Have A Question? Call An Expert
REQUEST A FREE CONSULTATION

If you are thinking about starting a Dutch company, chances are high that you are opting for a Dutch BV, which is the equivalent of a private limited company. A Dutch BV has many benefits, such as a relatively low corporate tax rate and the fact that you will not be personally held liable for any debts you make with your company. Thus, many starting entrepreneurs choose to establish a Dutch BV for their new business. But how do you actually establish a Dutch BV? Is it always necessary to establish an entirely new business, or can you also buy someone else’s (empty) company, also known as a shelf company? In practice, you can do both. You can buy an already existing and thriving company, an inactive company or start a BV yourself. We will discuss all three options in this article, to make it possible for you to contemplate which possibility suits your needs and wants best. We will also outline the pro’s and cons of each option. Afterwards, we will also let you know how you can take care of the process practically, and how Intercompany Solutions can assist you with the endeavor.

What is a Dutch BV?

A Dutch BV is a certain type of legal entity. A legal entity is basically the specific company type you choose, when you become an entrepreneur. Next to a BV, there are various other Dutch legal entities, such as the sole proprietorship, a cooperation, a NV and a foundation. All these legal entities have their own unique characteristics, which are somewhat tailored to the type of business you want to establish. For example, a foundation is a good choice when you want to start a charity, since you generally won’t be making any profits.  A sole proprietorship is a good option for starting freelancers, who don’t expect to make a large profit during the first years of business and will probably also not hire personnel. A Dutch BV, however, is actually suitable in most cases, and is therefore one of the most chosen legal entities to date.  With a Dutch BV, you can set up a holding structure, which enables you to distribute your workload and profits over several companies. One of the main benefits of a BV is the fact, that you will not be personally liable for debts you make with your company, as we already mentioned briefly above. This makes it easier for you to take on more challenging projects and risks.  A large number of successful Dutch businesses are a BV, which makes it a logical choice for starting entrepreneurs.

Reasons why a Dutch BV is a good choice for starting entrepreneurs

Next to not being liable for company debts, there are more benefits to owning a Dutch BV. The current corporate income tax rates are quite low, which makes it a profitable choice. Also, you can pay yourself dividends with a Dutch BV, which can sometimes be more beneficial than paying yourself a salary.  The current highest personal income tax rate is 49.5%. When you generate more profit in a certain period and would like to pay yourself an extra bonus, it can therefore be more profitable to pay yourself dividends instead of salary, as the amount of taxes levied will be lower. This can literally save you tens of thousands of euros, which makes it a very popular possibility.  Another massive benefit of a Dutch BV, is the possibility of attracting investors by offering them shares in your company. Once your company is doing well, you will both profit from this agreement. Next to that, a Dutch BV provides your company with a professional appearance. Oftentimes, customers and third parties tend to respect someone with a private limited company, since it generally means you make a substantial amount of profit. If you believe you won’t be able to generate this amount during the first years of your business establishment, then we advise you to start a sole proprietorship instead. Once you cross the minimum revenue line, you can always convert your sole proprietorship into a Dutch BV during a later stage.

Buying an already existing company

As we already explained, there are multiple ways to acquire a Dutch BV. If you already own a company, or you are able to invest some money, it is generally possible to buy an already existing Dutch BV. This can either be done by acquiring the company entirely, or merging with an existing BV. The main difference is that acquisition will make you the new owner of the company, whereas mergers will often result in shared ownership.  You can read more about mergers and acquisitions in this article. If you plan on taking over another company, you should be very thorough with your investigation of said company. At the very least, you should research factors such as the profits the company has made during the past years, the owners of the company and their background, possible illegal activities that have taken place, possible partnerships and also the current financial situation of the company. We strongly advise hiring a responsible partner to assist you with the acquisition process, for you to be sure about the credibility of the company. The upside of buying an existing company is the fact, that the business itself is already running. By acquiring a business, the management changes, but the daily business activities can go on seamlessly, until you decide you want to change things. Once you are the owner, you can steer the company according to your own preferences.

Buying an inactive BV: a shelf company

Another option is acquiring a so-called ‘empty’ BV, which is commonly known as a shelf company. The name is derived from ‘shelving’: when you temporarily don’t use something, you put it on the proverbial shelf, where it rests until someone decides to use it again.  This means, that a shelf company is currently not doing any business at all, it simply exists without any activities taking place whatsoever. This company may have been involved in previous business transactions, but this is certainly not always the case. So it involves a BV that no longer has debts or assets and in which no activities take place. As a result, no more assets will arise in the BV in the future. At most, the BV will still receive some debts, e.g. the invoice from the accountant for drawing up and filing the annual accounts. Next to that, an owner of an empty BV can choose to dissolve the BV. As a result, it ceases to exist. The owner also has the option to sell the shares. He then has no more costs and receives a purchase price for the shares. This is where you, as a potential buyer, come into the picture.

There are some benefits to acquiring a shelf company. One of the main advantages of buying a shelf company, in the past, was the little amount of time that is needed to complete the process. In theory, a shelf company can be bought in just a single business day. Keep in mind that buying a shelf company still requires a notarial deed, but the process of acquisition is easier than the incorporation of an entirely new BV. Nonetheless, the transfer procedure itself has become almost as expensive and time-consuming as incorporating a new BV. This is due to increased KYC compliance requirements, due to which clearance and identification of all involved parties is required. Also, keep in mind, that shelf companies are generally sold with a premium. This makes acquiring a shelf company more expensive than the incorporation of a new BV, even if the timeframe is somewhat shorter. We would also like to note that all shelf companies have a legal, financial and also tax history. In many cases, shelf companies have been involved in previous business activities. You should therefore thoroughly research any possible shelf company you would like to buy, in order to know whether the company hasn’t been involved in any shady activities, or still has debts.

Risks of buying a shelf company

When you decide to set up a completely new Dutch BV, you know absolutely sure that the past of the company is entirely ‘clean’. Since you just established it, and, therefore, it has no past. But when you buy a shelf company, this is not always the case. The business activities that you initiate after the purchase of a shelf company run a risk, without you as an entrepreneur having to have done anything 'wrong' yourself. Perhaps a guarantee has been issued by the seller that the Dutch BV has no debts. But it is not entirely certain whether there are no obligations from the past. Remember, that a buyer of a shelf company cannot see whether there are still creditors, which might put you in a precarious position, as a creditor can still find the Dutch BV despite a name change via the registration number and the history registered with the trade register. This essentially means, that collecting an old debt can immediately mean the end of your company. That is a waste of all of your investments in the company, and the takeover of the shelf company itself. Guarantees given by the seller of the company are worth as much as that seller himself, meaning that if you don’t know the seller, you basically know nothing. Moreover, in order to implement guarantees, litigation must be carried out, which is costly.

