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When you aspire to start a business overseas, you should take into account that you will be subjected to entirely new international laws and regulations, which are often much different than the prevalent ones in your home country. This means, that you should always research the country you would like to establish a new business in, as you will need to adhere to national and international laws if you want to run a successful and legally correct business. There are a few important Dutch laws that apply to (certain) business owners. One such law is the Anti-Money Laundering and Terrorist Financing Act (“Wet ter voorkoming van witwassen en financieren van terrorisme”, Wwft). The nature of this law is quite clear, when you look at its title: it is meant to prevent money laundering and financing terrorist organizations by starting or owning a Dutch business. Unfortunately, there are still criminal organizations around that try to funnel money via dubious ways. This law aims at preventing such activities, since it also ensures that Dutch tax money ends up where it belongs: in the Netherlands. If you are interested in starting a Dutch business (or you already own such a business) that generally deals with cash flows, or with the purchase and sale of (expensive) goods, then the Wwft will also be applicable to you as a business owner.

In this article, we will outline the Wwft, provide you with all necessary details and also provide you with a checklist, to find out whether you are adhering to the law. Due to pressure from the European Union (EU), several Dutch supervisory authorities, such as the DNB, AFM, BFT and Belastingdienst Bureau Wwft) must monitor compliance more strictly by using the Wwft and the Sanctions Act. These Dutch regulations apply not only to large, listed financial institutions and multinationals, but also to small and medium-sized enterprises that provide financial services, such as asset managers or tax advisors. Especially for these smaller companies, the Wwft can seem a bit abstract and hard to follow. Next to that. The regulations might also seem quite intimidating to less experienced entrepreneurs, which is why we aim to clarify all the requirements, so you know where you stand.

What is the Anti-Money Laundering and Terrorist Financing Act and what does it mean for you as an entrepreneur?

The Dutch Anti-Money Laundering and Terrorist Financing Act mainly aims at the prevention of money laundering by criminals, with money earned through illegal activities, via due diligence performed by banks and other financial institutions. This money could have been earned through various nefarious criminal activities, such as human or drug trafficking, scams, and burglaries, amongst others. When criminals then want to put the money into legal circulation, they generally spend it on excessively expensive purchases, such as houses, hotels, yachts, restaurants, and other objects that can ‘launder’ the money. Another goal of the regulations is the prevention of financing of terrorists. In some cases, terrorists receive money from individuals to continue their activities, very much like political campaigns are subsidized by wealthy individuals. Of course, regular political campaigns are legal, whereas terrorists operate illegally. The Wwft thus provides more insight into illegal financial flows, and the risk of money laundering and terrorist financing is limited this way.

The Wwft mainly revolves around customer due diligence and a reporting obligation for businesses when they notice strange activity. This means it’s extremely important to know who you're doing business with and to map out your current relationships. This prevents you from unexpectedly doing business with a company or an individual, who is on a so-called sanctions list (which we will explain in detail later in this article). The law does not literally prescribe how you must conduct this customer due diligence, but it does prescribe the result that the investigation must lead to. Needless to say, you, as a business owner, decide which measures you take in the context of customer due diligence. This will depend on the risk of money laundering or terrorist financing of a particular customer, business relationship, product, or transaction. You estimate this risk yourself by putting a solid due diligence process in place whenever you aspire to attract new customers. Ideally, this process should be both thorough and practical, making it easier for you to scan new clients within a reasonable amount of time.

The types of businesses that deal directly with the Wwft

As we already briefly discussed above, the Wwft doesn’t apply to all businesses in the Netherlands. For example, a baker or thrift store owner will not be at risk of dealing with criminal organizations that want to launder money via his or her company due to the small prices of the products offered. Laundering money that way would imply that the criminal organization would have to buy the entire bakery or store, and this would simply attract too much attention. Therefore, the Wwft principally only applies to businesses and individuals that deal with large financial flows, and/or the purchase and sale of expensive goods. Some clear examples are:

These service providers and businesses generally have a good view of their customers due to the nature of their work. They also often have to deal with large amounts of money. Therefore, they can actively prevent criminals from using their services to launder money or pay for terrorism, by investigating new clients and making sure they know who they are dealing with. The exact institutions and persons that are covered by this law is set out in Article 1a of the Wwft.

The institutions that supervise the Wwft

There are multiple Dutch institutions that work together, to be able to supervise the correct application of this law. This is divided by sector, to make sure the supervisory organization is acquainted with the work of the businesses and organizations they are supervising. The list is as follows:

As you can see, the supervising institutions are well-matched with the organizations and companies they supervise, allowing for a specialized approach. This also makes it much easier for company owners to contact one of these supervising institutions, since they generally know all about their specific niche and market. If you are in doubt about the steps you need to take, you can always contact one of these institutions for help and advice.

What specific obligations are connected to the Wwft when you are a Dutch business owner?

As we briefly discussed above, when you fall under the categories of businesses specifically mentioned in Article 1a of the Wwft, you are obliged to research your customers, and where their money comes from, through customer due diligence. If you see anything out of the ordinary, you need to report unusual transactions. Of course, to be able to adhere to these regulations, you will need to know what due diligence according to the Wwft actually means. In customer due diligence, institutions that fall under the Wwft always need to investigate the following information:

You are not only obliged to research these matters, but you also need to continually monitor your clients' progress on these subjects. This will, amongst other things, provide you as an organization with the necessary insight into unusual payments made by clients. However, the correct way to perform due diligence is entirely up to you, there are no strict standards mentioned. It largely depends on your current processes, how you can implement due diligence to fit these processes, and how many people will be able to perform due diligence. The way you carry this out also depends on the specific client and the potential risks that you, as an institution, see. If the  due diligence does not provide sufficient clarity, the service provider may not carry out any work for the customer. So the end result needs to be conclusive at all times, in order to prevent the facilitation of illegal activities via your company.

The definition of unusual transactions explained

To be able to carry out due diligence, it is logically important to know what kind of unusual transactions you are looking for. Not every unusual transaction is illegal, so it is important to know the difference, before you accuse a client of something they potentially never did. This might cost you clients, so try to be balanced about your approach in order to adhere to the law, but still manage to be attractive to potential clients as an institution. You do want to keep making profits, after all. Unusual transactions generally include (large) deposits, withdrawals, or payments that do not fit into the normal process of an account. Whether a payment is unusual, the institution determines on the basis of a list of risks. This list varies by institution. Some common risks that most institutions and companies are on the lookout for are:

This is a rather crude list, as it’s the general basics every company should look out for. If you would like to have a more extensive list, you should contact the supervisory institution that your own organization falls under, as they can probably offer a more extensive summary of unusual client activity to watch.

What can clients expect regarding due diligence due in line with the Wwft?

As we already explained extensively, the Wwft obliges institutions and companies to know and investigate every customer. This means that almost all customers have to deal with standard customer due diligence. This applies whenever you want to become a customer at a bank, or apply for a loan, or make a purchase with a hefty price tag—activities related to money in any case. Banks, and other institutions that offer services that fall under the Wwft, can ask you for a valid form of identification to begin with, so they know your identity. This way, institutions can be sure that you are the person with whom they are potentially doing business. It is up to the institutions to decide which proof of identity they request. For example, sometimes you can provide only a passport, and not a driver's license. In some cases, they ask you to take a picture with your ID and the current date, to know for sure you are the one sending the request, and you didn’t steal someone’s identity. Many cryptocurrency exchanges work this way. Institutions are required by law to handle your information accurately, which means they are not allowed to use the information you provide for other purposes. The government has tips for you, to be able to issue a secure copy of your ID.

An institution or company that falls under the Wwft, can also always ask you for an explanation of a certain payment that they find unusual. The (financial) institution may ask you where your money comes from, or what you are going to use it for. Consider, for example, a large amount that you deposited into your account, whilst that is not a regular or normal activity for you. Therefore, keep in mind that questions from institutions can be very direct and sensitive. Nonetheless, by asking these questions, his particular institution is fulfilling its task of investigating unusual payments. Also note, that any institution may request data more often. For example, to keep their database up to date, or to be able to carry out customer due diligence. It is up to the institution to decide which measures are reasonable for this purpose. Furthermore, if an institution reports your case to the Financial Intelligence Unit (FIU), you will not be notified immediately. Financial institutions and service providers have a duty of confidentiality. This means that they may not inform anyone about the report to the Financial Intelligence Unit. Not even you. This way, institutions prevent clients from knowing in advance that the FIU may be investigating suspicious transactions, which might enable said clients to change transactions or undo certain transactions, in order to try to escape the consequences of their actions.

Can you refuse customers or terminate the business relationship with clients?

A question we get quite often, is whether an institution or organization can refuse a client, or terminate an already existing relationship or contract with a client. If there are any discrepancies, for example, in an application, or in a client’s recent activity dealing with this institution, any financial institution may decide that a business relationship with this client is too risky. There are some standard cases in which this is true, such as when a client does not provide any or insufficient data when asked for, provides incorrect ID data, or states they want to remain anonymous. This makes it very hard to perform any due diligence at all, since there is a minimum amount of data needed to identify someone. Another large red flag is when you are on a sanctions list, for example, the national terrorism sanctions list. This flags you as a potential threat, and this might entail many institutions refusing you from the start, due to the risk you potentially pose to their company. If you have ever been involved in any kind of (financial) criminal activity, please keep in mind that it will be very hard to either become a customer of a financial institution, or set up such an organization for yourself in the Netherlands. In general, only someone with an entirely clean slate can do this.

What to do when an institution or the FIU is not handling your personal data properly

All institutions, including the FIU, must handle personal data accurately, in addition to having the correct reasons to use the data at all. This is stated in the Privacy Act General Data Protection Regulation (GDPR). First, contact your financial service provider if you do not agree with a decision based on the Wwft, or if you have a further question. Are you not satisfied with the answer, and would you like to file a complaint? If you believe that your personal data is being used in a way that is contrary to privacy laws and regulations, you can file a complaint with the Dutch Data Protection Authority. In such a case, the latter can investigate the privacy complaint.

How to adhere to the regulations in the Wwft as a business owner

We can understand that the way to adhere to this law is quite extensive and a lot to take in. If you are currently the owner of a company or institution that falls under the Wwft, it is very important that you stick to the rules. If you don’t, there is a large risk that you may become jointly liable for any criminal activities that happen with the ‘help’ of your institution. You basically have the duty to perform due diligence and know your clients, as ignorance will not be tolerated, due to the fact that by performing due diligence, unusual activities are foreseeable. Therefore, we have created a list of steps you can take, in order to comply with the Dutch Anti-Money Laundering and Terrorist Financing Act. If you follow this, the chances of getting sucked into someone’s illegal activities are close to zero.

