The present article describes the legal and tax aspects and some practical matters concerning office establishment in Holland. It summarizes information about the Dutch legal and tax system relevant to the required procedures. The article also presents Holland as an international centre of commerce and highlights the location advantages gained by opening a Dutch office. Finally, it discusses other matters of practical importance such as living and labour costs.

Please, do not hesitate to call our tax and incorporation agents if you have legal or tax issues or in case you need any additional information.

Tax aspects of establishing a Dutch office

Company establishment in Holland has numerous tax advantages. Many entrepreneurs choose to incorporate an international structure under an efficient tax regime such as the one in Holland. Dutch legal entities within company structures bring many tax benefits. The main advantages can be summarized as follows:

1) The benefit of double tax avoidance thanks to agreements concluded by Holland and to the EU directives on direct tax;

2) The participation exemption;

3) The option to negotiate agreements with the national tax authorities regarding advance pricing (APAs) and tax ruling (ATRs). Such agreements provide certainty about future tax payments;

4) Holland’s bilateral treaties on investments (BITs)

5) Dutch tax credits for income from foreign sources;

6) The Innovation Box (IB) regime for R&D activities;

7) No withholding tax levied on outbound royalty and interest payments; and

8) The scheme for highly qualified migrants (30 percent ruling).

These tax benefits will be explained in detail below.

Benefits of Dutch holdings

A Dutch holding can serve as an investment centre for companies established in various countries worldwide. Holland is recognized for its favourable regime with respect to holdings, particularly thanks to the participation exemption, coupled with an extensive network of tax treaties and bilateral agreements on investments. The main benefits prompting international businesses to use Dutch holdings as intermediaries are the lower withholding tax in the country where profit is generated, the untaxed receipt of funds accumulated by foreign subsidiaries and the protected status of these subsidiaries. These advantages will be clarified below.

The Government of the Netherlands has declared its general intention to keep and preserve these benefits, considered figuratively as jewels in the crown of the national tax system, regardless of the attempts of the Organisation for Economic Co-operation and Development and the European Union to combat tax avoidance strategies aimed at shifting profits from higher- to lower-tax jurisdictions.

The participation exemption in the Netherlands

As already mentioned, Holland is popular with the so-called participation exemption. If particular conditions are fulfilled, capital gains and dividends obtained from qualifying subsidiaries are not subject to Dutch corporate tax.

This exemption applies if an eligible subsidiary holds no less than 5 percent of the company’s shares. One eligibility criterion is that subsidiaries must not hold the shares with the sole purpose of passive investment in a portfolio. However, even in cases where this purpose is predominant, the exemption still applies if the subsidiaries are paying profit tax of no less than 10 percent (under the rules of tax accounting in the Netherlands) or if less than half of their assets are allocated to passive investments. When the exemption cannot be applied, companies usually have the option for tax credit.

The system for tax ruling in the Netherlands (Advance Pricing Agreements, APAs and Advance Tax Rulings, ATRs)

The Dutch system for advance tax ruling provides clearance in advance by concluding APAs and ATRs with Dutch companies with respect to their tax position. The conclusion of such agreements is voluntary. In general, companies use the system for tax ruling to become aware in advance about the tax liabilities relating to planned intercompany transactions. ATRs provide advance certainty with respect to the tax repercussions of envisaged transactions by clarifying, for example, if they will be eligible for participation exemption. APAs, on the other hand, define when the arm’s length principle can be applied to international transactions between associated companies or different parts of the same company.

Bilateral treaties on investments (BITs)

When investing in a foreign country, one should consider both the respective taxes and the protection of the so-called bilateral treaties on investments, especially if the investments are made in a country with a serious risk profile.

BITs are concluded between two countries to establish the terms for protection of entities from one country investing in the other country. These treaties ensure reciprocal protection and promotion of investments. They secure and protect the investments of entities residing in one of the contracting parties on the other party’s territory. Therefore BITs represent institutional safeguards with respect to foreign investments. Also many BITs provide for alternative mechanisms for dispute resolution where investors whose rights have been infringed upon can opt for international arbitration rather than sue the defaulting country in its courts.

Holland has developed a large network of such bilateral treaties offering investors the best possible security and protection in foreign contracting countries. It is worth to mention that Holland has entered into BITs with approximately 100 states.

Investors who reside in a country signatory can benefit from the protection of its BITs. Therefore Holland is an attractive jurisdiction for setting up holding companies not only due to its favourable tax regime, but also thanks to the numerous BITs it has concluded.

The double tax avoidance decree

In order to encourage Dutch investments into other, especially developing, countries, the Government has introduced a regulation providing a mechanism to lower Dutch corporate tax on profits obtained from investments in countries that have not concluded tax treaties with Holland. This piece of legislation is the Unilateral Double Tax Avoidance Decree (hereinafter referred to as DTAD). As a result of the DTAD the Dutch taxes levied on investments in countries that have not concluded tax treaties with the Netherlands are usually the same as the taxes levied on investments in tax treaty states.