This can be a very tricky story, all in all. As a buyer, you can require the seller to be liable for any debts they made in the past with the company. Nonetheless, you still have no guarantee that you will actually get the money back from the seller afterwards. One way to limit such risks, is to hire and instruct an accountant to examine the books of the shelf company. With an auditor's report, you can normally obtain a guarantee that everything is in order. However, keep in mind that this involves extra accounting costs on top of all other expenses. This makes buying a shelf company with no risks attached a rather costly way to start or continue a business. So in order to ‘save’ the notary costs that you would normally pay for establishing a new Dutch BV, you will probably have to make several other payments, that, when added up, are generally higher than the costs of starting a new company. Furthermore, the shares of the shelf company must be transferred by notarial deed, since that's what the law says. The notary costs for the establishment of a BV are hardly any higher than the costs for the acquisition of shares. In addition, after the transfer of the shares, the name and purpose of the company usually must be changed. This requires a separate deed of amendment of the articles of association. The buyer of the shares therefore needs to spend a lot more money, than if said buyer sets up a new BV.

Incorporating a new Dutch BV

In the past, it was considered costly to start a new BV, since there was a minimum capital requirement of 18,000 euros. In 2012, the incorporation procedure has been simplified, by abolishing these minimum capital requirements, but also the governmental consent procedure and the bank declaration. A Dutch BV can now be established with a subscribed capital of €1 or even €0.01. This led to a drastic decline in the need for shelf companies, which consequently made the entire market for such companies almost disappear. These type of companies are extremely scarce nowadays, the only need for such a company might arise out of a specific name or logo that you might want to use, but cannot whilst the company itself still exists. However, you could also consider coming up with a similar name or logo, that doesn’t infringe on any existing copyrights. Incorporating a new Dutch BV can actually be arranged in just a few business days, with significantly lower costs than you would have to spend on the acquisition of a shelf company. With this ‘new’ procedure, the establishment of a Dutch BV has become a lot simpler and therefore also faster. The Dutch Ministry of Justice does not have to carry out background checks on the persons of the founders, directors and shareholders anymore, which saves you an ample amount of time. A new BV can therefore be set up just as quickly as the shares of an existing BV are transferred.

Need advice? Intercompany Solutions can help you with company formation

We can understand that the choice between setting up an entirely new company and buying an already existing company can be tough. In some cases, a certain company might have a very positive image within a specific market, making it easier for you to immediately start doing business and benefit from the already built image. Nonetheless, you should also consider the fact that you might be burdened with debts you know nothing about. If you have a business idea and would like to implement this, the team at Intercompany Solutions can assist you with making the right choice. If you are an already established entrepreneur or investor, buying an already existing company might be a good bet. If you are starting your first company, however, the risks might simply be too high. It is very important to do solid research and come up with a business plan, that outlines all the costs and risks involved regarding starting a company. This business plan will provide you with a blueprint of all factors involved, which will make it easier for you to make a well-thought-out decision. In all cases, we can assist you with the entire process of business establishment, or company takeover. In general, this should not take more time than a few business days. Feel free to contact us with your query, we will try to respond as soon as possible with helpful advice and tips to make the process as smooth as possible. We can also take care of the process for you, if you so desire.

There is a lot of debate going on regarding the environment and how our behavior impacts the climate of our planet. This has already pushed many well-known multinationals to do business in a more climate-friendly, or even climate-neutral, way. Governments all over the world have very ambitious goals when it comes to a climate-neutral and circular way of living. Such as further reducing C02 emissions, recycling every possible material and making sure plastic waste will be eliminated in the future. These are all very sensible goals, aimed at making our environment healthy for everyone on the planet. If you are also interested in environmental issues and would like to actively contribute to certain climate goal, then The Netherlands offers you a solid base of operations for your future business. The Dutch are very innovative and ingenious when it comes to solutions for existing climate problems, and welcome any foreign entrepreneur who is willing to put in the effort, too. In this article we will outline some measures that the government believes will impact the climate positively, how you can implement such measures and what kind of company would be an interesting fit for you.

How can we positively influence the environment and climate?

During the past decades, it became very clear that some parts of the planet are too heavily polluted. This includes cities with too much air pollution that are covered in smog, oceans with tons of plastic waste, lakes where toxic waste is dumped in, garbage in city streets and also the pollution of soil due to the incessant use of pesticides. Most of these causes can be linked back to companies and corporations, since regular citizens generally don’t go out and dump waste in the water. Nonetheless,; consumers have also become environmentally conscious in the past few years. We all recycle more, try to buy sustainable materials and don’t dump waste in the park. In order to clean up the Earth, so to speak, we must all be able to put in an effort to minimize waste and toxic materials as much as possible. This has resulted in some general guidelines that are being promoted worldwide, that will help everyone to live in greater harmony with the planet and environment. These guidelines contain some of the following measures:

These are just a few general guidelines, but they show the broader picture of, for example, the UN’s (United Nations) plan. This also means, that any already existing company as well as startup, needs to take into account that their company will also have to be (partly) climate neutral in the coming decades. This requires you to think creatively about how you want your business to be run, and how you will deal with possible pollution and waste in your supply chain.

What can you do as an entrepreneur to adhere to certain climate goals?

The guidelines and measures are fairly broad, so it might seem difficult to instantly convert these to smaller and achievable goals. If you, for example, own a company that has been dumping toxic waste, it’s fairly easy for you to understand that you need to stop doing this. If your company produces and/or uses a lot of plastic materials, you can look for recycled alternatives to make a positive impact. Or you can ask for a small deposit from your customers for using the item, which will enable them to return it to you easier, so you can reuse or recycle the item. This has been the case in the Netherlands and Germany for a while now when it comes to plastic bottles. These need to be returned to the store where the consumer bought them, where they get their deposit back, so the bottles can be cleaned and reused. If you own a clothing company and import a lot of materials, you can make sure that the sources of these materials are environmentally-friendly and sustainable. Another thing you can do, is to try to make deals with local suppliers. This substantially limits the amount of time the goods need to travel to your location, which will reduce your carbon footprint.

