It has become pretty clear that Brexit has had various effects on businesses currently situated in the UK. A lot of major companies and organizations are already moving their headquarters elsewhere, in order to stay involved with the EU and all its associated benefits. This also means that many start-ups and investors are looking for alternatives to their original plans of starting a UK business. Are you on the lookout for a suitable new location? Then the Netherlands might just be exactly what you are searching for.

Deal or no deal: the UK is withdrawing

The fact that the UK will soon no longer be part of the EU means that businesses situated in the UK will also feel the consequences. In the case of a deal there might be several agreements to stabilize international relations, but the fact still remains that your business probably won’t benefit from all EU regulations anymore.

When there will be no deal, the whole situation becomes even more severe. Without any mutual agreements, the UK basically stands alone. This will be felt in the business sector on various levels, from international trade to customs affairs. There are many different scenarios and every single one of these possibilities definitely involves some kind of restriction for UK companies. Why? Because you will no longer be seen as an EU-member.

Consequences of your company being ‘cut off’ from the EU

The EU offers many benefits for its member states, which are especially beneficial for entrepreneurs and investors. This includes factors like the single market, healthy competition, substantially reduced paperwork, free movement of people, goods and services, harmonized standards and so on. The EU offers you the possibility to trade in a very large market without customs, import taxes nor a long list of complicated regulations. Once Brexit is finalized, you might lose some (or even all) of these benefits. Suffice to say, this will have a negative impact on the flexibility, adaptability and overall success of your (future) business.

How to avoid this? Move your start-up or business to the Netherlands

You definitely won’t be the first! According to The Guardian, the Dutch government states that more than 250 UK companies have already made the move to Holland. The Netherlands supposedly has gained almost 2000 new jobs due to Brexit.[1] These companies are active in several key industries and sectors, such as the health sector, the creative industry, financial services and the logistics sector.[2] Some well-known names that have already established their headquarters in the Netherlands include Sony and Panasonic, Discovery Channel and Bloomberg.

How to proceed with moving your business to the Netherlands?

If you want to know exactly what your options are, contact us immediately. Intercompany Solutions can assist you every step of the way, whether you already own a company or are planning to start a business in the Netherlands. Don’t miss out on all the benefits Holland has to offer and take action now, while you are still in the position to go through the procedure as an EU-citizen.

[1] O'Carroll, L. (2019, 9 February). Brexit: Netherlands talking to 250 firms about leaving UK. Link: https://www.theguardian.com/politics/2019/feb/09/brexit-uk-companies-discuss-moving-to-netherlands.

[2] Pieters, J. (2019, 25 januari). Over 250 companies considering move to NL over Brexit: report. Link: https://nltimes.nl/2019/01/25/250-companies-considering-move-nl-brexit-report.

It has almost been two years since the infamous Brexit referendum. A small minority of Brits then made it clear, that they no longer wish to be part of the European Union. And so Brexit was born. After many negotiations and struggles there is still no clear view about the road ahead, meaning that the UK may or may not become independent on March 29, 2019.

Intercompany Solutions CEO Bjorn Wagemakers and client Brian Mckenzie are featured by CBC News - Dutch Economy braces for the worst with Brexit,  in a visit to our notary public on 12 February 2019. 

In either case, there will be consequences for every single party involved. Of course if there is no deal, the situation can become frantic as there will be no agreements with the EU. The UK might find itself in a very uncomfortable position, and not just with the EU but with many other nations that have trade agreements with the EU. In the case of a deal, there are still many factors that will influence business owners and entrepreneurs who work either from the UK or from an EU-member state.

There’s a rather large grey area between deal and no deal, which will have various consequences depending on the scenario playing out. Plus; the financial losses to sustain the whole process up until now have been severe. The big question for everyone is whether the UK will stay involved with the EU at all, and if yes; in what role? The long-term relationship between the UK and Europe is very unstable and this can have massive effects on your business. It doesn’t even matter if that business already exists, or is just an idea at this moment.

From the UK to a business in the Netherlands

In this article we will inform you about the most important details of Brexit and the possible consequences of all scenarios. You will also find information about the benefits of having a business in an EU-member state, and why the Netherlands is possibly one of your best options. Huge companies like Sony, Discovery and Panasonic are already moving their headquarters from the UK to the Netherlands. We will discuss why this is a solid and smart move that might be beneficial for you too.