1. Determine whether you are subject to the Wwft as an institution

The first step is obviously determining, whether you are one of the institutions that fall under the Wwft. On the basis of the term 'institution', Article 1(a) of the Wwft lists which parties fall under this law. The law applies, amongst others, to banks, insurers, investment institutions, administrative offices, accountants, tax advisers, trust offices, lawyers, and notaries. You can view Article 1a, which states all obliged institutions, on this page. If you are unsure, you can always contact Intercompany Solutions to clarify whether the Wwft applies to your company.

2. Identify your clients and verify the provided data

Whenever you receive a new application from a client, you need to ask them for their identity details before you start to offer your services. You need to capture and save this data too. Determine that the specified identity matches the actual identity before you begin the service. If the client is a natural person, you can ask for a passport, identity card, or driver’s license. In the case of a Dutch company, you should ask for an extract from the Dutch Chamber of Commerce. If it’s a foreign company, see whether they are also established in the Netherlands, because you can also ask for an extract from the Chamber of Commerce. Are they not established in the Netherlands? Then ask for reliable documents, data, or information that is customary in international traffic.

3. Identifying The Ultimate Beneficial Owner (UBO) of a legal entity

Is your client a legal entity? Then you need to identify the UBO and verify their identity as well. The UBO is a natural person who can exercise more than 25% of the shares or voting rights of a company, or is the beneficiary of 25% or more of the assets of a foundation or trust. You can read more about the Ultimate Beneficial Owner in this article. Having "significant influence" is also a point at which someone can be a UBO. In addition, you should investigate the control and ownership structure of your client. What you need to do to determine the UBO depends on the risk you have estimated. In general, the UBO is the person (or persons) who have the most influence in the company and can therefore be held responsible for any criminal or illegal activities, that arise. When you have estimated a low risk, it is generally sufficient to have a statement signed by the client about the correctness of the specified identity of the UBO. In the case of a medium- or high-risk profile, it is wise to carry out further research. You can do this by yourself via the internet, by questioning acquaintances in the client's country of origin, by consulting the Dutch Chamber of Commerce, or by outsourcing the research to a specialized agency.

4. Check whether the client is a Politically Exposed Person (PEP)

Investigate whether your client holds or has held a certain public position abroad now, or until one year ago. Also involve family members and loved ones. Check the internet, the international PEP list, or another reliable source. When someone is classified as a PEP, chances are they have come into contact with particular types of individuals, such as people who offer bribes. It is important to know whether someone is sensitive to bribery, since this might be a potential red flag regarding the risk of criminal and/or illegal activities.

5. Check whether the client is on an international sanctions list

Next to checking someone’s PEP status, it is also necessary to search for clients on international sanctions lists. These lists contain individuals, and/or companies, that have been involved in criminal or terrorist activities in the past. This might give you an idea of someone’s background. In general, it’s wise to refuse anyone who is mentioned on such a list due to their volatile nature and the threat this might pose to your company.

6. (Continuous) risk assessment

After you have identified and checked on a client, it is also extremely important to stay up-to-date on their activities. This means you should continually monitor their transactions, especially when something seems unusual. Form a rational opinion about the purpose and nature of the business relationship, the nature of the transaction, and the origin and destination of resources to make a risk assessment. Also, make sure you get information from your client. What does your client want? Why and how do they want this? Do their actions make sense? Even after the initial risk assessment, you must continue to pay attention to the risk profile of your client. Check whether transactions deviate from your client's normal behavior pattern. Does your client still meet the risk profile you have drawn up?

7. Forwarded clients and how to handle this

If your client is introduced to you by another advisor or colleague within your firm, you can take over identification and verification from that other party. But you do need to check whether identification and verification have been done correctly by other colleagues, so request details about this, because once you take over a client or account, you are the one who is responsible. This means you will have to perform the steps yourself in order to be sure you have carried out the necessary due diligence. The word of a colleague is not enough, make sure you have the proof.

8. What to do when you see an unusual transaction?

In the case of objective indicators, you can consult your list of indicators. If the indicators seem rather subjective, you should rely on your professional judgment, possibly in consultation with colleagues, a supervising professional organization, or a confidential notary. Make sure you record and save your considerations. If you conclude that the transaction is unusual, you need to report the unusual transaction to the FIU without delay. Within the framework of the Wwft, the Financial Intelligence Unit Netherlands is the authority where you must report suspicious transactions or clients. An institution shall notify the Financial Information Unit of any unusual transaction made or planned to be made immediately after the unusual nature of the transaction has become known. You can easily do this through a web portal.

Intercompany Solutions can assist you with setting up a due diligence policy

By far, the most important aspect of the Wwft is knowing with whom you are doing business. By following the abovementioned steps, you can set up a relatively simple policy that meets the legal requirements set by the Wwft. Insight into the correct information, registering the steps taken, and applying a uniform policy are essential to being able to pick up on risky and unusual behaviors quickly and efficiently. Nonetheless, it still happens too often that compliance officers and compliance employees work manually, so they do a lot of unnecessary work. We advise you to think about the possibility of developing a uniform approach within your organization. If you are currently thinking about starting a business that falls under the legal framework of the Wwft, we can assist you with the entire company registration process in the Netherlands. This only takes a few business days, so you can start doing business almost immediately. We can also handle some extra tasks for you, such as setting up a Dutch bank account, and pointing you to interesting partners. Please feel free to contact us with any inquiries you might have. We will reply to your query as soon as possible, but generally within just a few business days.

Sources:

https://www.rijksoverheid.nl/onderwerpen/financiele-sector/aanpak-witwassen-en-financiering-terrorisme/veelgestelde-vragen-wwft

It’s quite well known that the Netherlands has one of the best infrastructures in the world. The quality of Dutch roads is nearly unmatched, and all necessary commodities for businesses are always in close proximity due to the relatively small size of the country. You can literally travel to Schiphol airport and the port of Rotterdam in just two hours’ time from any place in the Netherlands. If you own a logistics business in the Netherlands, you are already well aware of all the benefits and perks that the Dutch infrastructure offers. If you are a foreign entrepreneur who would like to expand their logistics, import, and/or export business to the European Union, then rest assured that the Netherlands is one of the safest and most profitable bets you could place. The port of Rotterdam connects the country with the entire rest of the world, whilst it also benefits from the European Single Market due to being an EU member state.

According to the World Economic Forum (WEF), Hong Kong, Singapore, and the Netherlands are home to the best infrastructure in the world. The Global Competitiveness Report, released by the WEF, ranks 137 countries on a scale where 7 points are the highest. Points are accumulated based on the quality of different types of infrastructure, such as railways, ports, and airports. As a result of these measurements, Hong Kong had a score of 6.7, Singapore 6.5, and the Netherlands 6.4.[1] This makes Holland the third-best country regarding infrastructure worldwide—no small feat. We will discuss the Dutch infrastructure in detail and how you, as an entrepreneur, can profit from its high quality and functionality.

The Netherlands performs exceptionally well compared to the rest of the world

The Netherlands is the main access point for all goods to the European continent, due to the accessibility of the country and the port of Rotterdam being the largest port in Europe. Therefore, it is of the utmost importance that the Netherlands also has the best infrastructure to facilitate the transport of all these goods to the rest of Europe. Many high-quality highway connections have been established in the country to facilitate transportation from the coast of the Netherlands to the rest of the country. These roads are also very well maintained. Due to a very high level of urbanization, as Holland is very densely populated, most of the city's roads are built to include sidewalks for bicycles, allowing the country to avoid congestion on its roads. The widespread use of bicycles has also enormously aided in reducing pollution, although roughly 80% of citizens still use cars. Nonetheless, bicycling has actually become a trend worldwide, partly because of the large number of bicycles in Holland. It has even become somewhat of a Dutch staple, just like windmills and wooden shoes. The Netherlands also has several thousands of kilometers of railroad as well as advanced waterways. The country has a highly developed communication system and digital infrastructure as well, with a very high level of coverage. According to the Global Competitiveness Report 2020 of the WEF, the Netherlands scores 91.4% on "Upgrade infrastructure to accelerate the energy transition and broaden access to electricity and ICT”. Meaning that the Netherlands scores exceptionally high on both its physical and digital infrastructure. In short, the strategic location of the Netherlands as a gateway to European markets and its well-developed logistics infrastructure, including ports, airports, and extensive transportation networks, make it a prime choice for companies involved in global trade.

The importance of a solid infrastructure

A good infrastructure is of extreme importance if a country wants to facilitate trade, business in general, and the smoothtransportation of natural persons. It also has a direct impact on the economy of said country because it allows goods to be transported in an efficient manner to available ports, airports, and ultimately to other countries. Without a good infrastructure, goods will not reach their destination in time, which inevitably leads to economic loss. A highly developed infrastructure will help in the economic development and growth of a country. The connection between travel hubs and a good infrastructure is also notable, due to the shorter travel times and higher level of ease when traveling. If you are a foreign company based in the Netherlands, the quality of the infrastructure will massively aid your company if you are aiming for very fast delivery options and excellent connections to the rest of the world.

A world-class airport and port are within easy reach

The Netherlands has the largest port in Europe and a well-known international airport within easy reach of each other. Amsterdam Airport Schiphol is by far the largest airport in the Netherlands, both in terms of passenger transport and cargo transport. Other civilian airports are Eindhoven Airport, Rotterdam The Hague Airport, Maastricht Aachen Airport, and Groningen Airport Eelde.[2] Furthermore, in 2021, 593 million metric tons of goods were handled in Dutch seaports. The Rotterdam port area (which also includes the ports of Moerdijk, Dordrecht and Vlaardingen) is by far the largest seaport in the Netherlands. 457 million metric tons were handled here. Other important seaports are Amsterdam (including Velsen/IJmuiden, Beverwijk, Zaanstad), North Sea Port (Vlissingen and Terneuzen, excluding Ghent), and Groningen Seaports (Delfzijl and Eemshaven).[3] You can reach both from any place in the Netherlands within a maximum of two hours, which is ideal if you aim for fast shipping.