If you own a restaurant, or another place where consumers eat directly in your establishment, you can do some research into sustainable accessories such as cups and straws. Needless to say, there are many areas in which we can all become more environmentally friendly and conscious, and some of these measures are actually pretty small and non-invasive regarding your daily business activities. It can be as simple as replacing a regular garbage bin with one that has recycling options, which enables you and your customers to separate your waste immediately. Whatever your chosen industry or business sector is, there is always something you can do to limit any negative impact your company might have on the environment. If you want to learn more about climate goals in or near the location where you have an office, you can always look up the website of the municipality in the Netherlands. They will generally provide you with current goals that they want to achieve, as well as helpful tips and tricks on how to achieve this.

Business sectors that are putting in effort to become climate neutral

In essence, all businesses and industries need to put in the effort to realize certain climate goals, but some companies need to take more direct action, than others. If you own a company, or plan to start a company, that is involved in one of the following, then you can expect more drastic changes will need to be made:

All these companies use larger amounts of fossil fuels than other businesses. But next to that, they are also more prone to create toxic waste due to the often toxic (raw) materials they use. Furthermore, a lot of companies are also involved in dealing with animals, for example the bio-industry and the pharmaceutical industry, if and when they perform test on animals. These two sectors are under heavy scrutiny, mainly due to animal welfare activism. The general consensus is leaning more and more towards a society in which animal cruelty is abolished completely, and for good reason. If you plan to operate in one of these sectors, you should inform yourself about set goals and how your company will be able to adhere to new laws and regulations. If you want to operate in a different sector, then it would be wise to see how your competitors are handling climate goals. The future is leaning towards a more clean and responsible way of handling our daily affairs, so it’s best if you learn how to adapt and stay flexible.

What kind of business would you like to start in the Netherlands?

After reading the above, we can understand when you feel hesitant about taking appropriate steps and measures to reach certain climate goals. How would you do this? Where can you start? A lot depends on the industry you choose. We already gave some practical tips in a former paragraph, but there are more ways to limit your carbon footprint and lessen a possibly negative impact on the environment. If you deal with the import and export of goods, then make sure your suppliers are trustworthy and, preferably, sustainable. This will rid your entire supply chain of any negative influences. If you own an internet business, try to screen any suppliers and clients before you provide them with your services. That way, you will know whether you are pulled into something shady. Another good tip is to invest in clean energy, whatever your type of business is. Try to inform yourself a little bit about these goals, and brainstorm about how you can contribute with your business. It will not only have a positive impact on your environment, but also your client database. Many consumers are very conscious about what they buy and where they buy it, nowadays. If you create a solid image for yourself by sticking to such goals, chances are large that you will also attract higher-end clients.

Intercompany Solutions can establish your Dutch company in just a few business days

If you want to start a company in the Netherlands, it’s important that you also handle all the administrative tasks efficiently, such as the registration of your company with the Dutch Chamber of Commerce. Intercompany Solutions has acquired many years of professional experience and expertise within the field of business establishment. Thus, we can assist you with the entire company registration process, from A to Z. You can find more general information about registering a Dutch company here. Next to that, we also provide extra services aimed at keeping your company stable and flourishing. We can help you with your periodical tax return, or give practical advice that will propel your business to another level. If you need help with certain regulations or laws, we can also explain these to you in simple terms. This also includes any climate laws and measures. Feel free to contact us anytime with your query, and we will get back to you with advice as soon as possible.

Health is becoming an increasingly hot topic, especially since the pandemic broke out two years ago. A lot of people are looking for easy and practical ways to boost their health, as opposed to taking a wide variety of chemical medications to suppress symptoms of health issues. To stay healthy, it’s very important to eat nutrient-dense foods, drink a lot of water and become active on a daily basis. Nonetheless, sometimes someone requires more than just these basics, for example after disease or recovery. This is where lifestyle and supplement companies come into the picture. There are many ways to improve your health, ranging from fasting and special diets, to supplementing with various substances to boost your overall immunity. If you are someone who is very enthusiastic about health in general, and you would also like to help others achieve a fit and healthy physique, the lifestyle and food supplement niche might be a perfect option for you when you are seriously considering establishing a Dutch company. Due to the continuously growing clientele within this market, you are almost certain to generate good sales quotes and thus, achieve rapid success with your company. Provided you know what you are doing, and the advice and products you offer are of high quality. Would you like to know more about starting a Dutch business within the lifestyle and healthy industry? Then read on for general information about this market, some helpful tips and tricks when starting a business and the most practical way to register your company with the Dutch Chamber of Commerce.

Health is booming

Health is wealth, at least that’s how most people perceive it. When you are healthy, you can go about your daily routine and do the things you want and love to do. When something is wrong with your health, however, you are substantially limited in carrying out your daily tasks and chores. Diseases vary in severity and duration, of course. A common cold is something entirely different from long-term illnesses, which is why there is no one-size-fits-all solution to overcome illness. Every human being is unique, and thus, every approach to a healthier lifestyle should be tailored to the individual at hand. During the past century, we have seen that most regular approaches in medicine tend to suppress the symptoms of a disease, whilst the core problem is often overlooked. Societal problems like stress, a heavy workload and unhealthy habits take a large toll on people, which inevitably can lead to long-term health problems and issues. When you have a sincere ambition to help people become more healthy and strong, it is very important that you educate yourself properly on the subject of health. Ideally, you studied medicine or any other topic that covers a wide range of health problems. This will make it easier for you to diagnose health issues and offer correct treatment.

If you are not a medical professional, however, you can still help others achieve a balanced way of life and optimum health. There is a wide variety of subjects and topics you can focus on, such as:

As you can see, there are many ways in which you can assist any individual to recover back to good health, whilst also complying with any necessary official medical treatments. Sometimes people are in chemotherapy, or receive treatments for long-term illnesses, that can also harm the human body at the same time. By offering supplemental treatment, you can strive to negate (a part of) the negative effects such treatments have on the patient. This can be acquired in a large variety of ways, which you can learn by adequate schooling and training. By assisting others to achieve a stable health condition, you essentially help society to become better and healthier as a whole.