Start a business in The Netherlands

Why is Brexit bad for business?

The negotiations between Brussels and the UK have been going on for almost two years by now, and still there is no consensus. Major issues like the border between North-Ireland and Ireland are unresolved up to this date. This leaves a huge amount of entrepreneurs, business owners and foreign investors in the dark about the choices they should make.  In the case of a deal, which means the UK will not be a member state of the EU any longer but with the inclusion of agreements between both parties, there will be losses in terms of national income. The Financial Times assessed the situation and according to their expertise, the outcome would be as follows:

• If the UK stays a member of the single market: 2% loss
• In the case of a free trade deal with the EU: 5% loss
• If trade between the UK and EU is commenced under WTO rules: 8% loss[1]

Needless to say, that a no-deal situation resulting in a hard Brexit may include financial consequences which will be far more severe. Large corporations and companies have already initiated steps towards damage-limitation. Companies like Bentley were slowly returning to profit but might fail anyway, when a hard Brexit becomes reality. Adrian Hallmark, Bentley’s CEO, explained to The Guardian: “It’s Brexit that’s the killer, if we ended up with a hard Brexit... that would hit us this year because we do have a potential to get beyond break-even to do the turnaround. It would put at fundamental risk our chance of becoming profitable.”

In the eventuality that he would need to stop production in the UK-based Crewe plant, this would cost Bentley millions a day.[2] And Bentley is not the only worried company, which is exactly why many multinationals are swiftly moving their headquarters to ‘safer terrain’ like the Netherlands. Because the benefits and profits of staying within the EU are very real for most business owners.

The repercussions of Brexit: More than 250 companies are considering relocation to Holland

Hundreds of businesses are discussing options for relocation with Holland’s government, as they are worried about their trade on the European market after the British exit from the EU. Several popular companies have declared their firm decisions to relocate.

Consequences for businesses

Brexit and the uncertainty about its specifics strongly motivate companies to leave Great Britain and move to Holland. In 2018 Panasonic announced its intention to move to Amsterdam. More recently Sony also communicated its plan to relocate, citing Brexit as the reason for these developments.

The Dutch Agency for Foreign Investment claims that it has been contacted by more than 250 companies to discuss their relocation to Holland. In 2017 the number was 80, and at the beginning of 2018 it increased to 150.

More businesses are expected to express interest in moving to the country of windmills and tulips before the total figure is announced the following month. A representative of the Dutch Foreign Investment Agency stated that every company’s arrival, regardless of its size, is good news.

The United Kingdom loses and the Netherlands wins?

Britain recently lost a major player in the face of EMA (European Medicines Agency), an institution employing approximately 900 highly qualified workers. EMA has decided to establish in Amsterdam. Other countries are also benefitting from Brexit, because a number of companies in the financial sector plan to move their operations and employees overseas to cities such as Luxembourg, Frankfurt, Paris and Dublin.

It may seem that Holland is benefitting much from Brexit because of the rapidly increasing interest in the country as a destination for business establishment. Still, the companies that actually move will only alleviate the negative consequences of Brexit for Holland. The effects of Brexit are still ambiguous but the country has considered a no-deal situation regarding the rights of British residents.

The European Union in a nutshell

Every member state has accepted the four freedoms of the EU, which are basically the pillars of its existence:

• Free movement of goods
• Free movement of capital
• Free movement of services
• Free movement of people

It is obvious how these freedoms are beneficial for companies based in one of the member states. All companies inside ‘the bloc’ can buy and sell products and services freely within the borders of the EU. To keep the market fair for everyone, a regulatory framework exists that prevents a party from gaining unfair competitive advantages.

Member nations also have the obligation to implement EU law into their own national law and to recognize mutually shared standards. Another important role the EU plays, is that of a common customs union. The member states can trade freely within the borders of the EU, though all non-EU countries are bound to common tariffs on imports. All in all, the EU protects its member states in many ways but also limits countries’ autonomy. This is exactly why the UK decided to leave the EU.

What are the benefits of trading within the EU?