Amsterdam Schiphol Airport

Schiphol started in 1916 on a dry-ground piece of land in the region known as Haarlemmermeer, which is close to the city of Haarlem. Thanks to courage and pioneering spirit, the national airport of the Netherlands has grown into a major global player in the last 100 years.[4] Due to the presence of Schiphol Airport, the Netherlands is excellently connected to the rest of the world by air. Schiphol also provides a lot of means for employment, both directly and indirectly. Partly because of Schiphol, the Netherlands is an interesting location for internationally operating companies. The Dutch are aiming to maintain that strong hub function. At the same time, attention must be paid to reducing the negative effects of aviation on people, the environment, and nature. There are various challenges around the airport in the fields of nitrogen, (ultra) particulate matter, noise pollution, quality of living environment, safety, and housing. This requires an integrated solution that offers certainty and perspective for both the hub function of Schiphol and the surroundings of the airport. European agreements on the fair taxation of aviation are actively supported. The level playing field within the EU and between the EU and third countries is central to this. The Dutch want rail transport in Europe to become a solid alternative to flying as soon as possible, both in terms of time and cost. At the national level, Schiphol commits to the blending of biokerosene and stimulates the production of synthetic kerosene.[5]

Port of Rotterdam

Rotterdam became the most important port city in the Netherlands during the nineteenth century, but the port itself has actually existed for many more centuries. The history of the port is actually interesting. Somewhere around the year 1250, a dam was built in the mouth of the peat river Rotte. At this dam, goods were transferred from riverboats to coastal vessels, marking the beginning of the port of Rotterdam. During the sixteenth century, Rotterdam developed into an important fishing port. In the second half of the nineteenth century, the port continued to expand, mainly to take advantage of the flourishing industry in the German Ruhr area. Under the direction of hydraulic engineer Pieter Caland (1826-1902), the dunes at Hoek van Holland were crossed and a new connection to the port was dug. This was called the ‘Nieuwe Waterweg’, which made Rotterdam much more accessible from the sea. New harbor basins were being constructed in the port itself, and machines, such as steam cranes, made the unloading and loading processes more efficient. Thus, inland vessels, trucks, and freight trains transported products faster to and from the ship. Unfortunately, during the Second World War, almost half of the port was heavily damaged by bombing. In the reconstruction of the Netherlands, the restoration of the port of Rotterdam is a top priority. The port then grew rapidly, partly due to the flourishing of trade with Germany. Expansions were already needed in the fifties; the Eemhaven and the Botlek date from this period. In 1962, the port of Rotterdam became the largest in the world. The Europoort was completed in 1964 and the first sea container was unloaded in Rotterdam in 1966. In the large steel sea containers, loose 'general cargo' can be transported easily and safely, which makes large-scale loading and unloading possible. The port continues to grow after that: the First and Second Maasvlakte will be put into operation in 1973 and 2013. [6]

As of today, Rotterdam is the largest port in the EU and ranks 10th worldwide. [7] Only Asian countries trump the port of Rotterdam, making it the largest port compared to continents like Africa and the US. To provide an example: in 2022, a total of 7,506 TEU (x1000) containers were shipped to the Netherlands and a total of 6,950 TEU (x1000) were shipped from the Netherlands, which equals a total of 14,455,000 containers that were imported and exported.[8] TEU is the designation for the dimensions of containers. The abbreviation stands for Twenty-Foot Equivalent Unit.[9] In 2022, 257.0 million euros were invested in the port of Rotterdam. In doing so, the Dutch focus not only on infrastructure but also on stimulating the use of sustainable energy sources, such as hydrogen, CO2 reduction, cleaner air, employment, safety, health, and well-being. In this way, the Dutch government immediately fulfils their important social role by creating space for the transition to a sustainable port in all respects.[10] Globalization is increasing the movement of goods worldwide. This means that the competition is also growing. The Dutch government is keen on keeping Rotterdam competitive because the port is also known as a "main port," an important hub in the foreign trade network. For example, in 2007, the ‘Betuweroute’ was opened. This is a railway line intended exclusively for freight transport between Rotterdam and Germany. All in all, the port of Rotterdam keeps growing, expanding, and flourishing, creating a beneficial hub for all kinds of companies worldwide.

The Dutch infrastructure and its components

According to the Dutch Central Bureau of Statistics (CBS), the Netherlands has around 140 thousand kilometers of paved roads, 6.3 thousand kilometers of waterways, 3.2 thousand kilometers of railways, and 38 thousand kilometers of cycle paths. This includes a total of more than 186 thousand kilometers of traffic infrastructure, which equals nearly 11 meters per inhabitant. On average, a Dutch person lives 1.8 kilometers from a highway or main road and 5.2 kilometers from a train station.[11] Next to that, the infrastructure consists of objects such as locks, bridges, and tunnels. This infrastructure actually underpinsDutch society and the economy. And whilst the existing infrastructure is aging, it is being used more and more intensively at the same time. That is why the Dutch are working on optimal assessment, maintenance, and replacement of infrastructure in the Netherlands. Some interesting figures are, for example, the amount of money it costs the Dutch government to maintain all existing infrastructure, which is around 6 billion euros annually. Thankfully for the government, all Dutch citizens that own a car are legally obliged to pay ‘road-taxes’ on a quarterly basis, which can be used to maintain roads and other infrastructural components.

The choice to repair, renovate, or replace a part of the infrastructure largely depends on the condition of the infrastructureand also on the extent to which the roads are used. Logically, roads that are used more often also require more maintenance. The Dutch are working on innovative technologies to assess the existing infrastructure in the Netherlands and better maintain and replace it. The Dutch government is extremely committed to the accessibility of the entire country. The transport and logistics sectors are of huge economic importance to the Netherlands. A solid infrastructure is needed for basic activities such as getting to work, visiting family, or accessing education. The Dutch infrastructure is therefore well-maintained, of high quality, climate-adaptive, and fits together seamlessly. Topics such as safety, an eye for new developments, and sustainability are important. Continued investment in infrastructure and associated bottlenecks is thus essential and should be acted upon when necessary.[12]

How the Dutch analyze, prevent, and solve infrastructural risks

Infrastructural risks are always a possibility, even with high levels of maintenance and foresight. Roads are used every day, with a staggering amount of drivers that can cause problems at any moment. Whenever the quality of a road diminishes, the risks for users of the infrastructure grow at the same time. It is of vital importance that all roads are well-kept at any given moment, creating a challenging scenario for the Dutch government and all involved parties. One way the Dutch safeguard their infrastructure, is by assessing the structural safety and service life of all involved structures. Up-to-date and accurate information about the current and future state of steel and concrete structures is a huge gain for infrastructure managers. This is also where digitalization comes in, which we will cover later. In addition, the Dutch are working on condition forecasting. This encompasses, for example, the monitoring of structures, roads, and railways to determine the current condition of the structures. By using the measurement data as input for a predictive model, they know more about the possible future condition and how long the construction will last. Better condition forecasting ensures cost savings and prevents traffic disruptions without compromising safety.

The Netherlands Organization for Applied Scientific Research (Dutch: TNO) is a massive player in the maintenance of Dutch infrastructure. Amongst other things, they conduct research and innovation in the fields of water safety, tunnel safety, structural safety, and investigating the traffic load of certain structures. Safety in general is a prerequisite for all infrastructure; without proper analysis and safety management, it becomes unsafe for natural persons to use certain parts of the infrastructure. For many existing constructions, the current regulations are not sufficient anymore. The TNO uses analysis and assessment methods to develop frameworks for the safe use of the Dutch infrastructure. This means that construction work is not replaced until it is actually needed, which reduces costs and inconveniences. Next to that, the Dutch TNO uses probabilistic analyses in their risk assessments and analyses. In such analyses, the probability of a construction project failing is determined. The uncertainties that play a role in this are explicitly taken into account. Furthermore, the TNO conducts research on samples in their Building Innovation Lab under strict conditions. For example, researching factors like the long-term behavior and consistency of the roadsor significant properties of structures that are important in maintenance. In addition, they regularly carry out damage investigations on construction sites. If there is damage with a major impact, such as personal suffering, major financial consequences, or even a partial collapse, an independent investigation into the damage is important and should be carried out. The Dutch have forensic engineers available for an investigation into the cause. In the event of damage, they are able to immediately start an independent investigation together with other TNO experts, such as constructors. This gives a quick picture of the situation, and it becomes immediately clear whether more measures are needed.[13]

The Dutch government is gradually shifting towards an infrastructure that also has digital components, such as cameras. This, however, also means that cybersecurity risk becomes a larger concern. About three-quarters (76 percent) of global infrastructure leaders expect more attention to data security during the next three years. Which is no surprise since the number of attack vectors is growing exponentially as more and more components are connected to the internet. This doesn’t only entail highly sought-after personal data, but also asset data that can be interesting for a variety of commercial purposes. For example, you could think of traffic movements that enable a better prediction of routes in a navigation system. Solid and adequate protection is a must. In addition, there is also physical safety. Physical safety testing has shown that weaknesses can surface, enabling unwanted or unintended activities. Think, for example, of opening locks or pumping stations. This means that thinking carefully about segmentation is essential. Does an office automation system need to be linked to operational systems? A choice that needs to be considered at the front end of the entire infrastructure development process. In other words, security by design is needed. Taking cybersecurity into account from the start is crucial, as opposed to testing it afterwards, because then you run into the problem that the way of building is already several years old, while the way in which attacks take place has developed much further.[14] Foresight is essential in order to prevent accidents, attacks, and various other issues concerning infrastructure.

Sustainability is very important to the Dutch government

The Dutch TNO has solid and established goals in order to guarantee a sustainable way of maintaining infrastructure with as little harm as possible to the direct natural environment. With the sustainable goal in mind, the Dutch are able to use innovation and foresight during every part of the process. If you want to operate in a country with consistently high-quality infrastructure as an entrepreneur, the Netherlands should probably be at the top of your list. Due to continuous research and innovation, new methods of maintenance and surveillance, and an overall oversight of all things important, the Dutch infrastructure remains in excellent and pristine condition. The TNO highlighted the following goals for the near future:

·         Sustainable infrastructure

The TNO is committed to an infrastructure that has the least possible impact on the environment. They do this through innovations in design, construction, and maintenance. And they develop new solutions with governments and market parties. Rijkswaterstaat, ProRail and regional and municipal authorities take sustainability into account in their tenders. This is one of the reasons they are working on sustainable innovations and methods for better assessments of environmental performance. When working towards a sustainable infrastructure, they focus on three areas.

·         3 focus areas for sustainable infrastructure

The TNO is working on innovations to increase the environmental performance of infrastructure. They mainly focus on:

In which knowledge is an important factor for further development and implementation. The materials should be of the best quality, the product should be as promised, and the process should enable a smooth transition from materials to product.

·         Reducing emissions

According to the TNO, CO2 emissions from infrastructure can be reduced by 40% via more efficient use of materials and energy, life extension, reuse, and innovative materials, products, and processes. These measures often also entail a reduction in costs and other harmful substances. They are working on all kinds of innovations, from fuel-saving road surfaces to concrete made from waste materials, from a glass cycle path with solar cells to energy savings for construction equipment. The Dutch are very innovative in such approaches.

