Companies with capital consisting of shares, cooperatives and other entities conducting business are on the list of company types subject to taxation. All companies need to file tax returns every year. The deadline for submission is five months after the concerned year’s end. All taxes need to be paid within two months of the receipt’s assessment.

Value Added Tax is, per se, a consumer tax incorporated in the price paid by the end customer for a particular service or product. In line with the EU legislation, VAT is applicable to the provision of goods, services, importation and acquisition of goods. Holland has three different VAT rates: a standard 21% rate, a special 9% rate for drugs, food, newspapers and books, and a 0% rate for international trade to allow for VAT-exempt export of commodities.

If you need further information and personal advice with regard to your business, please, get in touch with our local lawyers.

International companies that do not reside in Holland can advertise their business interests and establish a presence in the country by opening a representative (liaison) office. According to the national law liaison offices are not classified as legal entities, since they do not function and exist independently; they are fully subordinated to and dependent on the international corporations that have established them in Holland.

Generally, international companies are interested in settling liaison offices in Holland for the purposes of marketing research: to introduce and promote products on the local market and sign contracts with resident business partners.

Activities of the local liaison office

Being fully dependent and subordinated to the international company that opened it, the Dutch liaison office cannot perform its own activities (it cannot manufacture goods or provide services). It can, however, support different operations of its parent corporation, e.g. commercial activities (advertisement, promotion and marketing). The Dutch liaison office can also collect information for the purposes of scientific research and similar activities that are auxiliary to the international company.

Dutch liaison offices often serve as intermediaries between their international parent companies and commercial partners in Holland, thus representing the parent companies (acting in their name/on their behalf).

Representative offices cannot generate profit, so international investors willing to establish their products and services on the Dutch market may opt for opening branches instead. Branches are also highly dependent on their parent companies but, in contrast to liaison offices, they can carry out actual business activities.

Dutch liaison office registration

Dutch liaison offices do not need to undergo registration at the National Commercial Chamber. They are considered as structures that simply collect and provide information/provide administrative services to their parent companies without involving any commercial activities. Therefore liaison offices are not taxed in Holland. (Read more on Dutch taxes).

Still, a Dutch liaison office can employ staff and, if so, it has to be registered with the appropriate local authorities for personal income tax. The non-resident individual acting as a Dutch liaison officer and representing the international company needs to apply for residence and work permits.

The Value Added Tax incurred by Dutch liaison offices may be refunded under particular conditions. A Dutch liaison office can receive a refund if its international parent company files regular requests with the local tax authorities.

The Dutch liaison office represents an initial step for international entrepreneurs planning to establish themselves on the market in Holland. At a later point the office may become a branch, if the entrepreneur makes a decision to broaden the range of his local operations.

If you need more information about Dutch liaison offices, please, contact our agents in company incorporation. They will answer your questions about setting up a Dutch business and can represent you in front of the respective authorities.

An important aspect of the corporate tax system in the Netherlands is the special participation exemption according to which all capital gains and dividends generated by an eligible shareholding are exempted from taxes.

Even though all companies residing in Holland are generally liable for CIT on their income generated worldwide, profits originating from an eligible shareholding are tax-exempt at the level of the shareholder considered as tax-resident in Holland. This tax exemption is called the Dutch participation exemption (hereinafter referred to as: PE).

The PE has two main purposes. In its purely domestic sense it prevents double taxation of the income of a single enterprise (taxing both the income of the company and of its parent corporation). From an international perspective the PE aims to avoid double taxation by different countries.

Corporate tax in the Netherlands

Generally, all local companies are liable for corporate income tax, or CIT, with respect to their income generated worldwide. For profits up to 200 000 Euro the CIT rate is 19%. Any income exceeding this threshold is taxable at a rate of 25.8%.

Corporate residents

All resident Dutch companies need to pay CIT. Tax residency is determined based on the particular circumstances and facts. The effective management location is defined by certain prerequisites. This is the location where:

• important decisions regarding the business are made;
• the directors meet and work;
• the company stores its business records and prepares its financial statements.

Thus entities are considered tax resident if their effective management locations are in Holland.