Lifestyle and food supplements cover a wide range of topics

As we already briefly discussed above, there are many ways to help others with their health. Maybe you are excited about helping others exercise more? Exercise is a fantastic way to help your body to stay in shape, which will automatically lead to a better and stronger immune system, which will inevitably prevent many diseases. You can also dive into the world of supplements and figure out, what each supplement does to the human body. This can cover any possible supplement, ranging from regular minerals and vitamins, to amino acids, superfoods, special herbs and other natural products that boost the human immune system and performance supplements. Coaching is another fantastic way to help others to strive for their goals. Often people have coping mechanisms, such as unhealthy habits, that ‘get them through the day’.

Needless to say, unhealthy habits wreak havoc on the human body and are thus counterproductive when it comes to strengthening the human body. By providing your clients with coaching sessions, you can figure out the root cause of their unhealthy habits and transform those into healthy ones. There are many topics you can become experienced in, such as specialized natural health care like acupuncture, which has been proven to be successful for centuries. Meditation has also proven to be highly successful when trying to nurse someone back to health, due to the many benefits it offers for the body and the mind. Meditation is a surefire way to eliminate stressors in life. Stress is a huge risk for every human body, since it causes the body to produce cortisol and adrenaline in large amounts. This, in time, proves to cause many different illnesses and in bad cases even leads to early death. Preventing diseases always trumps curing diseases, so you can focus on prevention as well as finding substantial ways to cope with already existing diseases, which will in turn improve the overall quality of life of any client you might have. The right choice for you is basically the topic you are already experienced in, or the one you feel most comfortable with. Try to do an ample amount of research before you decide on your niche, so you know for sure that you choose something you can actually help others with. Also keep in mind, that you can never overrule any already existing official medical treatments. Always consult the medical practitioner of your client, before you start something new. Some natural ways of healing can have adverse effects on a medical treatment.

Education and experience needed

As you can see, there are many topics to choose from when it comes to health, lifestyle and supplement advice. There are even more courses and specialized training to learn about a certain topic. You can never start a health company without proper training and education, as you might potentially harm others, and that’s a path you do not want to tread. If you aim to help others become healthy, that is exactly what you should do. Inform yourself about the various types of education available, because this will make it easier for you to pick something that resonates with you. Also, study literature and academic papers, since these often offer new insights into existing problems and treatments. If you want to study something official, there is a possibility you might have to go back to school or university. But try to see this as a grandiose way to deepen your knowledge, even if it might take you some years to finish. People are never too old to educate themselves on new topics! Education will make the difference between a successful company that heals people, as opposed to running a shady business that offers no guarantee whatsoever regarding health and the safety of your clients. A lot of health companies are founded by people who actually know nothing about health, they are just trying to make money off promising products, that actually do nothing at all for the individual. Or, in worse cases, these products actually damage health. Many supplements that are created for losing weight and/or boosting a work-out contain substances that can be harmful for certain individuals. Educate yourself on such topics, before you start selling goods and services.

What type of company can you start within the lifestyle and supplement market?

As there are many topics that fit into this niche, there are also many different company types that go along with it. These companies range from only selling certain products, to full-on coaching trajectories that help an individual to become healthy again. Your level of expertise and knowledge essentially dictates, what type of company you can start. Some company ideas that don’t involve the need for accredited education include (but are not limited to):

In some cases, a diploma might be needed, for example in the coaching industry. Nonetheless, most coaching courses are not very long or intimidating, nor are these very expensive. You could try to look around for courses that match your profile and expertise. If you own a diploma or certificate, the chances are substantially higher that clients will trust you more. Thus, you will acquire more clients in the long run. Some company ideas and professions that involve proper training and education are as follows:

These are generally professions that require a certain amount of knowledge and training, due to the fact that you can also hurt others when you provide incorrect treatment or advice. You should definitely broaden your scope about these topics, and see whether some of these professions are a good fit for you. You can also combine some of the topics, such as providing dietary advice, advice about supplements and exercise plans. That way, you cover all the basics, making it easier for you to tailor the program to someone’s individual needs as well as you can.

The Netherlands is strategically located

One of the many benefits of starting a Dutch company, is the strategical location of the rather tiny country. You have access to Schiphol airport as well as the port of Rotterdam, making it easier for you to buy high-quality products and having these shipped to you as fast as possible. Also note, that there are a lot of expats and travelling entrepreneurs in the Netherlands. You can help these people, even if you don’t know the Dutch language, since almost everyone in Holland is fluent in English. Most of the Dutch citizens are bilingual or even trilingual, making it easier for you to communicate with your client. It is also a very beneficially located country to import and export products, especially within the European Union (EU), since you are able to access the European Single Market directly. This means that you will have much fewer customs documentation to deal with, and you will also not have to charge others VAT. Feel free to ask us for advice about this topic anytime, as it can save you a lot of time and money whilst doing business internationally. This will make it very easy for you to acquire the necessary products for your company, such as supplements, herbs and other related products. Since the Dutch are very into health and a healthy lifestyle, you will have no problems acquiring clients here, provided the services and products you offer are of high-quality, and you do what you promise. There are many competitors in this particular market, but many websites don’t offer personal aid or programs. If you prepare well, you can thus manage to stand out from your competitors and reach the target audience you map out.

Consider going international

In line with what we mentioned above, it is very much possible to expand your Dutch business internationally in due time. If you can successfully aid people in the Netherlands with your services and products, chances are you might be able to expand internationally as well. Maybe you are considering putting a new product on the market, or offering a certain treatment that isn’t used often? In such cases, the clients you help will be more than willing to tell others about your mutual success. You can translate your website into various languages, although English generally seems to be sufficient in order to reach people internationally. Make sure there is something unique about what you are offering, since there is already a massive amount of lifestyle and supplement companies all over the globe. Try to offer a very individual approach to every client, since this will make them feel heard. It will also enable you to pinpoint your client’s problems precisely, which will make it easier for you to get them back to health. Try to look at some websites of companies that offer similar services, to see where you could stand out and make a difference.

How can Intercompany Solutions support your business?