·         Closing raw material chains

Asphalt and concrete are the most commonly used materials in the Dutch infrastructure, but generally around the world as well. New and improved methods in recycling and production ensure that more and more raw materials are reusable. This results in smaller waste streams and less demand for primary raw materials such as bitumen, gravel, or cement.

·         Less damage and nuisance due to noise and vibrations

New railway lines, more and faster train traffic, and houses close to the railways require effective reduction of noise and vibrations. Among other things, the TNO conducts research into the severity of vibrations. This makes living next to a busy highway a lot more acceptable, and this is a very important factor in a densely populated country such as the Netherlands.

·         Environmental performance assessment

The TNO also develops methods to assess the environmental performance of infrastructure projects. This allows a client to translate their environmental objectives into clear and unambiguous requirements during a tender. Because market parties know where they stand, they can make a sharp, distinctive offer. In particular, the Dutch focus on methods that help assess the environmental performance of innovative solutions at an early stage. This enables innovation while keeping the risks manageable. They develop methods for determining sustainability performance both nationally and at EU level.[15]

As you can see, the Dutch have ranked sustainability as a very important factor for future activities, purposes, and in general. Whatever needs to be done is done in a way that requires the least amount of harmful substances, whilst also ensuring the best possible lifespan for every structure involved. This is one of the ways the Dutch keep their high ranking regarding the national infrastructure.

Some crucial Dutch government plans for the near future

The Dutch government has laid out several plans for the future of infrastructure in the Netherlands. These are aimed at an efficient way of maintaining the quality of the roads and structures, but also at future developments and new ways of constructing, building, and maintaining crucial parts of the infrastructure. This ensures that you, as a foreign entrepreneur, can benefit from the stellar options the Netherlands offers for any logistics company. The plans are as follows:

As you can see, the Netherlands invests a major portion in the quality and maintenance of its infrastructure. As an entrepreneur, you can benefit from this immensely.

The future of physical infrastructurein the Netherlands

Digitalization is changing everything at a very rapid pace. In a world where everything is becoming connected, the purely 'physical' infrastructure (such as roads, bridges, and electricity) is shifting further and further towards a 'physical-digital' infrastructure. Artificial intelligence, cloud computing, and cybersecurity are reshaping infrastructural thinking, according to the study The Future of Infrastructure, published earlier this year, in which infrastructure leaders were asked about their plans and expectations. Expectations that are partly shaped by the growing attention paid to the environment and broad social benefits.[17] In other words, the worldwide infrastructure is on the brink of great change. With continued digital surveillance, new methods of researching and measuring the strength and capability of structures, and evolving ways of looking at problems in general, all infrastructures in the world, including the Dutch infrastructure, are currently flexible and fluid in their development. Rest assured, as a foreign investor or entrepreneur, that the quality of the Dutch infrastructure will probably remain excellent and maybe even unmatched during the next decades, or even centuries. The Dutch have a knack for innovation and progress, and this shows very clearly, considering the goals and ambitions the Dutch government proposes. If you are looking for a country with high-speed, quality, and efficient travel routes, you have found the right place.

Start a Dutch logistics company in just a few working days

Intercompany Solutions has acquired many years of experience in the establishment of foreign companies. We can start your Dutch company in just a few business days, including several extra actions when requested. But our way of helping you as an entrepreneur doesn’t stop there. We can provide continual business advice, financial and legal services, general assistance with company issues, and complimentary services as well. The Netherlands offers many interesting possibilities for foreign business owners or startups. The economic climate is stable, there is much room for improvement and innovation, the Dutch are eager to learn from different points of view, and the accessibility of the tiny country is overall fantastic. If you are interested in the options that establishing a business in the Netherlands can offer you, please feel free to contact us anytime. We will gladly help you plan ahead, discover your potential, and minimize your risks. Contact us by phone or via the contact form for more information or a clear quote.


[1] https://www.weforum.org/agenda/2015/10/these-economies-have-the-best-infrastructure/

[2] https://www.cbs.nl/nl-nl/visualisaties/verkeer-en-vervoer/vervoermiddelen-en-infrastructuur/luchthavens

[3] https://www.cbs.nl/nl-nl/visualisaties/verkeer-en-vervoer/vervoermiddelen-en-infrastructuur/zeehavens

[4] https://www.schiphol.nl/nl/jij-en-schiphol/pagina/geschiedenis-schiphol/

[5] https://www.schiphol.nl/nl/jij-en-schiphol/pagina/geschiedenis-schiphol/

[6] https://www.canonvannederland.nl/nl/havenvanrotterdam

[7] https://www.worldshipping.org/top-50-ports

[8] https://www.portofrotterdam.com/nl/online-beleven/feiten-en-cijfers (port of Rotterdam throughput figures 2022)

[9] https://nl.wikipedia.org/wiki/TEU

[10] https://reporting.portofrotterdam.com/jaarverslag-2022/1-ter-inleiding/11-voorwoord-algemene-directie

[11] https://www.cbs.nl/nl-nl/cijfers/detail/70806NED

[12] https://www.tno.nl/nl/duurzaam/veilige-duurzame-leefomgeving/infrastructuur/nederland/

[13] https://www.tno.nl/nl/duurzaam/veilige-duurzame-leefomgeving/infrastructuur/nederland/

[14] https://www2.deloitte.com/nl/nl/pages/publieke-sector/articles/toekomst-nederlandse-infrastructuur.html

[15] https://www.tno.nl/nl/duurzaam/veilige-duurzame-leefomgeving/infrastructuur/nederland/

[16] https://www.rijksoverheid.nl/regering/coalitieakkoord-omzien-naar-elkaar-vooruitkijken-naar-de-toekomst/2.-duurzaam-land/infrastructuur

[17] https://www2.deloitte.com/nl/nl/pages/publieke-sector/articles/toekomst-nederlandse-infrastructuur.html

On the 7th of June last year, the Dutch government informed the cabinet about the fact, that the Russian government has officially agreed to the termination of the double taxation treaty between the Netherlands and Russia. Therefore, as of January 1, 2022, there is no longer a double taxation treaty between the Netherlands and Russia. The main reason for this to happen, is based in failed negotiations in 2021 regarding a possible new tax treaty between the countries. One of the main problems was the Russian desire to prevent capital flight by increasing the tax rate.

What was the goal of the negotiations?

The Netherlands and Russia wanted to explore, whether they could become aligned with both views. The Russians wanted to prevent capital flight, by increasing the withholding tax on dividends and interest to 15%. Only some minor exceptions would apply, such as direct subsidiaries of listed companies and certain types of financing arrangements. Capital flight is basically the outflow of capital and financial assets on a large scale from a nation. This can have various causes, like currency devaluation, the imposition of capital controls or simply economic instability within a certain nation. This is also happening in Turkey, for example.

The Dutch, however, refused this Russian proposal. This is mainly due to the fact, that access to the tax treaty would be blocked for a lot of entrepreneurs. Russia then proposed to extend the exception to private companies, provided that the ultimate beneficial owners of these companies are also Dutch tax residents. This would mean, that everyone owning a Dutch BV would be able to benefit from the double taxation treaty. However, this would still block access to the tax treaty in many situations that the Netherlands does not consider treaty abuse. Foreign entrepreneurs would not be able to benefit from the treaty, for example. Since a large chunk of Dutch private limited companies are established by foreign entrepreneurs.

The taxation of real estate companies is also a point of discussion. The termination of the tax treaty between the Netherlands and Russia could have very negative consequences for investors and trade between the two countries. A prominent example is the full exemption from dividend tax as provided for in Dutch national law. This will lapse, resulting in a 15% levy on dividend payments by Dutch taxpayers to Russian shareholders. On the other hand, Russia may levy higher taxes on dividends, royalties and interest payments. These are not deductible from Dutch taxes. The entire scenario puts a lot of business owners in unsteady waters, especially companies that deal with Russian companies.

The denunciation process

The whole process until denunciation actually took several years. In December 2020, the Russian Ministry of Finance announced the denunciation. The first practical step was taken in April 2021, when a draft bill of the denunciation was submitted to the State Duma. After this bill went through multiple stages of consideration and correction, it was completed at the end of May 2021. The bill was then also filed. In June 2021, the Netherlands received the formal notice and also responded to it. Any tax treaty can be withdrawn unilaterally, no later than six months before the end of any calendar year, by a written notification. Thus, there is no longer a tax treaty in place between the Netherlands and Russia per 1 January 2022.

Reaction of the Dutch government to these changes

Once the Dutch Secretary of Finance received the formal notice regarding the denunciation, he responded with the message that it is still preferable to look for a common solution.[1] The negotiations about this tax treaty have been going on since 2014. There was actually an agreement reached in January 2020 between Russia and the Netherlands. However, Russia independently initiated certain procedures, aimed at amending tax treaties with several other countries as well. These include, but are not limited to Switzerland, Singapore, Malta, Luxembourg, Hong Kong and Cyprus. The Russian proposal is mostly aimed at increasing the withholding tax rate from 5% to 15%. As stated above, this only includes a few exceptions. These countries are also labelled as the Russian WHT protocol jurisdictions.

Once Russia initiated these changes, the former agreement was no longer valid, as Russia offered the Netherlands the exact same, as offered to the other countries. One of the main problems with this protocol, is the fact that it would always apply, even in the case of treaty abuse. The original treaty contained a 5% withholding rate, but with the Russian protocol this would increase to 15%. Such an increase can affect the business community very deeply, hence the apprehension by the Dutch government to comply to the Russian wishes. All company owners in the Netherlands would feel the consequences, and this is simply a risk that is too severe to take. The Netherlands tried to counter the Russian proposal with its own proposals, such as allowing non-listed Dutch businesses to use the lower rate, as well as new anti-abuse measures. But Russia rejected these proposals.

What are the consequences of this denunciation?

The Netherlands is considered a significant investor into Russia. Next to that, Russia is a very important trading partner of the Dutch. The denunciation will definitely have certain consequences, especially for companies that actively do business with the Netherlands. By far, the most significant consequence is the higher tax rate. Per 1 January 2022, all dividend payments from Russia to the Netherlands will be subject to 15% withholding tax, which was a rate of 5% before. For the taxation of interest and royalties, the increase is even more staggering: this goes from 0% to 20%. There is also the problem regarding the offsetting of these high rates with the Dutch income tax, as this might no longer be possible. This means some companies will have to deal with double taxation.

In some cases, double taxation can still be avoided after the denunciation. From 1 January 2022, it will be possible to invoke the Double Taxation Decree 2001 (Besluit voorkoming dubbele belasting 2001) under certain circumstances. This is a unilateral Dutch plan which prevents that taxpayers residing or established in the Netherlands are taxed twice on the same income, namely in the Netherlands and in another country. This only goes for a number of specific situations and also under certain conditions. For example, a Dutch business owner with a permanent establishment in Russia is entitled to an exemption. A Dutch employee, who performs work abroad and is paid for this, is also entitled to an exemption. Furthermore, all companies that are subject to corporate income tax are able to continuously apply the participation- and holding exemption.