Eligible shareholding

According to the effective legislation, the PE is applicable to profits from shareholding of a Dutch resident parent company, if it fulfills the requirements listed below:

1. The parent corporation participates with at least five percent of the nominal contributed share capital (alternatively, depending on the circumstances, five percent of the rights to vote) of a given company whose capital has been split into shares (requirement for minimum threshold);
2. At least one of three conditions is fulfilled:

• the parent corporation participates with the objective to accumulate a return higher than what is expected from passive investment in a portfolio (the motive requirement);
• the subsidiary’s indirect and direct assets include less than fifty percent passive assets subject to a reduced tax rate (the asset requirement);
• according to Dutch standards the subsidiary already carries an adequate tax burden (the taxation requirement);

3. The profits generated by the subsidiary are not deductible with respect to CIT in the subsidiary’s country.

Participation not eligible for exemption

In case the requirement for minimum threshold (at least five percent participation in the nominal contributed share capital) is fulfilled, but the other conditions for PE are not, the corporation will receive up to 5 percent credit for the base tax payable for the participation (with the exception of eligible EU participations, where the credit can cover the whole tax).

Motive requirement

The motive requirement involves circumstances and facts and is fulfilled when the parent company invests in its subsidiary with the aim to obtain profits exceeding the ones from passive portfolio investments. Generally, the requirement is met if, for example, the parent company is actively involved in the subsidiary’s management or if it performs a significant function in the group’s business enterprise. If >50 percent of the subsidiary’s consolidated assets are made up of shareholdings amounting to <5 percent, or the subsidiary (including its subsidiaries) functions predominantly as a leasing/licensing or group financing company, then the motive requirement will not be fulfilled.

Asset requirement 

Free passive assets, subject to a reduced tax rate, have the following characteristics:

• they are not practically required for the enterprise of their owner; and
• the profit that they generate is taxed effectively at <10% rate.

Immovable property always qualifies as “good” for the purposes of this requirement (never mind its function in the enterprise and its taxation). The fair value of assets on the market is decisive for the fulfilment of the requirement’s conditions. The asset requirement is continuous and mostly needs to be fulfilled throughout the whole accounting year.

Assets used for leasing, licensing or group financing are considered passive, except when they are included in active leasing or financing enterprises, as defined by law, or their financing consists of ≥ 90% third party loans.

Taxation requirement

In general, participations are considered subject to adequate taxation if they are taxed as profits at a minimum rate of 10 percent. Certain differences in the tax bases, e.g. a broad PE, taxation deferral until profit distribution, deductible dividends or absence of limitations with respect to interest deduction may lead to the disqualification of profit tax as sufficient liability, except in cases where the effective rate of taxation in accordance with the Dutch standards is ≥ 10%.

The present article considers the steps leading to company mergers or acquisitions in Holland. One such step is an investigation called “due diligence” (or DD). It aims to elucidate the actual state of the respective company.  DD allows for the assessment of potential risks with the aim to inform the final decision about the transaction and also to adjust the purchase conditions.

Agreement of confidentiality / non-disclosure

During the negotiation phase of merger and acquisition the parties often sign an agreement of confidentiality (non-disclosure), so that any confidential information shared with respect to the tentative purchase remains secret. In this way, the vendor reduces the risk of public disclosure of the supplied information. To minimize the risk further, sometimes penalty clauses are included in the agreement.

Declaration of intent (DoI)

After the agreement of confidentiality has been signed, the (eventual) purchaser has completed due diligence and the initial negotiations have been closed, the parties prepare a declaration of intent (DoI) that provides the conditions for further negotiations regarding the company’s acquisition. The DoI generally contains the following (the list is not exhaustive):

• that preliminary negotiations on company takeover are held between the parties;
• if the negotiations are exclusive (with exact exclusivity period);
• what conditions allow the parties to stop the negotiations;
• latest date for finalization of the acquisition;
• the conditions that need to be fulfilled (in the general case – completed due diligence) in order for the parties to proceed to the next acquisition phase.

Due diligence

During the second phase the purchaser performs an audit called due diligence examination (“DD”). This is an investigation intended to elucidate the state of the respective company and the possible risks, thus allowing the purchaser to make an informed decision on the potential transaction. The DD results are usually reflected in the conclusive purchase agreement terms and also in the statements and guarantees of the seller.

The following (non-comprehensive) list presents some common subjects to DD investigations:

• Human resources / contracts (for labour);
• real estate / contracts for tenancy;
• potential and current legal proceeding;
• rights to intellectual property and licenses;
• (civil) claims;
• insurance matters;
• finance;
• tax.

These details are key to assessing the company and setting its purchase price. They can serve as a basis for indemnities and guarantees in the agreement for purchase. In addition to the legal DD investigation, it is important to perform financial and fiscal (tax) DD examinations.