Intercompany Solutions is specialized in the entire registration process of starting a Dutch company. We can offer you various types of assistance, such as starting up your company, opening a  bank account, taking care of tax related matters and helping you with a solid business plan. We can also help you with a good business idea, provided that you already know what you want to do, and why. Our specialists can take care of the entire registration process in just a few business days, which enables you to start your company almost immediately. If you have any questions about importing or exporting goods and services, the best way to arrange this and which documentation you will need, you also have come to the right address. Please feel free to contact us with any queries you might have, or if you would like to receive a personalized quote for establishing your business. We will gladly help you with anything you need.

If you have ambitions within the crypto community, it’s actually possible to create your own token, or even a coin when you create a blockchain yourself. The crypto that is inherent to that blockchain is called the native cryptocurrency. Keep in mind, that there are various difficulty levels when creating cryptocurrency. We will discuss this later in the article. If you have already created a token or coin, you might be interested in the best possible way to list your cryptocurrency on an exchange. An exchange is basically the (digital) marketplace where people trade different cryptocurrencies, and as such, you can list your own in order for it to become tradable. Keep in mind, that listing your token on an exchange is in no way a guarantee for success: there are already tens of thousands of different cryptocurrencies available at the moment. Nonetheless, if you have a solid plan and an original idea that also helps others in some way, chances are realistic that you could achieve success. In this article, we will discuss how crypto projects are created, funded and also listed. We will also provide you with some helpful tips regarding the listing process, and how you can speed this up.

What is an Initial Coin Offering?

When you decide to create a new cryptocurrency, you can raise money via an ICO. This is actually the equivalent of an Initial Public Offering (IPO). Via an ICO you issue a new cryptocurrency, with the main aim of raising money, so you can compare it to crowdfunding as well. As opposed to asking investors for money for a good idea you have, you can now obtain start-up capital with the help of an ICO. Due to the fact that your coin can actually gain in worth down the line, investors are actually very positive about investing money this way. They don’t gain shares such as in a regular company, for example a private limited company, but they hold coins that can increase in value. Crypto investors are therefore always on the lookout for interesting new cryptocurrencies. The coin or token itself may or may not have a utility that is related to the service or product your company is offering, or in other cases it can represent a stake in the project or business.

As a company or individual, you can take advantage of this popularity by creating a cryptocurrency yourself. If you also have a good idea backing up the coin, you basically gain two types of income: direct investments and possible future gains when the coin increases in value. As you might know, companies that decide to go public need to meet many conditions and are strictly regulated. This is to protect investors against possible fraud. However, for cryptocurrencies, this is currently not regulated anywhere. This inevitably means, that literally anyone can create their own cryptocurrency and spend these as well. Just be mindful of the fact, that, if you decide to scam people, this will cast a shadow on you and your business forever. It might seem easy to steal money from people and make a run for it, but nowadays, everyone can be found and prosecuted. If you decide to put a coin on the market, make sure that it benefits all parties involved. This is always the best way to do business.

The idea behind any cryptocurrency

The main goal of issuing a new crypto is to gain wealth, ideally for everyone involved. This entails having a good idea to begin with. When you ask investors to invest money in your (new) company or idea, you generally create a solid business plan that describes exactly what you want, why you need it and what you are going to do with the funds. When you want to list a new cryptocurrency, you don’t make a business plan, but you create a white paper instead. This is not necessary, by the way, since there are no regulations yet that cover the way you should go about creating a new cryptocurrency, as we already discussed above. Nonetheless, if you want to be taken seriously, and you also want your project or idea to thrive, creating a white paper is the way to do this. Some crypto investors might buy cryptocurrency without knowing what the coin stands for. However, there are also investors who look at what the idea behind a coin is before they decide to invest anything. What do they get in exchange for the purchase of this coin? Is there a service in return, can they pay with it at the store, or do they invest in a cool new project? With a white paper, you basically answer all these questions.

When Satoshi Nakamoto created Bitcoin, he sent his white paper attached to an email which stated: “I’ve been working on a new electronic cash system that’s fully peer-to-peer, with no trusted third party.” This single sentence explained the core of his ambition: he wanted to put financial control back into the hands of the people. This was the start of cryptocurrency, as his white paper laid the foundation for the first digital currency that also fully functioned, being backed by blockchain technology. Since his white paper is still circulating and being read on a daily basis by individuals everywhere, you could say that his idea had quite an impact on the world. The moral of this story: try to come up with something unique, valuable and original if you want your cryptocurrency to succeed. There are some examples of crypto’s that became successful without a substantial story and meaning to back it up, such as Dogecoin. This doesn’t mean that people will invest in your coin, if you are only joking around, though. Business is still business and your idea needs to hold some kind of value for others as well, if you want to make an impact. Whatever idea or project is behind your crypto, try to describe it as well as you can in your white paper.  This allows investors to see what they are betting their money on. Maybe you want to add something valuable to the already existing blockchain technology? Or maybe you have a humanitarian idea, that you want to express via crypto? Do your research and explain everything, because that will give you much larger chances to succeed.

How do you create your own cryptocurrency?

If you already have a broad idea about the function of your coin, or the project it’s related to, you can start thinking about the way you would actually like to create the cryptocurrency. There are a few different options available, which range drastically in difficulty. The following four methods are generally applied when creating cryptocurrency:

In general, you should be advised that this process takes plenty of time, commitment and, of course, resources. Next to that, the more advanced technical knowledge you have, the better. Otherwise, it might be very difficult for you to understand what you are creating. This, in turn, might prove to be an awkward situation, for example when you are supposed to pitch your idea to investors. Make sure you at least know about the basics of cryptocurrency, blockchain technology and how everything works in general. If you don’t, you also run the risk of others scamming you. You should also note that the creation process of any cryptocurrency is actually seen as the easy part of the entire project. Growing the coin and project over time and maintaining a solid value is much more challenging, and will require much effort and patience on your part. We discuss the creation process of any cryptocurrency in much more detail in this article.

How to list your new digital token on a cryptocurrency exchange

One of the main characteristics of any cryptocurrency, is that is needs to be tradable. This is actually true for every existing currency, otherwise the currency wouldn’t have much practical use. If you want to list your digital coin and trade it, you need to do this on a cryptocurrency exchange. Anyone who creates a cryptocurrency themselves, must ensure that it is for sale via one of the many trading exchanges. You can do this by contacting crypto exchanges yourself, but this can be a very tedious and confusing task, since many exchanges have different conditions that you need to adhere to. One of the best ways to get your token listed, is to use exchange listing services from an experienced company, such as Intercompany Solutions. We have access to a very large database of various exchange partners that we work with on a regular basis, making it easier to seek out the best option for your cryptocurrency. This also means, that we can help you get listed in a fast timeframe. Even if you managed to get your crypto listed on a decentralized exchange, you should still consider adding it to more and better known exchanges, since this will substantially increase your chances of people investing in your token. Next to that, it will make it easier for others to find your coin in general. There are tons of exchanges, since it’s a booming business to create an exchange.