In addition, the exemption for foreign corporate profits (under the participation exemption and object exemption) to prevent double taxation continues to apply to Dutch companies. The main consequence of the new situation, is that Russia will be able to levy (higher) withholding taxes on outgoing dividend, interest and royalty payments. These withholding taxes are no longer eligible for settlement in a treaty-free situation. Without a double taxation treaty, all payments of involved companies payments will be subject to taxation in both the Netherlands and Russia, which in effect means there might be a possibility of double taxation. This means that some businesses might get into financial trouble, without taking appropriate actions.

What does this mean for your company?

If you currently own a company in the Netherlands, the absence of the double taxation treaty might have consequences for your business. Especially if you do business with Russia. We advise you to look into the financial part with an expert on the subject, such as Intercompany Solutions. We can help you assess your situation and see, if there are any solutions to possible problems. You could make various changes in order to avoid double taxation. For example, you could look for different business partners in other countries, that still have a double taxation treaty in place between them and the Netherlands. If you import or export products from and to Russia, you could see whether you can find new distributors or clients.

If your business is very heavily tied to Russia, we can look together whether your business might fall under one of the exemptions mentioned in the Double Taxation Decree 2001 (Besluit voorkoming dubbele belasting 2001). As mentioned before; if you also have a permanent establishment in Russia, chances are you won’t have to pay double taxes. The Netherlands remains discussing this issue with Russia, and the Dutch State Secretary for Finance hopes to find a solution later this year. So it’s still not written in stone yet, although we strongly advise you to stay flexible and alert. If there is anything Intercompany Solutions can help you with, feel free to contact us with any questions you might have. We will gladly assist you with any changes your company has to initiate.

[1] https://wetten.overheid.nl/BWBV0001303/1998-08-27

During the past decade, there has been an emphasis on eliminating tax avoidance by multinational corporations in the Netherlands. Due to the many benefits the country provides in terms of tax reduction opportunities, it became a tax haven for enormous oversees multinationals that abuse these rules for one single purpose: tax avoidance. Since every company in the Netherlands is bound to the countries’ tax rules, it became necessary for the Dutch government to take appropriate steps to halt this problem once and for all. Due to current incentives, this is internationally supported as well by the G7.

Direct incentives to counter tax avoidance

The current Dutch Cabinet clearly showed their support of the plan to introduce a minimum global tax rate of 15% in the G7, which includes Canada, Germany, France, Italy, Japan, the United Kingdom and the United States. This initiative is mainly proposed to discourage tax evasion worldwide, since it will eliminate differences between countries. If a global tax rate would be put in place, there would be no more need to funnel funds anywhere since there would not be any special tax benefits to profit from.

An incentive like this would force multinational tech giants like Google, Facebook and Apple to actually pay the taxes in the countries that facilitated the revenue. This list also includes the four biggest tobacco brands in the world. Until now, these multinationals found a way to omit paying taxes by funneling their profits via multiple countries. This new approach would establish a transparent order of business that actively battles tax avoidance.

Other benefits from this strategy

This approach would not only produce measures against tax avoidance, but it will also severely limit countries competing with each other to attract more multinationals to their location. This, in itself, creates so-called tax havens because countries outbid each other in terms of tax rates. The agreement has been signed by all finance ministers of the collaborating G7 countries. The State Secretary of Finance in the Netherlands clearly stated that the Dutch fully support this agreement, since it will allow for better regulations against tax evasion.

The agreement will be implemented as soon as possible in the entire European Union, as far as the leaders the Netherlands are concerned. All G7 countries already have a 15% corporate tax rate, but there are some countries in the EU that offer a lower rate. This enables somewhat unhealthy competition, which is detrimental to the overall worldwide economy. This is one of the primary reasons that the Netherlands is taking action, as the country has been deprived of billions of euros in taxes that should have been paid due to current tax regulations. As long as multinationals use certain countries as funnels to direct their money elsewhere, honest transactions will continue to be just a myth.

Need help with tax declarations?

The Netherlands provides an excellent and stable fiscal and economic climate for any ambitious entrepreneur, but it is advisable to follow the law when it comes to paying taxes. If you would like professional advice or accounting services for your Dutch company, feel free to contact our professional team anytime. We can also assist you with the entire process of company registration in the Netherlands, should you be interested in a branch office or company establishment here.

Starting a company oversees can involve many important choices, such as choosing the most profitable location and country for establishment. The Netherlands has been holding top positions in many economic and financial listings, due to the stable nature of the Dutch economy. In this article we will outline some interesting facts about the economy in the Netherlands, trending topics and current developments. This will provide you with enough information to seriously consider the Netherlands to branch out your business, or establish an entirely new business.

The current Dutch economic situation in a nutshell

The Netherlands is the sixth-largest economic power in the eurozone and the fifth-largest exporter of goods. The Netherlands, as a trade and export nation, is very open and therefore vulnerable to fluctuations in the global economy. In recent years, the recovery in the European Union (EU) has enabled the Dutch economy to grow dynamically. However, the uncertainty of world trade, the Brexit process and, above all, the spread of the COVID-19 pandemic led to a decline in the Dutch economy. In addition, exports and imports decreased by 3.9% and 5.3% respectively in 2020 compared to the previous year.

Political developments in the Netherlands in 2021

This year, acting PM Mark Rutte won the election with his center-right 'Party for Freedom and Democracy'. It is his fourth consecutive election victory (2010, 2012, 2017, 2021). He has even gained a little more with 22% of the vote compared to 2017 and has a clear lead with 34 seats in the 150-seat parliament. The big surprise of the latest elections is Sigrid Kaag of the left-liberal Democrats 66 and currently acting Minister for Foreign Trade and EZA. It became the second-strongest political force with 14.9% of the vote and 24 seats.

In the past, the formation of a government in the Netherlands took an average of three months. In 2017, it took as much as 7 months. This time, all parties, especially the VVD, want a quick result in terms of the pandemic. Until a new government is appointed, Rutte will continue to do business with his current government. This means that no new trade agreements or restrictions currently apply, enabling foreign investors and company owners to steadily do business with the Netherlands.

Many interesting opportunities for foreign companies

Many foreign companies which have generally successfully gained a foothold in different countries through a healthy product and quality policy, also find opportunities in the Netherlands. There Is a wide plethora of sectors to do business in, such as the organic products sector in particular, which shows very good absorption potential. E-commerce and online businesses are also rapidly gaining in popularity, this is partly due to the effects of Covid as well. Many small entrepreneurs are selling unique goods online, which makes the Netherlands a perfect country to invest in if you have original or handmade products to sell.

Focus sectors within the Netherlands

There are many sectors within the Netherlands that offer potential for foreign entrepreneurs. These can vary from agriculture, technology to the food and beverage industry and clean energy. The Dutch always try to be at the forefront of innovation, providing efficient solutions for interdisciplinary problems. We will outline a few sectors that are particularly popular right now and, thus, provide a stable basis for investment.

Furniture and interior design

The Dutch furniture industry is located in the middle and upper price segment, where the market demands quality and luxury. About 150,000 people are employed in the furniture industry. The furniture industry in the Netherlands had 9,656 stores in 2017. The housing sector generated 7% of sales in the retail sector in 2017, with sales of EUR 7.9 billion. The housing industry faces major challenges in the coming years. House and apartment prices in 2018 (excluding new buildings) have risen by an average of 8.9% compared to 2017. In the future, consumers expect a business to be more accessible, meaning the opportunities will continue to extend to digital communication. If you have a talent within this sector, the Netherlands offers ample opportunities in the form of both small projects and large corporations.

The food and soft drinks industry

The Netherlands is one of the world's largest producers of cheese, dairy, meat, charcuterie, fruit and other consumer goods. The majority of the smaller supermarket companies have merged into the shopping cooperative Superunie, which is part of EMD. Supermarket chain Albert Heijn (Ahold) has the largest market share of 35.4%, followed by Superunie (29.1%). Sales of Dutch supermarkets amounted to 35.5 billion euros in 2017. The Dutch consumer is currently increasingly interested in business models in which a shop simultaneously functions as a supermarket, snack bar, traiteur and an electronics or clothing store. The boundaries between LEH, hospitality and lifestyle are rapidly blurring. This makes it an excellent possibility for foreign companies to profit from this interdisciplinary approach.

Renewable energy

In the field of renewable energy the Netherlands amounts to almost 6% of the total usage nationwide. Although the use of solar energy has increased significantly since 2011, it still accounts for less than 5% of renewable energy sources(1). This has motivated the Dutch to invest in renewable energy solutions. EU Directive 2009/28/EC set a binding target of 20% share of renewable energy in energy consumption by 2020; in the case of fuels, the share of renewable energy sources should be 10%. These measures are expected to increase the share of renewable sources by 27% by 2030(2). Energy is one of the top nine sectors formulated by the Government to play a leading role internationally. The Netherlands is leading the way in the field of electro-mobility.

If you would like to become involved in the renewable and clean energy sector, the Netherlands can offer you all the tools and knowledge you need. Even though the Netherlands has a lot of catching up to do regarding renewable energy, there is an ample amount of funds being invested in new solutions and inventions. This creates opportunities for foreign companies in areas such as energy saving for new buildings, decentralized energy generation such as wind energy, smart grids and also infrastructure projects, innovative soil remediation and waste processing techniques and flood protection. The Netherlands also offers environmental subsidies for certain green technologies and investments.

Want to invest in the Dutch economy?

Next to these sectors, the Netherlands also provides opportunities in many other areas. If you are thinking about setting up a company in the Netherlands, Intercompany Solutions can assist you during the entire process. If you are not a citizen of an EU member state, we can also help you with the applications for necessary permits. Feel free to contact us for professional advice or a quote.

Sources:

  1. https://www.statista.com/topics/6644/renewable-energy-in-the-netherlands/
  2. https://www.government.nl/topics/renewable-energy
  3. https://longreads.cbs.nl/european-scale-2019/renewable-energy/

Nature, and especially sustaining nature, is increasingly becoming a hot topic within our entire  society. Due to the exponentially large growth of the amount of world citizens, new problems have arisen that continually need the government’s attention. One of these problems is the high current CO2 emission, which is mainly caused by the bio-industry, automobiles and other factors that contribute to a lower oxygen level. The earth is blessed with trees in order to transform CO2 to breathable oxygen, but with a simultaneous cutting of trees and polluting the quality of the air, extra measures have to be taken to achieve a sustainable situation.