The Innovation Box (IB) regime

Holland boasts a favourable tax climate under the innovation box regime, with regards to companies working in the field of research & development (R&D). Any company generating income from its own developed and patented intangible fixed assets (excluding trademarks and logos) or from assets derived from R&D activities (verified by an official statement) has the option to report the income using the IB regime. Then its eligible income exceeding the costs for the development of the intangible fixed assets will be subject to only 5 percent tax. Any losses associated with the eligible assets can be deducted against the usual corporate tax rate, i.e. 25 percent. If losses are included in the tax return, then they need to be recaptured using the normal rate. Only then the reduced 5 percent rate will become available again.

No withholding tax with respect to royalty and interest payments

Holland is an attractive jurisdiction for setting up (group) license and finance companies. The greatest advantage of establishing a Dutch license or finance company lies in the tax-effective setup of these entities. In broad terms this efficiency stems from the convenient tax treaties that Holland has concluded, coupled with the lack of withholding tax with respect to outbound royalty and interest payments. If certain requirements are fulfilled, these prerequisites allow for an extremely tax-efficient “flow” of license income and finances through the entity in the Netherlands to the eventual recipient.

The scheme for highly skilled migrants

Foreign employees living and working in Holland can benefit from a concession if they meet particular requirements. This concession is called the 30% ruling. According to it, 30 percent of the wages of the international employee remain untaxed. As a result the overall tax rate on personal income revolves around 36 percent instead of the usual 52 percent.

Legal aspects of establishing a Dutch office

Having a Dutch company in the framework of an international corporation provides both tax and legal benefits. Some important legal benefits are:

1) The legal system in the Netherlands has provisions for various entities to match the characteristics and needs of the planned business operations;

2) The Dutch Commercial Chamber (KvK) is very efficient and cooperative;

3) It only takes a day or two to obtain legalization from a Dutch Latin notary and a court-issued apostille;

4) It is easy to arrange the appointment of a local managing director, for example, to meet the subsistence requirements; and

5) In 2012 the laws on private limited companies (BVs) were thoroughly amended and currently they are a lot more flexible.

The corporate law in the Netherlands has provisions for entities both with and without a legal personality (i.e. both incorporated entities and partnerships/contractual entities).

Types of companies in the NL

The more commonly used entities without a legal personality include:

1) sole trader/sole proprietor/a one-man business (Eenmanszaak); (technically, sole proprietorships are not legal entities);

2) general partnership (Vennootschap onder firma or VOF);

3) professional/commercial partnership (Maatschap); and

4) limited partnership (Commanditaire vennootschap or CV.

The more commonly used entities with a legal personality include:

1) private company with limited liability (Besloten vennootschap or BV)

2) public company with limited liability (Naamloze vennootschap or NV)

3) cooperative association (Coöperatie or COOP); and

4) foundation (Stichting).

The choice of a legal entity depends on the type of business to be conducted. Owners of small businesses and freelancers usually establish sole proprietorships, while larger enterprises are incorporated as private companies with limited liability (BVs), public companies with limited liability (NVs) and limited partnerships (CVs).

After you decide to start a business, the first step is to register it at the Commercial Chamber which will include it in the Trade Registry. This procedure must take place during the period starting a week before your business becomes operational to a week after that.

Further details about the private company with limited liability (BV)

The private company with limited liability (Besloten Vennootschap or BV) with nominal capital split into shares is the most commonly used entity for business operations in the Netherlands. A BV has one or multiple shareholders and issues only registered shares. It can have one or several “incorporators” or subscribers who can be legal entities and/or natural persons. An entity or an individual, be it resident or foreign, can simultaneously be the sole incorporator and director representing the board of management.

Geographical features: Holland as an international commercial centre

Holland is an ideal strategic destination for businesses thanks to its connectivity. Companies established in the country can easily place their products and services on markets in the EU, Eastern and Central Europe, Africa and the Middle East. Holland is located in the western part of Europe and has common borders with Belgium (south) and Germany (east). To the west and to the north it borders the North Sea and its coastline is 451 km long. Holland is a small country with a territory of 41 526 square kilometres. Its economy is strongly dependent on international trade (more than 50% of the Gross Domestic Product is derived from foreign trade). The country is among the world’s top 10 exporting nations, which is quite an achievement for its size. Approximately 65 percent of all Dutch exports are destined for five countries: USA, the United Kingdom, Belgium, Germany and France.

More than 50% of all export and import in Holland consist of foods, machinery (mainly computers and parts) and chemical products. Many import goods (computers included) are actually destined for other countries and are re-exported largely unprocessed soon after their arrival in Holland. This situation is typical for big transportation and distribution hubs. As a matter of fact many millions of tonnes of North American and Asian goods arrive at Amsterdam or Rotterdam for distribution all over Europe. The role of Holland as an European gateway is also sustained by Schiphol Airport in Amsterdam – the fourth busiest and biggest airport on the continent servicing traffic of both goods and passengers. Most Dutch transportation companies have their bases of operation either in Rotterdam (with Rotterdam The Hague Airport) or close to Schiphol. Other major European airports, namely Düsseldorf and Frankfurt in Germany, Roissy in France and Brussels and Zaventem in Belgium are only several hours away. Furthermore Holland has an exceptional railroad network connecting important European capital cities, including London. The EU capital of Brussels is only a short ride away. Also, Rotterdam’s port is the biggest on the European continent. Until 12 years ago it was also the busiest port in the world, but was overtaken by Shanghai and Singapore. In 2012 it was the sixth busiest port in the world as regards tonnage of cargo per year.