Vendor DD

Every so often vendors also carry out their own DD investigations (or vendor DD) even before the start of the negotiations for takeover. Company problems can be fixed in time to prevent unpleasant surprises in the process of negotiation.

Agreement of purchase

After the DD examination is completed and the results are in, the parties start negotiating on the provisions of the purchase contract. This contract includes clauses on the risks related to uncertain events, financial and other, and their distribution among the parties. If, for instance, the DD examination has shown that claims are expected from pension funds or tax authorities, the purchaser can request specific guarantees or warranties from the seller (or a change in the price of purchase).

Agreement of share/asset purchase

Company acquisition usually involves a share transaction. The purchaser acquires the company shares held by the vendor by means of an agreement on share purchase. Sometimes it is necessary to conclude a different form of transaction, e.g. if the company to be acquired is a general partnership or a sole proprietor, rather than a legal person. In such cases the companies are subject to transfer of liabilities and assets by virtue of agreements of asset purchase.

Signing the agreement of share or asset purchase

After the parties agree on the transaction conditions (incl. the legal transfer date and the basis of the transaction), they sign an agreement of share or asset purchase (or another form of agreement, such as a merger contract). This phase is often referred to as “signing”. Usually the legal title transfer takes place weeks or even months later for a number of reasons, e.g. to give the purchaser enough time to fund the transaction. Agreements of share or asset purchase can also include resolutive or necessary conditions that must be met and can specify the period before title transfer.

Concluding the transaction

The transaction is concluded after all the necessary papers have been prepared and all requirements therein have been fulfilled or have expired. Then the documents related to the transfer are signed and, if a share purchase is taking place, the actual shares are transferred. Most commonly transfers take place against purchase price payment (or a part of it, if there is an earnout provision). In the Netherlands transfers of company shares are performed via transfer deeds prepared by Latin notaries.

If you are interested in buying or selling company shares for a company acquisition, find our articles below:

• Buying shares in a Dutch company
• Selling shares in a Dutch company

The tax law in the Netherlands offers a preferential regime for corporate taxation with the aim to promote activities related to investments in novel technologies and development of innovative technology. This is the Innovation Box (IB) regime. For profits meeting the requirements for IB, companies owe a total of 7% corporate tax, rather than the 19 – 25.8% usually levied (according to the rates for 2024).

Description of the IB regime

To be eligible for taxation under the IB regime, companies should have fixed intangible assets that meet certain requirements. According to the IB rules, qualifying assets are determined taking into account the taxpayer’s company size. Small taxpayers have a total 5-year group turnover below 250M Euro, while the total gross benefit derived from the eligible intangible assets for the 5-year period is below 37.5M Euro. Companies exceeding these thresholds are qualified as large taxpayers.

In these terms:

qualifying assets of small taxpayers are fixed intangible assets developed in-house and derived from Research and Development (R&D) activities benefitting from remittance reduction (WBSO – R&D tax credit / R&D certificate);

qualifying assets of large taxpayers (excluding cases of software or biological products for plant protection) must meet some additional conditions. Besides R&D certificates, the companies must also have an EU license for medicinal products,  a breeder’s right/(requested) patent, a certificate for additional protection or a certified utility model. Assets related to qualifying fixed intangible assets or exclusive licenses may also qualify under particular circumstances. Logos, brands and similar assets are not eligible for tax reduction.

If the eligibility conditions are fulfilled, then such profits are not taxed at the usual rate of corporate tax, i.e. 25.8%, but at a reduced rate of 7%. Therefore the actual tax amounts to 7%. Before applying the reduced tax rate, the expenses for the asset’s development need to be recaptured from the profits, which means that their amount will be taxed using the full general rate).

It is important to mention that R&D certificates allow both large and small taxpayers to apply for a tax credit with respect to wage tax liabilities. Since 2016 the basis for remittance reduction related to R&D consists of the costs for wage tax plus other R&D expenditures and costs.

Determination of the profits from technology and benefits of the IB regime

The profits eligible for reduced corporate income tax are determined by the expenses of the taxpayer related to the qualifying assets’ development. The expenditures for development are split in two categories: eligible and non-eligible, using the so-called nexus approach. Eligible expenditures are all direct costs related to the fixed intangible asset’s development, except any costs for outsourcing R&D tasks (costs incurred for outsourcing can reach a maximum of 30% of the eligible expenditures). Therefore, the formula below is applied:

eligible costs x 1.3

eligible profits = --------------------------------------------------   x profits

total costs

The profits are determined by tailoring. A simple functional analysis and transfer pricing can be used for a start.