New guidelines for businesses and consumers

The Dutch government has announced measures  in the past to further reduce CO2 emissions in the Netherlands. The Netherlands will have to reduce CO2 emissions by 25% in 2020, compared to the year 1990. This is the result of a judgment of the District Court of The Hague in the Urgenda case, which became irrevocable. The measures taken by the Dutch parliament also contribute to the reduction of nitrogen emissions in the Netherlands. In implementing the package of measures, the government also takes into account the impact of the Covid-19 crisis on CO2 emissions. A scenario study by the Dutch Environmental Agency (PBL) shows that the Corona virus could have a significant impact on emissions in 2020, whilst the longer-term impact is likely to be limited. As a view of this uncertainty, measures for the coal sector will be re-examined on the basis of the new emission figures.

With the help of an emissions cap, the government will limit the CO2 emissions of modern coal-fired power plants. In addition, the government is taking measures for consumers. A further 150 million euros will be made available for the program to reduce energy consumption, which will enable consumers to be compensated. Some examples include LED lamps or sustainable heating systems. In addition to homeowners, tenants and SMEs can also make use of this program.

Housing associations will also receive a discount on the landlord's levy if they invest in a more sustainable design of their homes. The conversion of plants and the additional reductions in nitrous oxide emissions may also be accelerated in order to implement the Urgenda ruling. Much of the cost of the package of measures is paid for with funds from the SDE incentive program. The level of investment will depend on the final measures. The government therefore expects an economic upturn in several sectors.

Innovative ideas to further reduce CO2 emission

Green and sustainable energy is very high on the Dutch agenda. Hence, many start-ups from foreign countries invest in this sector as it is constantly evolving. Further goals of the Dutch government include switching to entirely CO2 neutral resources by 2025, and put a halt to natural gas production and consumption. Currently, more than  90% of Dutch households are heated with gas and many large (production) companies too. Reducing the amount of natural gas use will substantially lower CO2 emission. The Netherlands government has formulated a new policy in the Energy Agreement and Energy Report.

Next to switching to greener solutions, the Dutch also want to completely reduce greenhouse gases before 2030. This will imply a need for inventive ideas and new ways of thinking, which in turn also offers possibilities for entrepreneurs in the clean energy sector. If you always wanted to contribute to society in a profitable way, this might be a perfect chance to do exactly that.

Intercompany Solutions can set up your company in just a few business days

If you would like to explore your options in this dynamic market, our experts are always ready to assist you. We can take care of the entire process of business registration, as well as accountancy services and market exploration. If you would like to receive more information about our goods and services, feel free to contact us anytime for advice and/or a clear quote.

 

The Netherlands has implemented quite a few priorities from the government’s fiscal agenda, which are combined into the 2021 Tax Plan. This includes several legislative taxation proposals, as well as the main Netherlands’ 2021 Budget. The measures are aimed at the reduction of taxation of employment income, to actively combat tax avoidance, to support a more clean and green economy and also to generally improve the Dutch investment climate for foreign entrepreneurs.

Next to the 2021 Budget, some other proposals went into effect last year. This concerns the EU Mandatory Disclosure Directive (DAC6) and the Anti-Tax Avoidance Directive 2 (ATAD2). Both the 2021 Budget and ATAD2 were implemented on the 1st of January 2021, whilst DAC6 was implemented on the 1st of July last year. Please keep in mind that DAC6 also has a retroactive effect from the 25th of June 2018. This might have implications for your already existing business in the Netherlands. If you would like to know more about this, you can always contact Intercompany Solutions for in-depth information and advice. All these taxation proposals and measures have a financial impact on foreign multinationals that own or have a subsidiary, branch office or royalty company in the Netherlands.

More information about DAC6

DAC6 is a ECOFIN Council Directive, which will amend Directive 2011/16/EU regarding administrative cooperation. This entails a mandatory and automatic exchange or information, about reportable cross-border arrangements which will enable the disclosure of potentially aggressive tax arrangements. Thus, this directive will impose an obligation to report certain cross-border arrangements with the main benefit to obtain a substantial tax advantage, by intermediaries such as tax advisers and lawyers. Other goals that are often aimed at with cross-border arrangements are satisfying hallmarks or meeting other specific hallmarks, other than obtaining a tax advantage.

DAC6 has already been implemented in 2021. If a company has made a first step towards a cross-border arrangement between the 25th of June 2018 and the 1st of July 2020, this should have been reported to the Dutch Tax Authorities before the 31st of August 2020. After that date, every attempt or first step of implementation of a cross-border arrangement needs to be reported to said authorities within 30 days.

More information about ATAD2

The implementation of ATAD2 was proposed to the Dutch Parliament in July 2019. This tax avoidance directive restores so-called hybrid mismatches, which exist due to usage of hybrid financial entities and instruments. This results in confusion, as some payments might be deductible in one jurisdiction, whilst the income that corresponds with the payment might not be taxable in another jurisdiction. This falls under Deduction/No Income - D/NI. There is also a possibility of payments being tax deductible in multiple jurisdictions, this is called Double Deduction - DD.

These new rules will go into effect for reverse hybrid entities on the 1st of January 2022. The directive will introduce a documentation obligation, which will be aimed at all corporate taxpayers. It doesn’t matter whether and/or why the hybrid mismatch provisions apply or not. If any taxpayer fails to meet this documentation obligation, this corporate taxpayer will need to prove that the hybrid mismatch provisions do not apply.

Proposals that have been adopted the 1st of January 2021

Amendment of dividend withholding tax and anti-abuse rules regarding statutory corporate income tax (CIT)

The Dutch 2021 Budget is partly implemented due to the fact, that the former anti-abuse rules were not considered completely in line with EU law and regulations. Therefore, the 2021 Budget proposed to amend these rules regarding topics such as dividend withholding tax and CIT purposes. This also relates to the Dutch exemption on dividend withholding tax which are made to any corporate shareholder resident that resides within the EU, in a double tax treaty country or the European Economic Area (EEA).

The only way this exemption does not apply, is when the subjective and objective test are not met. Previously, the objective test was already met when the corporate shareholder would meet the Dutch substance requirements. The objective test basically proves that there is no artificial structure. With the new proposal containing the anti-abuse rules, meeting these so-called substance requirements will no longer provide a loophole.

This provides room for two separate possibilities. When the structure is proved to be artificial, the Dutch Tax Authorities can challenge this structure and, thus, deny the dividend withholding tax exemption. The other option is not meeting the substance requirements. In this case, the company owner needs to prove that the structure is not artificial and will then fall under the dividend withholding tax exemption.

You also need to take into account the controlled foreign corporation rules (CPC), meaning that a subsidiary does not necessarily qualify as a CFC when the substance requirements apply to this subsidiary. Additionally, if a foreign taxpayer meets the substance requirements under the objective test, the foreign taxpayer rules do not apply either and it cannot be seen as a safe harbor. This is applicable for foreign shareholders who derive income like capital gains from a shareholding, that is larger than 5% in a Dutch company.

So this essentially means, that the Dutch Tax Authorities can challenge the structure from foreign taxpayers when the structure proves to be artificial and thus, can levy income taxes. This is possible even if the substance requirements are met. Alternatively, the foreign taxpayer can also prove that the structure is not artificial, even when the substance requirements are not met, which will result in no levying of income tax over income from the substantial interest.

Reduction of the CIT Rate

The current CIT rates in the Netherlands are 19% and 25,8%. The 25,8% rate is applicable to profits exceeding 200.000 euros per annum, whereas all profits below that amount are taxed by using the low 19% rate. This provides for a very competitive fiscal climate, which is why the Netherlands is so popular amongst foreign investors and multinationals. Furthermore, the reduction of the CIT rate provides a budget that will be used to reduce the tax rate of employment income as well.

Restrictions for banks and insurance companies

The 2021 Budget also contains a restriction for insurance companies and banks to deduct their interest payments, but only if the debt exceeds 92% of the total of the balance sheet. In effect, banks and insurance companies need to maintain a minimum equity level of 8%. If this is not the case, these companies will be affected by the new thin capitalization rules for banks and insurance companies. On the 31st of December of the preceding book year, all equity and leverage ratios are determined for the tax payer.

The leverage ratio for banks is determined by the EU Regulation 575/2013 on prudential requirements for credit institutions and investment firms. The EU Solvency II Directive serves as a basis for the equity ration to be determined for insurance companies. If a bank or insurance company has a physical seat in the Netherlands, these capitalization rules apply automatically. This is the same for foreign insurance companies and banks with a branch office or subsidiary in the Netherlands. If you would like advice on this subject, Intercompany Solutions can aid you.

The definition of a permanent establishment has been amended

The 2021 Tax Plan follows the ratification of the multilateral instrument (MLI) in 2021, by proposing to change the way a permanent establishment (PE) is defined for CIT purposes in the Netherlands. This also includes tax wage and personal income purposes, the main reason is alignment with certain choices the Dutch have made under the MLI. So if a double tax treaty applies, the new PA definition of the applicable tax treaty will apply. If there is no double tax treaty to apply in a certain case, the 2017 OECD Model Tax Convention PE definition always applies. If taxpayers artificially try to avoid having a PE, an exception might be made.

The Dutch tonnage tax has been amended

In order to comply with current EU state aid rules, the 2021 Tax Plan also aims to amend the current tonnage tax for travel and time charters, the flag requirement and also activities that exclude the carrying of persons or goods in international traffic. This includes three separate measures, namely a reduced tonnage tax for vessels that exceed 50.000 net tons, for ship management companies and also applying the tonnage tax regime to cable-laying vessels, research vessels, pipeline laying vessels and crane vessels.

Changes in Dutch personal income tax

The way Dutch citizens are being treated by the national tax authorities largely depends on the type of income they generate. In the yearly tax declaration, the income of any tax payer is sorted in three separate ‘boxes’:

The previous statutory personal income tax rate of 51.75% has been reduced to 49.5%, this will apply to all income exceeding the amount of 68.507 euros. This concerns income derived from box 1; income, a house or trading. For an income which is 68.507 euros or less, a base rate of 37.10% applies since the 1st of January 2021. Consequently, the Dutch possibility of the deduction of the payment of mortgage interest is also reduced in steps. The rate was reduced to 46% in 2020, further to 43% in 2021, 40% in 2022 and 37,05% in 2023. The 2021 Budget already contained these changes.