There are conditions you will have to fulfil, if you want to get listed. On most exchanges, for example, you will need to provide the following information:

This is generally the basic information you will need to provide, in order to get your token listed anywhere. In many cases, exchanges purposefully select projects and coins that offer something unique and new, since this automatically makes users interested in possible trading. If your idea is a lot like previous ideas or similar to already existing tokens, chances are that you won’t get listed. Also note, that some exchanges have more stringent processes than others. The larger the exchange, the smaller the chances that an exchange will pick your idea from amongst the rest. This is why it’s so important to stand out with your project and offer something truly new to the market. If your idea is innovative, useful and solves something that many people want solved, you have a good chance of getting listed. If you have an enthusiastic team, and you can provide all the information an exchange needs, then you should be able to get listed on most exchanges. You can also try to acquire additional exposure by providing information about your new token on various media. This might help to gain followers, which you can also mention when trying to get listed on an exchange.

What do you do with your tokens once they are listed?

An interesting question, of course! If your coins are successfully listed and also manage to rise in value, you have money to spend. Do you spend it all immediately, Or do you keep some for yourself, to see whether they become worth even more? In essence, it is always smart to keep some tokens. Suppose the value rises considerably, then it would be a shame if you do not own any tokens yourself anymore. Moreover, with some crypto coins in your possession, you can always decide whether more will be on the market. Next to that, with the issuance of your ICO, a lot of money has now been raised. How should, or can, you spend this money? Due to the fact that there are no rules tied to the issuance of new cryptocurrency, you can decide this entirely for yourself.  The fairest option is when you spend the money on the goal(s) you specifically stated in the white paper, since this is also the main reason that others invested in your token.

However, no one can check whether this actually happens. There are no clear laws and regulations covering this yet, so unfortunately, many people have already been scammed this way. If you want to do serious business, we strongly advise that you keep your promises and spend the money on your project. When crypto investors feel like they've been scammed, they do have the possibility of reporting this. For example, there were previously a lot of complaints against people who issued an ICO and ran off with the money. However, no one knew who the people really were: that is the dark side of the anonymity surrounding cryptocurrency. In business, trust is of the utmost importance. If you want to achieve success now and also in the future, keep your promises and do what you intended to do. It might be tempting to just take the money and disappear, but your image will forever be tarnished. So think twice before you do anything unethical with your achieved success.

The benefits of hiring a third party to list your cryptocurrency

Of course, as we already mentioned, you can try to get your token listed all by yourself. This means that you will probably have to contact many exchanges and go through the process numerous times, which can be extremely time-consuming. Also, the outcome is uncertain. Most exchanges can take ample amounts of time to even respond to your query, so you won’t know for a long time whether your application is successful. And even when an exchange agrees to list your coin, the process itself can take much time. If you hire a third party to help you out, such as Intercompany Solutions, you can get listed on many exchanges without a queue, which can save you large amounts of time. Another bonus is the fact, that we can offer much lower rates than the official prices that are mentioned on the exchanges, due to long-term partnerships. In a lot of cases, we can guarantee successful listing because of these partnerships, provided you can send us all the information that is needed for the process. Once we take care of the listing for you, we can connect you to the head management of the particular exchange to sign a direct contract. So working with us will not only create much better chances at getting listed, but it will go a lot faster and smoother as well. Please note that there were also fraudulent exchanges in the past, where the owner basically took the money and vanished. When you try to get listed yourself, you might run the risk of trusting an exchange that should not be trusted. By working with an experienced third party, you are completely free of such risks, since we only work with trusted and verified exchanges.

How Intercompany Solutions can assist you with listing your cryptocurrency on an exchange

If you have realistic plans regarding the issuance of a new digital token, you should definitely consider professional assistance and advice. We can help you with your ICO and try to get your token listed on an exchange, if you have a solid plan for the future.

Another matter we can assist you with, is company registration in the Netherlands. If you want to start a new project or have a very original idea, the Netherlands is a fantastic country to do business in. Many well-known multinationals are situated in Holland, making it an excellent hub to find potential investors and business partners. Moreover, you also have access to the European Single Market, which makes it easier for you to find suitable business opportunities. We can register a Dutch BV in just a few business days, which can back up your plans regarding the digital token. Of course, you can also decide to issue a new coin as an individual, as opposed to a business owner. Nonetheless, the chances are much higher that you will be taken seriously, when your plans are backed up by a business foundation.

Would you like to receive more detailed information about ICO’s and getting listed on an exchange, or would you like to inform yourself about your possible business potential in the Netherlands? Then feel free to contact us anytime with your query, we will respond as soon as possible.

How to establish a Dutch record label?

When thinking about starting a business, most people think about regular business types such as a sales company, a business in logistics or maybe a web shop.  But artists also very often have business aspirations, which turn out to be extremely successful in some cases. This is especially true, when you are talented within your field. Writers, painters and musicians are therefore perfectly capable to start their own company. We will focus solely on the music industry in this article, specifically the process of starting your own record label. Becoming a disc jockey (DJ) has never been easier, due to the digitalization of the creation process of music. But starting a record label is not limited solely to DJ’s: if you are a musician in a different music genre, you can start a record label from scratch as well. We will outline all the basics you will need to think about, as well as inform you about important laws and regulations that you should take into account when you start this undertaking. We will also provide you with some tips and tricks to aim at success with your newly found record label.

Step 1: Pick a genre you would like to operate in

Music can be categorized in a massive amount of different genres. When you start a record label, it’s wise to differentiate between these genres and pick one or two fitting genres that you would like to specialize in. Usually, it pays off to just pick the music that comes most naturally to you. If you are someone who likes EDM and other types of house music a lot, then electronic music might be your best bet. If you play an instrument, such as the guitar or piano, it is advisable to create something that fits your style well. If you have a special interest in any kind of music, it is generally smart to choose that direction, since the music you love most will often also be the genre you will be most successful in. A rock guitarist will inevitably have more issues creating electronic music, and vice versa, since the experience and preferences you have play a large role in the music that will fit your persona best. Try to not copy others, as music is supposed to be an original work of art, unless you are a successful cover band or musician.