Losses

The IB regime is structured so that it can also bring advantages to companies that aren’t currently paying taxes, e.g. due to accumulated tax losses in the past. In this case, if the company uses the IB regime, the full recapture of its accumulated losses from tax can take longer, so the period for which the entity is not liable for taxes will be extended.

If the developed assets in the field of technology lead to losses, the lost amounts can usually be deducted for the means of taxation at the usual 25.8% rate, and not the low effective 7% rate. Also, any initial losses that were incurred before the start of business operations can also be deducted at the general corporate tax rate of 25.8%. The reduced 7% rate is applicable again only after recapture of IB losses. A taxpayer can only have one IB. Therefore the amounts relevant to the intangible fixed assets under IB regime are consolidated.

Application submission and certainty for future taxes (Advance Tax Rulings, ATR)

A company can use the reduced corporate tax rate by selecting the relevant items in its yearly corporate tax return. In Holland, it is not only possible, but it is a standard procedure to go over the practical aspects of the IB principles and the question of profit allocation with the Tax and Customs Administration (Revenue Service). Taxpayers have the option to conclude binding agreements (ATRs) with the administration and, by doing so, have certainty with respect to future taxes. It is important to mention that the information on tax rulings is exchanged with international tax authorities. Read more on the Advance Tax Rulings in the Netherlands

If you need more details or legal support, please, get in touch with our Dutch tax agents.

Holland has long been attractive for entrepreneurs looking to establish a business due to numerous social, cultural and geographical factors. Its comparatively favorable tax climate is also an important prerequisite in the process of decision-making.

Value Added Tax (VAT)

Value Added Tax has a great influence on corporate cash flows. Generally, a business can request a VAT refund for the amount it has incurred. Still, it may take several months until the tax is recovered through the periodical return. The period for foreign VAT reclamation may even be longer than a year and its duration depends on the EU member involved with the application for refund.

Negative influence of VAT on cash flows is also observed in the process of import of products in the European Union. Importers are obliged to pay VAT that can be reclaimed only retroactively, in the VAT return, or in a time-consuming process requiring a separate refund application. As a consequence, companies have to prepay the VAT on their imports with adverse effects on their cash flows. On this background, few member states of the EU have adopted schemes for deferral of VAT payments that would otherwise be due at the time of import.

Article 23 license

Companies established in Holland have the option to apply for the Article 23 VAT deferral license. This document makes it possible to postpone the import VAT payment until the submission of the periodical return. In the statement, the VAT can be included as payable, but at the same time, its amount is also deducted under input VAT. This means that businesses do not necessarily have to pre-finance VAT. Without Art. 23 license, the VAT due for import would become immediately payable at the country’s border. Its subsequent reclamation occurs either through the periodical return or through a lengthy process for refund requiring a special application. As mentioned above, the refund of this VAT may take months, even years, depending on the case. VAT deferral licenses are granted to companies registered in Holland and international businesses without local establishment that have assigned a Dutch fiscal representative (a tax service provider holding a general licence) for the purpose of VAT.

In most members of the EU, the VAT payable at import has to be transferred to the customs and tax administration at the time of importation or shortly after. Countries like Ireland, Germany, Italy, Great Britain, Spain and Sweden do not offer options for postponed accounting. In other countries, the payment of VAT can be deferred, but only in specific cases and under strict conditions. The only country that provides an option comparable to the Dutch deferral license is Belgium. There the transfer of due VAT can be postponed until the submission of the periodical VAT return.

The EU Directive on the common system of value added tax provides the option to grant an exemption from VAT on import goods destined for another member state straight after import. Import goods intended for storage or sale in the respective member state cannot be exempt from import VAT. However, there is a possibility to suspend the payment of VAT and duties due at the time of import for a particular time period.

When goods enter the territory of the EU, companies the option to store them in the so-called customs warehouses. Such warehousing is possible in all member states, although the formal procedure varies depending on the state. In this case, the payment of duties and VAT is deferred until the goods’ removal from the customs warehouse. Thus VAT and duty payments are temporarily suspended to the advantage of cash flow. At some point in time, these taxes become payable. On the other hand, if the goods’ next destination is unknown, their storage in a customs warehouse can be beneficial. For example, if the goods are subsequently shipped to third countries, no VAT and customs duties become due.