Other changes include the increase of the statutory personal income tax rate of 25% to 26.9% in 2021, which entails the income from box 2; income from substantial (5% or more) interest in a company. The increase in this rate is directly linked to the decrease in the CIT for profits that Dutch companies make; meaning it levels it out. Amendments of taxation of box 3, savings and investments, have also been announced by the Dutch government. This should go into effect in 2022. Assets exceeding 30.000 euros are expected to be taxed at a deemed yield of 0.09%. Also, there shall be a deduction of a deemed interest rate of 3.03%. The statutory personal income tax rate will also be increased to 33%. All these amendments and new regulations will generally have a positive effect for tax payers that also own savings. For tax payers with other types of assets, such as a vacation home and other securities, these amendments might have a more negative effect. In particular, if these assets have been financed with debt.

Reduction of the wage tax

The Dutch ‘werkkostenregeling’ or WKR, which can be translated to the work-relaxed expenses provision, has also be amended. The previous budget for provision of work-relaxed costs and tax free reimbursements has been increased to 1.7%, from 1.2%. This concerns the total wage cost of any Dutch employer, up to 400.000 euros. If the total wage costs exceed the amount of 400.000 euros, the previous percentage of 1.2% will still apply. Certain products or services from a company of an employer will be valued at market value for this exact purpose.

Proposals that have been adopted the 1st of January 2021

An increase of the CIT rate for innovation box income & the abolition of the payment discount for provisional CIT assessments

The Dutch government increases the effective statutory corporate tax rate of 7% for innovation box income to 9% in 2021. The government also announced that the discount that is currently available to corporate tax payers, who pay income tax due on a provisional CIT assessment, will be abolished.

An increase of the real estate transfer tax

If someone wants to invest in non-residential property, they need to be mindful about the fact that the real estate transfer tax rate will be increased from 6% to 7% in 2021. This only applies to non-residential property, as the rate for residential real estate remains unchanged at 2%. Nonetheless, the Dutch government did announce that the real estate transfer tax rate for residential buildings might also be increased in the near future, when the property is rented to third parties, as this implies gaining income.

Amendments to the conditional withholding tax on royalty payments and interests

The 2021 Tax Plan includes a Withholding tax law, that proposes to introduce a conditional withholding tax on interest and royalty payments. These payments concern payments made by either a Dutch tax resident entity, or a non-Dutch resident entity with a Dutch PE, made to other so-called related parties that reside in a low-tax tax jurisdiction and/or in case of abuse. This withholding tax rate is expected to be 21.7% in 2021. The main reason for installing this conditional withholding tax, is to discourage the use of a Dutch subsidiary or resident entity as a funnel for both interests and royalty payments to jurisdictions with very low to 0 tax rates. In this case, a low tax jurisdiction means a jurisdiction with a statutory profit tax rate below 9%, and/or inclusion in the EU list of non-cooperative jurisdictions.

Any entity can be seen as related for this purpose, if:

An interest that represents at least 50% of the statutory voting rights is considered a qualifying interest. It can also be called a direct or indirect controlling interest. Furthermore, take into account that corporate entities can be related as well. This happens, when they are acting as a cooperative group that holds a qualifying interest in a corporate entity, either directly, indirectly or jointly. In certain abusive situations, the conditional withholding tax will also apply. This entails situations such as via indirect payments to recipients in certain low-tax jurisdictions, mostly funneled through a so-called conduit entity.

New restrictions concerning liquidation loss and cessation loss deduction

The Dutch government decided to limit the deduction of liquidation and cessation losses per the 1st of January 2021. This is due to an earlier proposal with the intention to deduct liquidation losses regarding foreign participation, next to cessation losses on foreign PE’s. Such liquidation losses should only be tax deductible, if the corporate tax payer in the Netherlands holds a minimum interest of 25%, opposed to the current low 5%, in the foreign participation. This also accounts for any foreign participation being resident of either the EU or the EEA. The liquidation of a foreign participation is completed within three years following the discontinuation of the participation. The limitation of the deduction of both liquidation losses and cessation losses will be roughly the same. In both cases, the limitations do not apply to losses lower than 1 million euros, since these will remain tax deductible.

Advice for both foreign and international Dutch companies and investors

Since all these measures entail a lot of changes, both Dutch and foreign entrepreneurs should monitor these closely. If you run an international business in Holland, these changes might very well apply to you too. In any case, we have prepared a few points of advice if you are currently doing business in the Netherlands.

If you are considered as a foreign tax payer that invests in shareholdings in companies in the Netherlands, you should monitor whether your income and capital gains continue to be exempt from dividend withholding tax and capital gains tax, since the instalment of the amended CIT anti-abuse rules and dividend withholding tax purposes. This is due to the fact, that meeting the substance requirements is not longer considered as a safe harbor. Next to that, if you own a subsidiary or branch office of a foreign bank or insurance company in the Netherlands, you will need to find out whether the thin capitalization rules apply to your business. If this is the case, you might face a serious disadvantage compared to other similar institutions that are not affected by these rules within their home jurisdictions.

If you happen to own an international business that has set up structures with so-called hybrid entities or instruments solely to reduce your tax costs, then you will closely need to monitor these entities and also possibly amend them. This is necessary in order to work around tax inefficiencies, that might exist after the implementation of ATAD2. Furthermore, certain multinational corporations that provide funding to debt platforms like financing companies, need to assess and monitor whether possible royalty and interest payments made by these companies would become subject to the Dutch conditional withholding tax. If this is the case, these multinational companies need to restructure if they want to mitigate any tax inefficiencies that follow after the implementation of the Dutch conditional withholding tax.

Furthermore, both Dutch holding companies and foreign multinational holding companies with a Dutch subsidiary or branch offices that are relying on an unlimited deduction of liquidation losses on foreign participation, need to be watchful regarding the tax deduction of such losses. It would be wise to assess how this might possibly affect them adversely. Last but not least; all international businesses should find out whether they have any new reporting obligation under DAC6, regarding tax optimization schemes which were implemented or changed after the 25th of June 2018.

Intercompany Solutions can clear up all your fiscal difficulties

These changes imply a lot of new ways to work and structure your business. If you are in any way uncertain about how these fiscal regulations are going to influence your business in the Netherlands, please always feel free to contact our professional team. We can sort out any financial and fiscal problems you might encounter along the way, as well as provide you with advice withing the fields of company registration in the Netherlands, accountancy services for foreign multinationals and solid business advice.

With constant news spreading about global warming, rapidly thinning fossil fuel sources and oceans filled with plastic debris, it’s no wonder that there are more and more innovative entrepreneurs who want to contribute to a healthier and safer planet. If you are considering pitching your environment-friendly idea anywhere in the world, the Netherlands might be your best bet. The country is known for its innovative and unique solutions, using sustainable power sources and utilizing established methods to gain completely new goals. Next to that, many crossovers between sectors give room to an interdisciplinary approach that is unique in its kind. Read on for more interesting information about the clean energy and technology sectors in the Netherlands.

The clean technology sector in the Netherlands

During the past few years the clean technology industry in the Netherlands has grown exponentially. This is largely due to the massive demand for renewable and clean energy, in order to establish a halt to the usage of fossil duels and other exhaustible raw materials. There is also a notable rising trend in certain niches such as a circular and sharing economy, conscious consumption and green mobility.

The Netherlands is very densely populated in some regions like the Randstad, which covers the area with the four largest cities in the country. This calls for extra measures in order to lower the CO2 production rapidly, as the Dutch produce more CO2 than is allowed in the EU standard. Next to that, the country is also behind on the EU directed schedule of CO2 reduction. By initiating Smart City initiatives the Dutch hope to change this in a short amount of time, together with other incentives such as Utilities transformation, which pushed several tech innovations in order to clean the air as fast as possible. The Dutch government is actively seeking innovations and ideas to make this happen.

Extra information about clean technology

The Netherlands also has good positions, such as being the 2nd country in Europe with the highest amount of electric cars. The Dutch are now also experimenting with electric busses and logistic vehicles, in order to limit CO2 emission. Furthermore, the Dutch are avid buyers of electric bicycles, as driving a bicycle is deeply ingrained into Dutch society.  A Finnish company named Solnet is also exploring possibilities to partner up with Holland, to transform used energy into renewable energy.  If you happen to have interesting ideas on this subject, there is a large possibility you could contribute within the sector of clean technology.

Some interesting current trends in this sector

The Netherlands is working on a few hot topics within the clean technology industry, such as:

All these ideas also require stable financial solutions, to be able to provide clean tech adoption. This also entails the search for investors and entrepreneurs with ground-breaking knowledge, ideas and expertise. This also entails the transformation of current companies that heavily rely on industrial needs and resources, in order to create a more sustainable future. Since the government offers its full support in this case, the investments in clean technology have grown immensely in the Netherlands. This provides an ample amount of opportunities in the clean technology arena. Because the Dutch don’t just need investors; they are looking for knowledge in this area too. Thus, they are open to any kind of interesting collaboration within this sector.

Energy solutions in the Netherlands

Next to clean tech, green and sustainable energy has been very high on the Dutch government’s agenda. They have announced that the Netherlands want to transition from natural gas to only resources that are CO2 neutral by 2025. This is a decision that impacts almost every Dutch citizen, as a lot will need to be changed. More than 90% of all Dutch households are currently heated with natural gas, furthermore most companies also use gas in their production centers due to the low price of gas. The government has formulated this new policy in a new Energy Agreement and Energy Report. The main target is the swift and substantial reduction of CO2 emission.

If the impact of our current society on climate change is to be minimized, new solutions need to be found for long existing problems. Topics like CO2 reduction, energy neutral and climate neutral are now more important than ever before. Next to lowering the CO2 emission, the Dutch also want to reduce greenhouse gases to 0% by 2030. That is quite an ambitious goal, which requires collaboration and crossovers between sectors and nations to reach. The largest amount of energy consumption in the Netherlands is due to generating heat, which is about 45% of the total amount. The Netherlands has natural gas resources, but in the past decades there have been issues with tremors and sinkholes in the northern part of the country, which reduced the production of gas significantly. On top of that, the natural resources will be exhausted in the near future, making it necessary to look for alternatives rapidly.

Some interesting current trends in this sector

The main topics in the energy sector include:

The main reason for all these goals is sustainability. This started as a trend a few decades back, but now proves to be a necessary effort if we want to continue to live on this planet in a healthy way. It’s not just the Dutch government that is taking action; many corporations are taking the matter seriously and actively become involved in the process of improvement. These companies are also reliant on the generation of heat, so figuring out alternatives is in everyone’s best interest. Thus, thinking up ideas within the lines of environmental services and products is very welcome in the Netherlands. This has made the clean energy sector also a very profitable sector. Other subjects that the Dutch are currently working on include, amongst others:

If you have innovative ideas in the clean tech or energy sector, or maybe both, then it might be a good idea for you to consider setting up a branch office in the Netherlands. There is a good chance that you can profit from diverse sources of funding, both governmental and private. Next to that, the Netherlands offers a very stable fiscal and economic climate, plus there is the added bonus of being an EU member state and having access to the European Single Market.