Next to that, the choice for a certain genre has consequences for the content of the music contracts you are going to work with. The way these contracts are handled differs enormously per genre. If your music company produces classical music, fewer copyrights may need to be cleared, due to the use of public domain works. As a rule, you will have to deal more with neighboring rights. Choosing a genre is very important when you start your own record label. With a new label, it's best to go for a focused approach, instead of keeping it broad. Specialize in a specific genre and perfect it. In addition, decide whether you only want to be a download label or also sell physical products.

Step 2: Come up with a fitting name for your label

Once you have settled on a genre, or a certain direction music wise, you will also need to figure out a catchy name for your label. This is actually one of the trickiest parts, since the name needs to not only appeal to you, but also to your target audience. One way to come up with a great name, is to think of something that you really like. Such as a favorite memory, color, song, person, or anything really that resonates with you strongly in a positive way. This will make the name more authentic. And not just to you, but also to your music and field of expertise. Essentially, the name of your label is going to be the identity of your business. When people see and read your label’s name, they should immediately be reminded of something specific about your music. This way, your label will quickly generate recognition and become more well-known over time. You can see the name of your label as your virtual shop window, so you best create something other people want to look at. It’s also wise to see whether there is a domain available with the same name to build a website, since you cannot really achieve anything without a website nowadays. Make sure to buy the domain immediately, so you can go forward with your plans.

Step 3: Create a brand around the name

Once you have settled on a fitting name for your label, it’s advisable to also create a brand around the name. The term brand is particularly broad, since it encompasses more than just some letters and colors. When you look up the general meaning of the word brand, you get explanations such as:

As you can see, you can go in any direction with your brand. You can also choose to sell more than just records, such as merchandise. We will follow up on this later in the article. The most important part is that your brand should be unique, and not a copy of someone else’s idea. We will also discuss intellectual property later, it’s important that you do nothing that might be illegal and cost you a lot of money in the future. You should think about a logo that matches what you want to radiate with your record label. Your logo is the face of your brand, and therefore what all your potential customers see first. If you do this well, you can become hugely successful. Just look at some well known brands such as Google, Microsoft and Audi. Everyone on Earth knows these brands, because they have become a force of their own. With solid preparation and some creativity, you can make it work.

Step 4: Build a website and register your brand

If you have already bought a domain, then you can immediately start working on your website. If not, you should look for some good providers that have stable reviews from other customers. Without a website, it will be very difficult for others to find you and your label. Moreover, on your website, you can inform your target audience about your work and future plans. If you keep your audience informed and up-to-date at all times, the chances are much higher they will invest time and attention to your brand. That way, you create a stable group of followers. You can inform people about new releases, for example. But also about yourself and your background story. If you also plan to sell items, you can incorporate a web shop as well. Make sure the website works well on all platforms. In general, if you create a website with the help of tools such as WordPress, the theme you choose will automatically adapt itself to the medium any visitor is using. Make sure the theme updates regularly, in order to be able to keep up with technological progress.  

Step 5: Register your company at the Dutch Chamber of Commerce

When you have come up with a name and brand and created a logo and website, it’s time to actually register your company with the Dutch Chamber of Commerce. This is where Intercompany Solutions can assist you. With multiple years of experience in the establishment of Dutch companies, we can make sure your business is set to go in just a few business days. One of the first things you should think about, is the legal entity you want to choose. If you want to start small, a sole proprietorship (‘eenmanszaak’ in Dutch) is your best bet. We also advise looking at the possibilities of starting a private limited company (a Dutch ‘besloten vennootschap’). With a Dutch BV, you are not personally liable for any debts you make with your company. You also need to take into account if you are starting a record label on your own, or with partners. The choice you make depends a bit on the amount of profit you expect to make during the first few years of your business. Intercompany Solutions can always help you to make an informed decision.

Once you have decided on the legal entity, you will need to take some steps to actually register your company. If you choose to incorporate a Dutch BV, you will need to do this via a notary. This is not required when you start a sole proprietorship. Afterwards, you will need to hand over some important documents and paperwork, such as a valid form of identification, the names of the persons establishing the company and the name of the company. You also need to make sure that your music company ends up in the right category of services, that the correct codes are listed in the Chamber of Commerce registration and that the precise activities of your own label are correctly described. If you also take care of bookings, management or publishing, please mention this at the Chamber of Commerce. The Trade Register of the Chamber of Commerce must always be up-to-date: your actual activities must be presented truthfully. If you decide to take care of bookings after 1 or 2 years, this can be supplemented at the Chamber of Commerce at that time. You do this by submitting the designated amendment form or by going to the Chamber of Commerce yourself with a passport. If you choose Intercompany Solutions as your partner, we will take care of all this for you.

Responsibilities as a company owner in the Netherlands

Once the Chamber of Commerce registration has been completed, you will receive a tax number from the tax authorities. It is very important that you adhere to all the laws and regulations regarding Dutch taxes, otherwise you risk receiving hefty fines, or in the worst case scenario, even imprisonment. When you do business in the Netherlands and you also own a Dutch company, you are required to pay taxes here. There are multiple taxes that are relevant in this regard, such as income tax, corporate tax and also VAT. It is therefore your own responsibility to keep a tight administration. This means you need to keep track of all the incoming and outgoing funds, as well as calculate the amount of tax you owe the Dutch state. You will have to file periodical and annual tax returns, and you need to do this on time.

In the beginning it probably takes place quarterly, later perhaps monthly. In the beginning, it takes some getting used to keeping a clear administration. It takes discipline and also expertise and knowledge about the subject, since there are many ways you can make mistakes. Maintaining or outsourcing your administration is a necessary entrepreneurial property. If you are foreign, we strongly advise you outsource your administration for practical purposes. Always make some backups of your administration, music contracts and of course also of the images of your artists, the tracks and the loose tracks. It is best to hire a decisive bookkeeper, an accountant or a skilled tax specialist who can take care of the annual income tax. Intercompany Solutions has an experienced team readily available, that can take care of all tax related matters for you, making it possible for you to solely focus on your main business activities.