Why should you choose the Netherlands as your gateway to Europe

Considering the above, one can conclude that logistic and geographical factors are just some of the significant reasons to import goods through Holland. The option to avoid VAT pre-financing can be decisive for companies in planning the routes of their import goods.

There is also another factor that must not be overlooked: the level of responsiveness of the different customs and tax administrations across the European Union. Some adopt a strictly formal approach, while others welcome dialogue. The customs and tax administration in Holland is open to discussions. It is acknowledged for its high quality of service and proactive approach. The officers are also ready to confirm particular arrangements in written form, guaranteeing certainty (in advance) to taxable entities. The responsiveness of the Dutch administration is a valuable quality and a strong motivator, along with the favourable VAT arrangements at import, for businesses to choose Holland as a European gateway.

Are you interested? Our company has the network, local competencies, and experience to assist you in the efficient structuring of your import/export operations, both in Holland and abroad. We are here to consider your needs and meet them. If you would like to receive more information on the possibilities, please, do not hesitate to get in touch with us.

Holland has a well developed regulatory framework for private businesses, partnerships and corporations. The main elements of the framework consist of: clear rules on financial statements, auditing, and the publication of audits.

Because of the clarity and relative simplicity of the regulations, corporations are able to have a stable base of operations where they can plan for the long term. In this article, we lay out a summary of the requirements for accounting, auditing and publication in the Netherlands. If you would like to receive more detailed information, please contact us.

Mandatory preparation of financial statements

Practically all corporate entities registered in Holland are obliged to present financial statements. The requirement is statutory and often included in the entity’s Articles of Association (AoA).

Foreign companies are obliged to submit their yearly accounts in their home countries and provide a copy to the Dutch Commercial Chamber. Branches are an exception to this rule as they are not obliged to prepare separate financial statements.

Importance of the financial reports for Dutch businesses

Financial statements constitute the foundation of corporate governance and, as such, are a vital element of the legal system in Holland.

Their main purpose is to report to shareholders. Once the shareholders accept the statements, they discharge the directors’ board for its performance. Their equally important secondary purpose is to protect creditors. Practically all corporate entities are obliged to register at the Trade Registry of the Commercial Chamber and publish annually particular financial data. The Registry is publically accessible and represents an important information source with regard to the national market.

Financial statements also have to do with taxation. Even though the tax law provides independent rules for determining the tax basis, the first step of the process is to consider the statements.

Contents of Dutch financial statements

As a minimum, the statements contain a profit/loss account, balance sheet and notes on the accounts.

Generally Accepted Principles in Accounting (GAAP) in Holland

The Dutch rules for accounting are regulated. The accounting principles are primarily based on European directives.

The GAAP apply to private and public companies with limited liability and to other entities, e.g. some partnership forms. Companies listed on the stock market, insurance companies and financial institutions are subject to special rules.

The Dutch accounting principles differ from the international standards for financial reporting (IFRS) but they are continuously harmonized. As of 2005 all companies listed in the European Union are obliged to follow the IFRS. This rule also applies to the Dutch insurance companies and financial institutions. The question whether private limited liability companies (BVs), non-listed public limited liability companies (NVs) and other local business entities can follow the IFRS is still being discussed.

The Dutch accounting principles

According to the principles of accounting all financial information has to be understandable, reliable, relevant and comparable. All financial statements have to reflect realistically the position of the company in line with the principles.

The profit & loss account, balance sheet and notes must present truthfully and dependably the equity of the shareholders on the date of the balance sheet, the annual profit and, if at all possible, the liquidity and solvability of the company

Companies participating in international groups may choose to prepare their statements in compliance with accounting standards accepted in another member of the EU, if a reference to these standards is included in the attached notes.

The principles of accounting need to be presented in the statement. Once implemented, these principles can be changed only if the change is well justified. The reason for the change must be explained in the respective notes, together with its consequences with respect to the company’s financial position. The Dutch legislation lays out specific requirements for disclosure and valuation that must be respected.

The official reporting currency is the Euro, but depending on the specific company activities or its group structure, the report may involve another currency.

Consolidation, audit and publication requirements in Holland

The consolidation, audit and publication requirements depend on company size: large, medium, small or micro. The size is determined using the criteria below:

• number of staff
• asset value in the balance, and
• net turnover.

The following table summarizes the parameters used for classification. The asset values, staff and net turnover of group companies and subsidiaries qualifying for consolidation must also be included. Companies qualifying for the large or medium category must meet at least 2 of the 3 criteria in two consecutive years.