Cost of labour

The living standards in Holland are relatively high and this is reflected by the average salary. In 2015 employers paid 2500 Euro/month to their employees and therefore the average cost of labour was 34.10 Euro/hour. All due taxes are levied at the source of income. The average work week is about 40 h.

The costs of labour in the different members of the EU vary widely. In 2015 the average pay per hour for the whole European Union was 25 Euro, and for the Eurozone the rate was 29.50 Euro. Therefore the costs of labour in the Netherlands are 16 percent higher compared to the average Eurozone value. Still, in 2015, five EU countries had higher labour costs than Holland. The average pay per hour in Denmark (41.30 Euro) and Belgium (39.10 Euro) is approximately 10 times higher compared to the value for Bulgaria (4.10 Euro). The labour in Belgium is more costly than in Luxembourg, the Netherlands, Sweden and France. Yet, the costs of labour in Lithuania and Romania are not much different than the cost in Bulgaria, even though the salaries in these 3 countries are on the rise.

As of 07/2015, the national minimum gross salary in Holland for employees aged 23 and older is 1507.80 Euro/month, i.e. 69.59 Euro/day. Based on 40 working hours per week, this equals 8.70 Euro/hour.

Amsterdam: The new European capital of finance

According to the writer James Stewart, a business columnist working at the NY Times, after Brexit Amsterdam is bound to become the new London thanks to its impressive architecture, top rated schools and exciting night life. Holland has been a global centre of commerce for centuries and so the country is traditionally tolerant to foreigners. Furthermore almost all Dutch residents speak English. The schools in Holland are considered the best on the European continent, with many opportunities for education in English. Amsterdam captivates with its architecture and offers attractive housing options, outstanding restaurants, picturesque views, theatrical and musical performances and an exciting night life. Its citizens have a tolerant, cosmopolitan attitude cultivated for centuries, ever since its emergence as a centre of global trade.

Thanks to the continuous efforts of the nation Holland is currently among the wealthiest states worldwide. The country’s strategic location on the North Sea coast and its rivers, bringing industrial and agricultural benefits have undoubtedly contributed to this success. Thanks to these geographical characteristics and the inherent work enthusiasm of its people, the Netherlands is now a great centre of commerce.

In addition, Holland has a well developed welfare state system ensuring that all the citizens share the prosperity of their homeland. The Dutch take great pride in their high living standards. The expenses associated with living, education, housing and culture are lower compared to most countries in Western Europe. The United Nations Sustainable Development Solutions Network surveys many people residing in various countries worldwide to prepare its annual World Happiness Report. As evident by its name, the report states which countries have the happiest populations. In 2018 Holland took the 6^th place.

Cost of living

Similarly to many other countries in Europe, the living cost in Holland has increased with the adoption of the common currency, the Euro. A standard room costs 300 – 600 Euros/month, so it is a lot cheaper to settle in a non-urban area, than to live in a city like Amsterdam or The Hague.

The public transportation is comparatively cheap by EU standards. Most areas work with chip cards (“ov-chipkaart””) that can be used on trams, buses, metros and trains. In the city a single bus ticket costs approximately 2 Euro. A ticket for the train from Schiphol to the Central Station in Amsterdam costs about 4 Euro. A ticket Amsterdam – Utrecht is around 7.50 Euro. In contrast, taxi services are quite expensive. The usual starting cost is 7.50 Euro and the rates reach 2.20 Euro/km.

Please, do not hesitate to call our experts in taxation and incorporation. They will happily assist you with the procedures for starting your own business in Holland.

Foreigners residing in the Netherlands can either work for local businesses or establish their own companies. For the past few years people increasingly choose the second option, relying on the governmental support for start-ups.

One of the profitable businesses foreigners can establish in the Netherlands is shops. There are not many requirements to be fulfilled or licenses to be obtained. One significant advantage is the possibility to stock shops with quality products delivered from local manufacturers and producers. This is particularly convenient for low-cost consumer goods that are sold quickly.

Our local agents in company formation can assist you with the procedure for company registration with the aim to open a shop.

Registration of a shop in Holland

In order to open a shop, first you need to register your company at the Commercial Register. The procedure for company formation in the Netherlands requires:

• choosing a company name;
• selecting a form of business;
• registering the selected entity;
• registering with the Tax Administration;
• obtaining a social security registration;
• applying for a company account in a local bank, an additional merchant account is optional;
• obtaining the licenses necessary for operation.

As regards the licenses needed for opening a Dutch shop, the requirements vary depending on the offered products.

Licenses necessary for operating a Dutch shop

Of the permits necessary to open a shop in Holland, perhaps the most significant is called a market license. It allows both sole traders and companies to sell products on the Dutch market. This license is provided by the municipality of the area where the business operates.

In addition to the abovementioned market license, opening a Dutch shop implies certain measures for safety that must be considered by the business owners. The sold products need to be insured, and different contracts with the suppliers need to be signed. In particular cases, when selling imported products, the shop owners will have to obtain import permits.