The European single market is obviously the main benefit here. Currently the EU is the largest single trader in the world, accounting for 16.5% of the total sum of imports and exports around the globe.[3] The main goal of the EU is not only the possibility for free trade amongst its members, but also the liberalization of world trade. Some tangible benefits of owning a business in an EU member country such as the Netherlands include:

• No internal trade barriers
• Healthy competition in services
• Reduced overall business costs
• No monopolies or cartels counteracting competition
• Reduced amount of paperwork
• Various harmonized standards
• A more efficient way of doing business
• Free movement of people resulting in a multinational labor force
• A single trade currency – the Euro

This is why being a member of the EU has offered key benefits to UK businesses. The EU includes some of the wealthiest and most prosperous countries worldwide, offering every business owner access to an enormous amount of suppliers. You can basically see the EU like a big marketplace, which offers an amount of convenience similar to doing business in your own country. No customs, no import taxes and a lot less regulations to slow trade down.

Fair and open trade possibilities

The World Trade Organization ensures that obligations and trade agreements between countries worldwide are transparent and fair. All EU regulation and trade policy is made on behalf of the EU by the Commission, who work closely within the framework of the WTO in order to ensure fairness and openness. The commission also works very closely with national governments, the European Parliament and global organizations to be able to adapt quickly to necessary worldwide and local situations and changes.

Because the EU has an extensive network of worldwide trade relations, favorable agreements can be negotiated. This is something a country on its own would not be capable of. All these partnerships are aimed at creating and maintaining a stable and fair single market that provides business owners with many benefits. It also makes it safer for business owners to trade outside of the EU, being protected by numerous multilateral agreements.

The EU provides safety and stable conditions

Next to creating opportunities for business owners, the EU also strives for better working conditions in poorer countries. The EU trade policy is aimed at reducing and putting a stop to malpractices such as child labor, the use of harsh chemicals and creating environmental hazards as well as combating price volatility. Countries in distress can be actively pushed forward by actions such as temporarily lowering duties, providing governance advice and supporting smaller national businesses. By choosing to establish a company in the EU, you automatically choose safe conditions.

Is a company in the Netherlands a good Brexit alternative for your business?

In general, starting a Dutch business is almost always beneficial due to the large amount of benefits and possibilities the Netherlands has to offer. If you’re still in doubt though, you can ask yourself a few questions first. The answers will determine whether Holland is a good place to start your company:

• What kind of business are you planning to establish?
• Is it possible for you to start such a company in the Netherlands?
• Is there a fitting niche for the services or products you want to offer?
• Would your company be competitive in certain ways?
• Will it be easier for you to trade with a business based in the Netherlands, or would this entail certain financial benefits you currently miss out on?

It’s a wise to answer these questions for yourself beforehand, since you might need to answer them once you decide to start the process of establishing a Dutch business. If you already own a successful UK business but want to move it to the Netherlands, you might also have to explain how your company will be beneficial for the Dutch economy.

''The Netherlands to become the centre for financial trading infrastructure of the EU27

The AFM conducted more than 150 interviews with companies that are interested in applying for a licence. ‘We assume that between thirty to forty percent of the European trade in financial instruments will opt for the Netherlands as a location. Thus, the Netherlands will become the financial trading centre within the EU27’, according to Merel van Vroonhoven, Chair of the AFM. ‘The arrival of these parties will also attract other service providers. Moreover, it strengthens the access of Dutch pension funds and other portfolio managers to the capital market’. '' [4]

How can setting up a Dutch business benefit you?

If you have already been thinking about starting or moving your business, the Netherlands proves to be a fantastic choice for almost every single investor or start-up. A business in the Netherlands offers a wide amount of perks and benefits to foreign entrepreneurs. The Dutch have been ranked 4^th on the Global Competitiveness Index of the World Economic Forum, the 3^rd best country in the world for business by Forbes Magazine due to the profitable business conditions.