Criterion	Large	Medium	Small	Micro
Turnover	> 20 M Euro	6 – 20 M Euro	350 K – 6 M Euro	< 350 K Euro
Assets	> 40 M Euro	12 – 40 M Euro	700 K – 12 M Euro	< 700 K Euro
Employees	> 250	50 - 250	10 – 50	< 10

Dutch requirements for consolidation

In principle, corporations must include the data of any subsidiaries and companies in their group in their financial statements in order to present a consolidated report.

According to the law in Holland controlled subsidiaries are legal entities in which companies can exercise indirectly or directly >50 percent of the rights to vote at the meeting of shareholders or are authorised to dismiss or appoint >50 percent of the supervisory and managing directors. Partnerships where companies are full partners also fall within the scope of the subsidiary definition. Group companies are legal entities or partnerships in the structure of company groups. The decisive consolidation factor is the control (managerial) over the subsidiaries, regardless of the percentage of held shares.

The financial information of subsidiaries or group companies does not need to be presented in the financial statements (consolidated) if:

1. It is insignificant compared to the whole group:

• it takes too much time or resources to obtain the subsidiary’s / group company’s financial data;
• the company is held with the intention to be transferred to a different owner.

2. Consolidation can be excluded if the group company or subsidiary:

• meets the criteria for a small business from statutory point of view (these criteria are presented in the point on publication conditions);
• is not listed on the stock market.

3. Consolidation can also be excluded under the following circumstances:

• the company hasn’t been informed in a written form of any objections to the lack of consolidation within six months following the financial year’s end by a minimum of 10 percent of the members or holders of ≥ 10 percent of the capital issued;
• the financial data pending consolidation has already been presented in the statements of the parent corporation;
• the consolidated statements and yearly report meet the requirements of the 7^th EU Directive;
• the consolidated statements, the yearly report and the audit report, if not already translated to Dutch, were translated to or prepared in German, English or French and all documents are in one and the same language;
• within six months of the date of the balance sheets or within 1 month of permitted postponed publication, the papers or their translations mentioned above were submitted at the Trade Registry office where the company was registered or, alternatively, a notification was made with reference to the Trade Registry office where these papers are available.

Requirements for audit in Holland

The law in Holland requires that large and medium companies have their yearly reports audited by qualified, registered and independent local auditors. Auditors are appointed by shareholders, members of the general meeting, or, alternatively by the managing or supervisory board. In principle, audit reports should include points clarifying whether:

• the statements give information in line with the generally accepted principles of accounting in Holland and represent accurately the company’s yearly result and financial position. The company’s liquidity and solvency may be assessed;
• the report of the Managing Board fulfils the statutory requirements; and
• the necessary additional information is provided.

The appointed auditor reports to the supervisory and managing boards. The competent institution should first consider the audit report and then approve or determine the financial statements.

If it is not mandatory to carry out an audit, the parties may do so voluntarily.

The Dutch publication requirements

All financial statements should be finalized and accepted by the members of the managing board within 5 months following the financial year’s end. After that the shareholders have two months to adopt the statements after their approval by the management directors. Also, the company has to publish its yearly report within 8 days of the shareholders’ approval or determination of the statements.  Publication means submission of a copy at the Trade Registry, Commercial Chamber.

The period for preparation of the statements can be extended by up to five months by the shareholders. Therefore the publication deadline is 12 month following the financial year’s end.

If the entity’s shareholders also act in the capacity of managing directors, then the date of approval of the documents by the Management Board would also be the date of adoption by the meeting of shareholders. Under such circumstances, the publication deadline is five months (or ten months, if an extension of five months has been given) following the financial year’s end.

The requirements for publication depend on the company size. They are summarized in the table below.

Document	Large	Medium	Small	Micro
Balance sheet, notes	Fully disclosed	Condensed	Condensed	Limited
Profit & loss accounts, notes	Fully disclosed	Condensed	Not necessary	Not necessary
Valuation principles, notes	Fully disclosed	Fully disclosed	Fully disclosed	Not necessary
Management report	Fully disclosed	Fully disclosed	Not necessary	Not necessary
Statements on cash flow	Fully disclosed	Fully disclosed	Not necessary	Not necessary

Can we help you?

We can offer you a full list of services for accounting, including the preparation of financial statements/yearly reports, administration, tax compliance and payroll services.

Please, contact us with any questions related to this article or in case you want us to send you a specific proposal for engagement.