If you need further information on registering a Dutch company, do not hesitate to get in touch with us. Our local consultants in company registration will assist you with the procedure for business incorporation. You can also check our guide on opening a Restaurant, Cafe or Hotel business in the Netherlands.

If you intend to start a business on the European continent, you have to choose a suitable country to begin with.  Europe includes 44 countries (28 members of the EU) of various sizes, languages and levels of economic development. You might consider the Netherlands as a good place to establish your European business. The five main reasons why you should are listed below.

1. English will do everywhere

Regardless of the part of Holland you are in, the locals will speak basic English as a minimum. Your beginner’s attempts to speak Dutch will most likely result in replies in English. The widespread knowledge of the English language has multiple advantages, among which:

• Drafting agreements in English is common practice. You don’t have to translate your contracts in Dutch for them to be legally binding.
• If you employ local personnel or use the services of Dutch vendors, you will not encounter serious communication problems.
• You will not need to adapt your manuals or product packaging;
• The marketing slogans of your company can remain in English, though it may be appropriate to translate your other advertisements.

• Short distances for travel

The big cities like the capital of Amsterdam, Utrecht, Den Hague and Rotterdam are an hour away from one another by car, at the most. The Randstad megalopolis hosts seven of the fifteen million people living in the country. Even the far-off regions or towns are no more than 3 hours away by car. Therefore you will be able to operate on the whole territory of the country from a single location.

3. Considerable spending power

Statistics show that in Holland the gross domestic product per capita rates among the highest worldwide. And, unlike in other top scoring countries, the distribution of income is relatively even. Therefore most Dutch residents have quite a bit of spending money.

4. Good opportunities online

The broadband penetration in the Netherlands rates among the highest worldwide due to the coaxial and phone networks covering the entire country. Dutch people shop readily online, while it is cheap and easy to arrange payments for the services and goods you offer. Consumers are not biased and more inclined to buy Dutch products: good deals always attract customers.

5. Setting up a company is easy

The last competitiveness ranking prepared by the International Institute for Management and Development rates the Netherlands 1^st on the European continent and 4^th in the world with respect to competitiveness. With the help of Intercompany Solutions, you can register your company within a few days. Small businesses need to meet few requirements and it is not obligatory to appoint an accountant or a local director. The rate of corporate income tax is twenty percent. You will also need to pay a fifteen percent withholding tax, but this could be settled with taxes on dividends covered by you elsewhere.

If you need further information on company establishment in Holland, please, get in touch with our qualified agents. If you are interested in starting a business in the Netherlands, you might also like our article with 5 ideas for opening a small Dutch business.

According to the legislation on the types of investment vehicles that can be registered in Holland, these structures may be established as investment companies or funds. Investors intending to go through the procedure for starting a fund can register their vehicles as closed- or open-ended forms of business.

Legal entities applicable for investment funds in the Netherlands

The Dutch legislation relating to investment funds includes various acts concerning the different regulated vehicles. To give an example, funds with a closed end are subject to Directive 2003/71/EC on the prospectus to be published when securities are offered to the public or admitted to trading, and are implemented in accordance with the EU legislation. Regardless of whether a fund has been established in a closed- or open-ended form or as a related vehicle, e.g. a start-up hedge fund, the Dutch laws prescribe the following five legal entities:

• private limited company (BV);
• public limited company (NV);
• cooperative;
• limited partnership;
• mutual fund (FGR).

Businessmen willing to open a Dutch fund also have the option to establish a variable capital investment company (BMVK). This entity acts as a fund for investments because its investors can set up umbrella funds in its structure. Still, in contrast to investment funds, a BMVK is not obliged to offer its stocks on the national market.

Corporate and non-corporate Dutch entities

The Dutch legal entities that can be used for investments belong to two general categories: corporate and non-corporate. The first group includes the BV, NV, cooperative and MBVK. The second features mutual funds and limited partnerships.

All these structures are taxed differently, in accordance with the system for taxation that covers them. The tax system in Holland allows legal entities open for investment funding to be established either as opaque or transparent. For opaque entities, the tax administration levies corporate tax with respect to capital gains and income.

Our company in the Netherlands can provide you with further information regarding the taxation of the structures listed above. Please, get in touch with our agents to receive detailed information on the legislation governing investment funds.

The procedures for appointment and dismissal of staff are partially covered by the Civil Code of the Netherlands and partially clarified by the judicial system. It is relatively easy to employ staff, but it may prove tricky to dismiss employees.

Employment contracts under Dutch law

The Dutch law on employment does not require a contract in written form. However, it is advisable to conclude written contracts with your employees to avoid discussions about the arrangements. It is good to start your employment contract with definitions of the most significant conditions for work.

The written employment contract also allows both the employer and the employee to include particular clauses, for example regarding non-competition, trial period, company secrecy, working hours, salary, bonus regulation, holidays, pension scheme, terms of termination, etc.

The contract for employment can be prepared in a language other than Dutch or English, but in such case, there is a risk of misinterpretation. Therefore a contract in one of those two languages is preferable.

If the hired employee is living and working in Holland, then the applicable law would be the Dutch one. In special cases, however, where the individual works in two or more countries, the provisions may be different. The particular circumstances will be determined by the governing law. The parties may need to consider the legislation of different countries.