A few very good reasons to start a Dutch business:

• One of the lowest tax rates in Europe: between 16.5% and 25% (15-21% from 2021)
• You don’t pay value added tax (VAT) for transactions within the EU
• The Netherlands has the largest number of treaties worldwide for double tax avoidance
• The Dutch have a solid reputation in global (e-)commerce
• More than 90% of the population speaks English and in most cases a second foreign language
• The Dutch labor force is highly educated and ranks 3^rd in the global top
• The Dutch offer an innovative international business atmosphere
• Foreign entrepreneurs and investors will profit from a stable legal and political climate and a plethora of outstanding international relations

The procedure for starting a Dutch business

If you want to be able to enjoy all the benefits the Netherlands has to offer, you will need to follow a certain procedure to establish your company here. This is where Intercompany Solutions comes into the picture. We can help you set up a Dutch business in just a few working days. We can also assist you to transfer your current business to the Netherlands. Our procedure consists of 3 general action steps:

Step 1

You will be asked to send in all the necessary documentation as well as proof of your identity, which we will check thoroughly. If you already have a company name in mind, we will check the availability of that name during this stage too.

Step 2

After all the checks we prepare all the documentation that will be needed to register your company. When these documents are finished, we send them over for you (and possible other shareholders) to sign. Once signed, you send everything back to us so we can start the registration process.

Step 3

With all the signed documents we go to a notary public, who will sign the deed of incorporation and submit the deed of formation to the Chamber of Commerce. You will then receive your registration number as well as your VAT number. Your company officially exists! If you wish, we can also take care of other matters such as applying for a Dutch bank account.

Contact Intercompany Solutions for more information

Intercompany Solutions has many years of experience in setting up businesses for foreigners, as well as handling a great many cases. We can help you with any question you might have related to starting a business in the Netherlands. From the permit you will need to finding the best Dutch bank for your business. Simply contact us for more information, and we will get back to you as soon as possible.

[1] Strauss, D. (2018, 9 October). Brexit explainer: what’s at stake for EU single market and customs union. Link: https://www.ft.com/content/1688d0e4-15ef-11e6-b197-a4af20d5575e.

[2] Neate, R. (2019, 23 January). Companies press Brexit panic button in further blow to Theresa May. Link: https://www.theguardian.com/technology/2019/jan/22/no-deal-brexit-panic-grips-major-uk-firms.

[3] European Union. (2018, 13 November). Trade | European Union. Link: https://europa.eu/european-union/topics/trade_en.

[4] Dutch Authority for the Financial Markets (AFM) (2018, 29 October) The Netherlands to become the centre of European financial trading post Brexit. Link: https://www.afm.nl/en/professionals/nieuws/2018/okt/trendzicht-2019

Updated 11-12-2019

The income included in Box 2 for foreign taxpayers includes the eligible Dutch income (calculated in the same way as for residents) from local companies, except in cases where the shareholding belongs to an enterprise’s equity.
Fiscal partners are subject to special requirements.

The income that must be declared in Box 2 includes the capital gains and/or dividends (main income items) obtained by a foreign taxpayer with substantial interests (>5% shareholding) in a resident company minus any losses related to the shareholding and monumental building tax deductions.

The deductions and personal allowances (“persoonsgebonden aftrek” in Dutch) do not apply for foreign taxpayers that only have income qualifying for Box 2.

The Dutch rollover/tax deferral for eligible legal mergers/demergers and share mergers is not applicable to foreign taxpayers in case the surviving/acquiring company is established outside of Holland. If a Dutch corporation changes its tax residence, then its relocation is considered as a (taxable) substantial shareholding transfer.

An entity established under foreign jurisdiction that has qualified as a resident corporation in Holland for a minimum period of five years but has relocated to another country for the purposes of taxation is considered a resident corporation in Holland for another ten years.

In case the total amount in Box 2 is a negative number, the income is considered as a substantial shareholding loss for foreign residents. Such losses are deductable and can be compensated (loss carryforward or carryback) following the same rules as for resident taxpayers. These losses can be aggregated with any qualifying losses from tax liabilities for resident taxpayers.

The taxable base is determined by special rules if the taxpayer emigrates or the Dutch corporation where he/she is a substantial shareholder transfers its tax seat to a different country.

Our Dutch specialists in taxation can provide consultancy on your tax position. We can prepare and submit your yearly income tax report and take care of other matters related to tax compliance. Please, contact us, if you need further information or tax-related assistance.