How can Intercompany Solutions assist you?

If you want to set up a company abroad and especially the Netherlands, you will need to go through an official procedure in order to get your company registered and up and running. Intercompany Solutions has many years of experience in the establishment of Dutch companies within every imaginable sector. We can also help you out with a wide array of other services, such as setting up a bank account, accountancy services and plenty of general information on running a business in the Netherlands. We have assisted companies in the clean tech and energy sector before, and can provide you with useful and practical information to support your entry in the Dutch market.

Due to Brexit a lot has changed for the UK. Many company owners are becoming restless, since trade with the European Union has become significantly more complicated when a company solely operates from the UK. This is the main reason that the amount of companies wanting to settle oversees keeps rising; and one of the most popular countries in this regard is the Netherlands. Companies and organizations want to keep serving their clients in the EU and thus, try to open new (branch) offices in countries they consider appropriate.

The Netherlands offers a stable and profitable business climate

The Netherlands has a wide plethora of assets available for entrepreneurs who decide to settle here, open a branch office or outsource services such as logistics or tax services. Holland has been an economically very stable country for decades, meaning there is little risk involved financially. There are plenty of other benefits when you decide to set up your company in Holland, such as a skilled and highly educated bilingual workforce, fantastic (IT) infrastructure and many business opportunities in various fields.

Why start a business in the Netherlands?

Since Brexit took effect, the UK can no longer profit from the free movement of goods and services in the EU. The UK did come to a trade agreement with the EU, though this is much more restricted than the previous situation. Especially transporters suffer from large amounts of paperwork and delays, which can be extremely detrimental to any international business. Companies from the UK now also have to deal with a staggering amount of 27 different VAT rules, which makes the process of invoicing a lot more complicated and time-consuming.

The newspaper the Guardian stated in a report, that all these issues have resulted in the UK Department of Commerce giving companies the advice to open branch offices in EU countries. This means that most companies will probably look for a country nearby, such as Ireland or the Netherlands. During 2019, already a total of 397 international companies opened new offices or branch offices in the Netherlands. 78 of these companies moved due to reasons related to Brexit. This amount grew significantly in 2020, as a spokesperson for the NFIA mentioned.

Right now, the NFIA is communicating with more than 500 businesses that want to expand or relocate to the Netherlands. Around half of this number are British companies, which is the triple amount of companies that moved in 2019. That’s a very large increase in such a short timeframe. Setting up a branch office in Holland makes it possible to continue your business activities the usual way, as opposed to being tied to enormous amounts of new rules and regulations.

Intercompany Solutions can help you every step of the way

With many years of experience regarding setting up foreign companies in the Netherlands, we can assist you during the entire process. From the registration of your company to acquiring a Dutch bank account and VAT number; we are here for all your company’s needs. If you would like to receive more information or a quote, feel free to contact us anytime.

Tax evasion is a worldwide problem, which makes it necessary for governments to actively monitor this problem and deal with it accordingly. In the Netherlands this has also been a hot topic during the past few years, which instigated some government reforms in order to impose stricter rules. However, since these government reforms do not seem to stretch far enough in reality, Dutch lawmakers have initiated an inquiry on how to make (large) multinationals and other tax avoiding companies pay their legally expected share of tax.

This happened just after some harsh public criticism regarding the reforms not being severe enough. Multiple multinationals pare their tax bills by using the Netherlands as a funnel, but the Dutch are not exactly amenable to minimizing company tax. The interesting fact is that minimizing company tax is legal and has been unchallenged for a long time, although this is starting to change. One of the main instigators is Royal Dutch Shell, who acknowledged that the company had paid almost no Dutch corporation tax in the year 2018.

The root of the problem

Shell refused to release any details regarding their choice in a hearing of a parliamentary panel on taxation. One of the main factors of anger is the fact, that every single Dutch citizen is expected to pay a rather large amount of income tax in relation to their wages. Even people who earn the minimum wage. Seen from this perspective, it’s absurd that a multibillion company would not pay taxes. After extensive research the government’s data shows, that there are assets parked within a very large amount of so-called letter box companies in the Netherlands. These assets have a cumulative value of more than 4 trillion euros. Many of these are exploited to funnel profits via the Netherlands to low-tax countries. And the Dutch government has had enough.

No more shady deal making

The Dutch government now wants to introduce new reforms, in order to break with this dark image of back-door deal-making. There is a certain shady quality about tax evasion, especially if the working class gets hit by the problem. Menno Snel, the Dutch official in charge of this issue, stated that companies that solely establish a business here to channel away capital to foreign countries are made very unwelcome in the near future.

Dutch lawmakers have stated that they feel the government still falls short in regulating tax avoidance, and want more details published when it comes to tax rulings such as the company name. According to a member of parliament, a lot of Dutch citizens feel duped, since they feel they paid for the financial crisis in a way. And due to the issue, citizens also have to pay higher taxes like VAT, whilst corporate taxes are lowered simultaneously. This obviously provides a stable basis for confusion and, in the worst case, corruption.

Intercompany Solutions assists you in all financial matters

Whether you want to establish a new company in the Netherlands, set up a branch office or just want to know more about tax regulations and laws; we are here to help you in any way we can. We can provide you with all necessary information in order to run a successful company legally, whilst making the most out of your business at the same time. We can also assist you with company accounting requirements.

Entrepreneurs are invaluable. They are the engine of the Dutch economy. We owe our jobs, prosperity and opportunities for development to a large extent to creative self-employed persons, innovative startups, proud family businesses, global companies and a large, varied and robust small and medium-sized company.

Space for entrepreneurs

Legislation and regulations are being modernized so that companies can better respond to social and technological changes with their services and products. Regulatory pressure and administrative burdens are limited, for example by expanding the current business effects test with an SME test.

The various inspections will cooperate better so that better enforcement is associated with fewer administrative and supervisory burdens. Appropriate rules and more space will be created for companies with social or societal goals while maintaining a level playing field. The possibilities for regional and sectoral pilot projects, legal experimental space, test locations (for example for drones) and rule-free zones will be increased. Minimum requirements and appropriate supervision apply.

In order to take advantage of regional opportunities, the national government seals 'deals' with decentralized authorities, in which the parties undertake to work together on new solutions.

Strengthening innovation

In vocational education, professionals, technology and craft are given priority, revaluation and a new impulse. The Technology Pact and the Beta Technology Platform will be continued.
The cabinet invests 200 million euros a year in fundamental research. In addition, 200 million euros per year will become available for applied research. This includes an extra investment at large technological institutes that demonstrably meet market needs and public-private partnerships at universities and colleges with a focus on beta and technology.

Credit and banking sector

The cabinet is continuing the establishment of a Dutch financing and development institution, InvestNL, in accordance with the set-up that has already been started with three main objectives (see Parliamentary Paper 28165-nr266) and is making 2.5 billion euros available as equity.
Financial technological innovations (Fintech) contribute to innovation and competition in the financial sector. The entry of these innovative companies is simplified by introducing lighter banking and other licenses while ensuring sufficient protection of the customers.
Well-capitalized banks are crucial for lending. As soon as the stricter requirements of Basel IV come into force, the requirement for the leverage ratio is brought into line with European requirements.

A level playing field for entrepreneurs

An open economy is difficult to relate to the barriers that Dutch entrepreneurs too often encounter in other countries outside the European Union. This also applies to foreign companies that are (partly) state-owned or that benefit from state aid. The Netherlands wants to make agreements at European level and with third countries for a better balance.

To prevent improper and unwanted competition between governments and private parties, the general interest provision in the Market and Government Act is being tightened. For activities that are developed by governments and that are otherwise not or insufficiently offered by market parties, such as sports, culture, welfare and reintegration services, there remains a possibility to provide these by governments.
Additional franchise legislation will be introduced to strengthen the position of franchisees in the pre-competitive phase.

A competitive business climate

We want the Netherlands to be a country where it is attractive for companies to settle and from which Dutch companies can trade all over the world. The Netherlands benefits from this because these companies add employment, innovation and strength to our economy. Many people work at internationally operating companies and at companies that supply them. The Netherlands is an attractive country of residence for many internationally operating companies. Measures are needed to keep it that way in an increasingly globalizing world.

Read here for more information on registering a company in the Netherlands.

In September 2019, the government of the Netherland announced bad news for large companies in the form of 1.5 billion more tax.
Very large companies will have to pay more tax in the coming years. A number of advantageous schemes for large companies are being revised and an intended tax cut is not being made.

This is evident from the Tax Plan, which is part of the Budget Day documents. The biggest blow to large companies and the biggest blow to the tax authorities is reversing an intended reduction in profit tax.

Profit tax reduction will be reduced

The government planned to reduce the tax rate for corporate profits above 200,000 euros from 25 percent to 21.7%. The lower tax rate is set to decrease to 15% in 2021.

The ministry estimated that this change in policy will benefit large companies nearly 1.8 billion euros next year, on the other hand, this means less income for the treasury that was not previously expected.

In 2021, the higher rate of the corporate income tax will drop to 21.7 percent, but it was previously planned to drop to 20.5 percent. This smaller reduction means that from 2021 the Tax and Customs Administration will structurally receive 919 million euros more income from profit tax than previously estimated. (Currently the rates are 19% for the lower rate and 25,8% for the upper rate as of 2024).

More setbacks: innovation tax and Groenlinks law

However, that is not the only setback for large companies. More setbacks are planned from 2021 onwards. Corporate profits achieved through new innovations are now taxed at 7 percent, that rate goes up to 9 percent. This is expected to generate 140 million euros more annually for the state.

And the cabinet is accepting a proposal from Groenlinks, whereby companies such as Shell can no longer deduct unrestrained foreign losses resulting from the closure of a subsidiary from the tax owed in the Netherlands. In 2021 this will generate additional income of 38 million euros for the state, but in time this will yield 265 million a year.

A disappointment for Multinationals: the loss of the VPB discount

And with that, the poisoned chalice for companies is not yet completely empty. The discount that multinational companies now receive if they pay their corporate tax in advance at once, after they have received a provisional assessment, will also disappear. As a result, companies are estimated to miss out on around 160 million euros a year in discounts.

As a result of these measures, the burden on business will increase structurally by almost 1.5 billion euros. That money is used to pay for part of the tax relief for citizens.

For the latest advice on taxation for multinational companies in the Netherlands, contact Intercompany Solutions whoo are on hand to answer any tax-related questions you might have.

Dedicated to support entrepreneurs with starting and growing business in the Netherlands.

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