In the Netherlands, it is advisable for employers to draft their contracts according to the local Dutch laws. Otherwise, some conditions or arrangements may prove to be invalid.

Agreements for employment in the country can be concluded for a particular or indefinite time period. However, fixed-term and open-ended contracts are subject to specific legislative provisions. Furthermore, the law is continually changing and therefore the agreement for employment needs to be revised regularly.

Dismissal of staff in the Netherlands

It may prove difficult to fire an employee by reason of various legal provisions related to dismissal.

First of all, you should have reasonable arguments in support of your decision to end the employment agreement. The law in the Netherlands mentions eight possible reasons, including economic circumstances, underperformance, serious misconduct, sick leave with a duration of more than 2 years and frequent illnesses.

The employment contract can be terminated via different routes. The easiest approach is to conclude a termination agreement ending the employment with mutual consent. During this process, the two parties often enter negotiations. You can also terminate the employment agreement by asking the Agency for Insurance of Employees (or UWV) to issue a permit for dismissal. This is a possible solution only in case the employee has been on a sick leave for 2 years or more or the job has become redundant because of technical, economic or organizational reasons. The third possibility is to seek contract dissolution in court due to shortcomings such as underperformance.

The UWV and the Court would not permit termination of an employment agreement if there is a prohibition for dismissal (e.g. during sick leave or pregnancy).

In the Netherlands, the dismissal procedure is heavily regulated. We are prepared to assist you in understanding the rules and applying them in your best interest.

In case you have questions on the mentioned topics, our Dutch office will be happy to give you answers and provide you with the ins- and outs of the Dutch workforce.

The flourishing city of Utrecht is famous for being creative, healthy, talented and smart. Its residents, knowledge institutes, local authorities and companies work in collaboration to achieve social sustainability. This is the ideal location for establishing a business, thanks to its central position on the map, accessibility, favourable business atmosphere and highly qualified workforce. Furthermore, Utrecht offers various office and business locations in its historic inner part and its innovative Science Park.

One of the most competitive regions in Europe

According to the EU Regional Competitiveness Index Utrecht is the second most competitive region on the European continent after London. The region offers excellent business climate, qualified workforce and a strong economy. The region achieves regular high ranking, much better than the indices for Paris, Frankfurt and Amsterdam. Utrecht is famous for its superior digital infrastructure, institutions for higher education, job market, innovation and technology, and healthcare.

Healthy city life

Utrecht is the healthiest and fastest growing city in Holland. It has achieved outstanding results in combining economic growth and rapid urbanization with the ambition of healthy living. Health, prosperity and well-being are the main points in the development of a sustainable and healthy environment for living. The region cooperates for innovative, creative solutions, services and products to guarantee that the environment remains liveable, healthy and green.

Central location, excellent accessibility

Many consider Utrecht as a central intersection point. It offers great accessibility by any means of transport. All important Dutch highways lead to the city. Schiphol Airport is 30 minutes away. Utrecht boasts the biggest railway station in Holland that offers transport to any destination, both in the country and abroad. The business park of Lage Weide accommodates a large inland port. Furthermore, Utrecht has an outstanding digital infrastructure.

Young, qualified labour force

The smart, vibrant Utrecht has young and bright residents. The city hosts many students and every year it attracts a new flow of smart, talented, young individuals. Many of them decide to remain in Utrecht and work here after their graduation. In general, it is fairly easy to reach ambitious entrepreneurs and innovative talents in the area of Utrecht.

High living standards

Utrecht is a compact metropolis, welcoming, open and accessible. Due to its relatively small size, the city can easily be explored by bicycle or on foot. Utrecht is popular with its charming historic inner city, various cultural amenities and extensive shopping area. It offers lively festivals, gorgeous parks, inspiring museums, exciting architecture and unique events. The city offers an excellent environment for living, working and studying and takes the second place in the countdown of the most inviting cities in Holland (Dutch Councils Atlas, 2017).

International communities

The region of Utrecht hosts sixty thousand international professionals and 900+ foreign companies. Its International School has a diverse range of European Baccalaureate programmes for secondary and primary education. For international students pursuing higher education, Utrecht has an International Campus and a University College. The Centre for Expats in the city welcomes newcomers to obtain practical information on studying, working and living in Utrecht.

In case you are interested in establishing a business in Utrecht, contact our incorporation agents. They will lead you through the process of starting a company in the Netherlands.

The Netherlands has a rare combination of characteristics that encourage international investments and form the country as a competitive and highly popular business centre.

Holland is strategically located in Western Europe, allowing investors to establish suitable bases for their shipping and trade operations. Furthermore, the outstanding infrastructure and accessibility make the country an extremely popular destination for European, American and Asian investors who have opted for setting up an office in the Netherlands.

Advantageous taxation principles

The tax system in the Netherlands offers international investors a 15% income tax for profits up to EUR 245 000 per year and 25% for amounts exceeding this threshold. It also ensures certainty and clarity regarding future tax liabilities. Investors can take advantage of certain benefits related to royalties, interests, debts, taxation of dividends and loss structuring. Holland offers various investment deductions and tax reliefs. A special tax regime called “innovation box” provides for preferential tax rates for income generated as a result of the development of intellectual property. Furthermore, freight companies benefit from a tonnage tax regime.

Holland has concluded numerous treaties for the avoidance of double taxation (>95 agreements). Therefore entities deriving income from Holland and a country that has signed a double tax treaty with Holland can be taxed using preferential rates.

Sound legal and financial systems

In addition to the abovementioned tax benefits, the Netherlands has a straightforward legal system allowing international investors to efficiently deal with legal issues arising from different transactions, e.g. patent/trademark or tax. Judgements from other countries can be enforced in Holland under specific conditions. As an EU member, Holland conforms to all European laws relevant to trade and business.

The area of Amsterdam hosts numerous globally acknowledged financial institutions and banks. Various banks have established branches in Holland, thus contributing to the good financial climate. Many investors of private equity and managers of trust funds have chosen the Netherlands as their base of operations.

Highly educated labour force

In case you intend to establish a business in the Netherlands, you are free to choose from different types of companies. If your scope of activities includes shared services, customer care or distribution/logistics, Holland is the perfect choice as it offers an unparalleled business environment for such operations.

Furthermore, Holland’s workforce is among the most qualified, motivated and flexible in the world. Most Dutch employees have good knowledge of two foreign languages, so they are a perfect match for foreign companies in any industry sector.

Great logistics and infrastructure

The Netherlands is a popular European destination for companies thanks to its superb transportation network. The country boasts the largest port in Europe, the Port of Rotterdam, and the best European airport for transport of cargo, Schiphol Airport.

As regards innovation and technology, Holland has made investments in e-commerce, communications, outsourcing and high-speed digital systems for communication and internet. The country has adopted the latest cell phone and computer technologies, creating ideal conditions for companies needing modern technologies for their operations.

If you intend to establish a Dutch company and take advantage of the opportunities for business offered by the country, please, contact our local agents in company formation. They will assist you in completing the necessary procedures.

A Netherlands-based company may decide to sell shares due to the expansion of the business or as a plan to accumulate larger income. The acquired capital may be directed towards debt repayment or reinvestment in the business.

A Dutch company can sell or transfer shares only in accordance with the provisions of the Association Articles. Share transfers also require the preparation of notarial deeds. Companies can become public by entering the stock market and offering shares publicly. Only certain company types can use this option. Our Dutch experts in company formation can provide you with detailed information on the features of different commercial entities in the Netherlands.

Are you interested in buying Dutch company shares? Read here

Selling company shares in Holland

Only some types of Dutch companies are able to sell shares publicly. NVs (public limited companies) can list their shares in the Stock Exchange. BVs (private companies with limited liability) do not have this option, as their shares are registered privately and cannot be transferred freely.

The best way to sell stocks for most Dutch public companies with limited liability is to go on the exchange market. In Holland company owners go public using Euronext.

Transfer of shares in Holland

In the Netherlands, registered shares are transferable through notarial deeds. The process must take place in the presence of a Latin notary. Any developments or limitations regarding the share transfer are noted in the association articles of the private or public Dutch company with limited liability.

Dutch companies can be acquired through purchases of shares or assets. The two mechanisms are different with respect to the transfer of liabilities. In share purchases, the buyers also acquire the obligations and responsibilities of the respective companies.

Our Dutch agents specializing in company formation will be happy to provide you with further information on buying and selling company shares, and on the possibilities open to investors.

Investors who have decided to buy shares of Dutch companies are able to purchase them either directly or via a plan for dividend reinvestment. They can acquire the ownership shares of a particular company or implement a larger plan for stock investment in multiple companies.

Holland welcomes international investments and foreign companies are free to open headquarters in the country. The business climate is equally appropriate for making large investments and opening Dutch companies with the perspective to sell shares to investors from outside.

Are you interested in selling Dutch company shares? Read here

Direct purchases of stocks in the Netherlands

A widely used method to purchase shares in Dutch companies is to deal directly with the entities issuing them. Big international corporations are among the most attractive businesses and most of them provide plans for direct purchase of stocks. One of the advantages of this mechanism is that commissions are avoided, even though a minimal deposit is usually required.

Stock purchase is beneficial for both the buyer and the issuing company. This is a way for investors to maximize their earning, while companies raise additional budget at reduced costs. Companies allowing direct purchase of shares publicize this information. Our Dutch agents specializing in company formation can assist you with details about local companies offering shares publicly and on the Euronext listings.

Purchasing shares in the Netherlands

There are two other options open for investors: to purchase stocks through a plan for dividend reinvestment or brokerage.

Some companies offer plans for reinvestment of dividends, allowing investors to reinvest the amounts accumulated in dividends by buying additional shares.

Brokerage is the other method to purchase Dutch company shares. This is a preferable option for entities that want their investments in Holland to be managed by experts. The extra management of accounts is more costly compared to other options.

Would you like to learn more about establishing a business or investing in Holland? Please contact our Dutch agents specializing in company formation.

The labour force in Holland is an essential factor for the country’s progress. The strong Dutch economy is growing rapidly, relying on well-developed infrastructure and skilled, productive employees. Undoubtedly the superior training and adaptability of the Dutch employees contribute significantly to the welfare of the Netherlands in the long run.

Our local consultants in company registration can give you details on the legal procedures for hiring employees in the Netherlands.

Highly qualified professionals

Dutch employees are ready to embrace changes and to acquire new skills and competencies. The national labour force is among the most flexible worldwide. The same applies to the local employers who readily make investments in their staff and motivate them to take up new challenges.

The Dutch labour force has one undeniable advantage: most people speak two or three languages. This is important for the role of the Netherlands on the European economic scene. Dutch employees are constructive, skilled and productive. They are well educated and open for cooperation. As regards the level of qualification, Holland is third in the global top for higher education.

The labour market in Holland

Foreigners who have moved to Holland only a few years ago with the aim to work for local companies now possess the skills to establish their own businesses. Regions such as West Holland offer great opportunities to entrepreneurs intending to create start-ups.

The labour market in Holland has evolved accordingly and the current demands are mainly focused on engineers and technicians. West Holland contributes significantly to the workforce qualifications because many of its universities cooperate with local companies to educate prospective employees.

Our agents in company formation in the Netherlands can help international investors planning to start Dutch businesses.

The law on employment in Holland

The Dutch law on Labour and Employment is quite complex. A contract for employment in the Netherlands may be concluded in oral or written form. In any case, the employer has to clarify certain aspects to the employee. Some of the key aspects are:

1. job description and position;
2. hiring date;
3. place of work;
4. temporary or permanent employment;
5. salary;
6. working hours;
7. rights to pension (if relevant).

Employment contracts can be concluded for a particular or indefinite time period. Employment agreements often include restrictive clauses related to confidentiality and non-competition. Read here on appointment and dismissal of staff in the Netherlands. 

International employees in Holland

The Netherlands has its own skilled labour force, but also attracts international talent. Foreign employees need residence permits to work in Holland. Highly qualified individuals can take advantage of the visa program for skilled migrants facilitating the procedure of hiring foreign staff in the Netherlands. The employer also needs to obtain a special employment permit. Swiss and EEA nationals are excluded from the rule.

Would you like to receive more information on the employment legislation in Holland? Contact our experts.

Thanks to its history of innovations and exceptional digital infrastructure Holland hosts the largest ecosystem for start-ups in Europe. In fact, as reported in the 2016 Start-up Scoreboard of the EDF, the country has the most beneficial business climate for start-ups in the European Union. With 10+ start-up and technology centres in a ninety-minute radius, the Netherlands provides many options for the establishment of innovative companies operating in any sector. The Netherlands is also referred to as ''The European Silicon Valley''. The Dutch cities offering the best conditions for start-ups are listed below.

The Hague

The international centre of justice and peace is currently the largest security and safety cluster on the European continent due to its many embassies and international organizations alongside some four hundred security companies. The Security Delta Campus in The Hague supports specifically start-ups in the field of cybersecurity by providing living laboratories, office spaces and training facilities.

HackerOne is among the most interesting start-ups in Den Haag’s security cluster. The company is an American-Dutch venture conceived by security leaders working for Microsoft, Google and Facebook. In 2015 this resourceful start-up established a centre of operations in Den Haag, after raising USD 25 million Series B funding. Until now it has provided services to fifty companies, including Twitter, Uber, Slack and the US Defence Department, finding more than 21 000 bugs.

Read more on the city of The Hague

Rotterdam

Rotterdam is the largest city in Holland, after Amsterdam. It boasts the biggest and most active shipping port in Europe. In recent years Rotterdam has been acknowledged as an excellent location for start-ups. Last year it was featured in Financial Times as a suitable location for launching new ventures. As a shipping centre, Rotterdam has encouraged the development of start-ups specializing in port-related technologies. They are aided by a dedicated Innovation Lab, established jointly by the YES!Delft incubator and Rotterdam’s Port.

Last year the Cambridge Innovation Centre (CIC) based in the USA opened its first international hub in Rotterdam. The city is located close to numerous renowned universities and the CEO of CIC, Tim Rowe, compared it to Boston, USA.

Read more on the city of Rotterdam

Utrecht

Utrecht is located at the heart of Holland and strives for healthy people, minds and environment. It is maintaining one of the most sustainable and healthiest living environments in the world and provides exceptional quality for business and life. The EC has recognized it twice as a leader among the competitive regions in Europe.

Utrecht hosts approximately 400 start-ups that benefit from the local institutions and resources. It is the home of UtrechtInc, rated in the top 10 for European incubators, and a Science Park fostering innovation in cancer research, stem cells, sustainable urban planning and bioprinting.

Read more on the city of Utrecht

Amsterdam

Holland’s capital is a global destination for businesses, famous among visitors with its scenic canals. Dubbed the capital of start-ups in mainland Europe, it offers all the necessary ingredients to transform an idea for a start-up into a business generating billions. Amsterdam hosts top European accelerators, such as Startupbootcamp and Rockstart, and establishments of giants like Salesforce, Uber and Google.

The unicorn company Adyen operating in the field of financial technology was started in Amsterdam. It was established in 2006 and is currently valued at USD 2.3B. According to Fortune, it is certainly a unicorn that you can bet your money on.

Read more on the city of Amsterdam

Eindhoven

Utrecht is the heart of the Netherlands, while Eindhoven with its region of Brainport is undoubtedly the country’s brain. In 2011 the Intelligent Community Forum rated it as the smartest region in the world. Eindhoven, a centre for high technology development and design, boasts a huge network of R&D and academic facilities, e.g. the High Technology Campus and its Holst Center dubbed Europe’s smartest square kilometre, as well as Eindhoven Technology University. The active collaboration within this network has enabled Brainport to generate USD 2.8B in innovation spending by private organizations.

The lucrative technology environment in Eindhoven attracted the interest of the Singularity University based in the Silicon Valley. As a consequence SU opened its first international department there: an innovation centre bringing together representatives of leading research institutions, start-ups, businesses and the government to work on new revolutionary technologies, such as food scanners, DIY drones and self-driving automobiles.

Read more on the city of Eindhoven

Are you intending to establish a start-up in Holland? It is easy to do so with the special Start-up Visa for international entrepreneurs. Get in touch with our team to receive further information and consultancy on start-up establishment in Holland.

Holland has strict rules that regulate the liability of public and private limited company (NV and BV) directors, both prior to and after a declaration of bankruptcy. The liability of director(s) in BV and NV companies is limited if the company capital is paid up by the shareholders. The public notary will then legalize the statutory capital as 'paid in full'. The company will be liable for all actions, with a few exceptions which we will explore in this article. To advise you on the matter, it is of the utmost importance to have an experienced notary and incorporation agent.

Civil liability with respect to the company

When a company director makes choices that, at a future point, prove to be destructive to the business, this does not necessarily mean that he/she will carry personal liability for the outcome. A certain degree of calculated risk is inherent to operating a business. Therefore the Dutch corporate laws give business directors considerable freedom in fulfilling their job responsibilities.

Still, according to Art. 2:9, Civil Code of the Netherlands, directors should fulfil their tasks with appropriate attention and care. Failure to do so shall result in personal liability for any subsequent damages to the business. According to the Supreme Court of the Netherlands, a director can be held personally liable in case of gross misconduct. The court also gives guidance for measuring the extent of misconduct. If a fully experienced, reasonably acting director would never take such actions then the behaviour is considered as serious misconduct. Some examples include:

• Adoption of illegal or fraudulent practices;
• Taking unsubstantiated financial risks;
• Stripping of assets;
• Diversion of company funds for private use;
• Inadequate insurance of tangible assets.

In case the company has two or more directors, all members of the Directors Board share equally the liability for any damages. A director can avoid liability only if able to prove that she/he did not know of the serious misconduct or took all reasonable measures to stop the detrimental actions. Therefore, if a director disagrees with the course of action chosen by the Board, it may be in his/her best interest to step down and avoid accountability.

Civil liability with respect to creditors

Under particular circumstances, company creditors can hold separate directors liable for damages resulting from decisions made in their course of duty. Some examples include the provision of inaccurate financial data or taking impracticable initiatives on the company’s behalf that are evidently impossible to fulfil.

Post-bankruptcy liability

When bankruptcy is declared, the Civil Code provides the trustee with the option to hold the directors of the company personally responsible for the fund deficit that has occurred as a result of the bankruptcy.

According to Art. 2:248, Civil Code of the Netherlands, in case of bankruptcy the directors share equally the liability to the estate as regards the portion of the bankrupt entity’s debts that would not be covered by its asset liquidation. This applies in cases of manifestly improper management on behalf of the directors when it can be concluded that their actions represent a significant cause for the bankruptcy.

It is automatically considered that the Board of Directors has performed its duties improperly if the next circumstances are ascertained:

• The management has not submitted the company’s annual financial reports at the Dutch Commercial Chamber within the specified period following the financial year’s end;
• The company’s accounts were not kept in line with good practices and the records give a false impression of the company’s actual financial position.

In these cases, it is the directors’ responsibility to prove that the inability to submit the company reports or administrate them correctly is not among the important causes of bankruptcy. Under such circumstances, it may be very difficult for them to avert liability.

On the other hand, the trustee may hold them liable due to gross misconduct (as indicated in the point on civil liability with respect to companies). Then, however, the trustee must prove that gross misconduct on behalf of the directors led to the declaration of bankruptcy.

If the trustee has reasons to believe that individuals who are not official directors but have presumably controlled the business are mostly responsible for the misconduct or failure to fulfil the company’s duties, the Civil Code (Art. 2:248) gives the trustee the right to hold these individuals liable, as if they were actual directors. In case a company director is a legal person, the Dutch law allows for piercing of the corporative veil, so that the actual individuals behind the entity are reached. Then these individuals are held responsible for the bankruptcy. Therefore appointing holding companies or foreign legal entities as directors cannot protect the individuals behind the entities.

Fiscal liability

The directors of legal entities can be held responsible for overdue tax liabilities, provided that they have failed to report the entities’ inability to transfer the respective payments (e.g. outstanding payments for Value Added Tax, withholding tax, etc.) within the legal period after the tax liabilities have become due. If the Tax Office declares a director responsible for outstanding tax payments, the director carries the burden of proving that the failure to pay the tax liabilities resulted from reasons outside of his/her control. Fiscal liabilities often arise after bankruptcy since companies become unable to pay their own taxes and the tax authorities focus on the individuals behind the companies.