Getting started with your new record label: a complete guide

The steps mentioned above are just the basics. Once this is taken care of, and you have registered your record label, it’s time to practically get to work. There are a lot of things you should arrange and do, so figuring out the basics before you start is a smart idea. We have made a list of all the possible actions you can take when you own a record label, as well as all the information you will need to draft contracts and settle everything legally. The way you will work depends greatly on the choices you make for the label, for example the genre you chose, whether you will be making the tracks or others will do this, if you need people who play instruments, whether you want to organize concerts and live shows and so on. We have added basic information about all relevant subjects, so you know what you are up against when you really want to kick start your label and become well-known within your niche.

Different ways to create music

In this day and age, the possibilities covering the creation of music are almost endless. You can do it the old-fashioned way, i.e. get a group of people together and create something spectacular in a studio. But you can also choose the digital road and create music from your computer, which is essentially what you will do when you choose to start a label that focuses on electronic (dance) music. A combination of both is also possible, for example, when you create digital tracks with real vocals and/or musical instruments. We will discuss all possibilities shortly in this section, so you can make a well-rounded decision that fits your personal preferences and ambitions regarding your newly found record label.

How do you plan to distribute your music?

In this day and age, music can be created in various forms. In older times, vinyl, cassettes and later also CDs were the norm. Nowadays, most music is distributed via the internet in a digital format. Nonetheless, in certain circles, vinyl pressing and cassettes are actually making a comeback. If you value a slightly retro feel to your label, this might be an interesting opportunity to keep in mind. When you are just starting your label, it’s obviously easier to stick to digital distribution due to its cost-effectiveness and practicality. Once your label becomes more known, you can also expand to physical music stores and other ways to provide your audience with music. Remember that you are the one who chooses, so try to base your decision on personal preferences, and not on the choices others make. We will discuss music distribution in more detail later in the article.

How to set up your music studio

If you want to own a record label and make music yourself, you cannot do this without a proper studio. A music studio is essential if you want to uphold a professional appearance. In most cases, any starting musician will create a home studio, since renting a professional studio can become a costly undertaking. There are some basics you should keep in mind when creating a home studio. You should, at the very least, have access to good (mixing) equipment. You can opt for a digital or hybrid setup, depending on your personal preferences. It’s important to invest in a strong and fast computer, which you can tweak accordingly. Also, make sure to invest in the right cables of solid quality. The quality of a cable can make or break your production.

Remember to acoustically optimize the studio space with absorbers, bass traps, reflectors and insulation. You should also teach yourself to work with equipment such as a sequencer and vst instruments and effects, since this will substantially benefit your music and mixes. A good external sound card with preamp is also essential. Next to that, if you own a hybrid home studio, you cannot work without a proper studio microphone. If you plan to include vocals in your music, you simply cannot do without. Headphones that sit comfortably and have as much flat frequency response as possible should not be missing in the recording studio of your record label. Last but not least: invest in an experienced mastering engineer. The mastering can also be outsourced, which usually gives better results. In any case, do not do the mastering yourself if you have already made the mix, because this enables the mastering engineer to profit from an objective sound image.

Necessities to create digital music

As we already mentioned above, a lot of music is created digitally with the assistance of a computer. Keep in mind, that all music software has a certain learning curve, This basically means, that you become better at using it over time. Keep practicing and honing your skills, this is the way to successfully rise to the segment of top musicians. Talent is one thing, but nothing can beat years of practical experience. You will also be required to gain knowledge of soft synths and effect plugins. In addition, some knowledge of harmony and music theory is also of the essence. Numerous online courses and other online learning materials such as tutorials can be found on the internet. This makes it possible to be more or less self-taught. With the aid of self-study via the internet, one can now go very far. If you are ambitious and determined enough! In addition, making a lot of mixes and developing ‘producer ears’ is the motto. If you own an internet label, you should also offer your target audience digital downloads and streams.

External collaboration

Almost every successful record label thrives due to collaborations with different other artists. If you want to produce and distribute versatile tracks, it’s highly advisable to collaborate with others. Songs, of course, come about in different ways. In some cases, you will write the music yourself, but ask others to produce it with you. The opposite might also be true: someone wrote a song that you would love to produce. Next to that, there are plenty of other things you can outsource, such as the vocals and playing different types of instruments. You might like a certain bass player or drummer for a certain track, because their sound resonates with your goals for the song. In such cases, parties can, for example, share in the copyrights or the master rights or be bought off with a flat fee. In that context, a distinction is made between creators of music and performing musicians. Within the limits of the legislation in this area, all kinds of variants are possible. It is also very important to create solid legal contracts, so you all know where you stand.

This also goes for ghost productions and used beats. If you own a dance label, then you will probably look forward to working on many so-called ‘ghost productions’. In such cases, the distribution of the music rights and the permissions for exploitation will have to be described in a producer contract. For example, you can arrange that the ghost producer shares in a small percentage of the master rights, or receives a fixed amount of money for their collaboration. It’s also possible to use ready-made beats. If you know a good beat that would fit one of your tracks well, then you can generally lease or purchase this from an external producer. In this case, it’s also very important to draft legally binding contracts, as opposed to making a verbal agreement or promise. When all parties involved know exactly what they can expect from each other, you can avoid unnecessary issues in the future. Take a professional approach and set everyone's rights and obligations clearly and clearly in a written producer contract. You can also record master rights in that document.

Some other things to consider

Next to the tips and tricks we provided you with above, there are some other factors that definitely deserve your attention if you want to do things right from the start. We already mentioned this above briefly, but try to invest in a good mastering engineer. Mastering your own tracks can become tedious and difficult, because you listen to your own music very subjectively. Your audience deserves efficiently mastered tracks, though. As a record label, ultimately your goal is to sell tracks. So they have to sound good and professional. Master your tracks. This can cost money, but is always worth it if you want to go for professionalism. Another important activity is providing your audience with live music. Studio tracks are great, but a true fan base loves nothing more than to see their favorite artists shining on a stage. If you want your label to become known, you will simply have to make a public appearance every now and then. Furthermore, live music is ultimately the best form of publicity and, thus, promotes sales. Get some local gigs and promote them on your website. The more proficient you become in live performances, the greater the chances are that you might be invited to play at larger and more well-known events, such as festivals and collaborative concerts. If you also plan to sell merchandise, then make sure to have a stall ready at live events. This is one of the best ways to promote your label and brand, in general.

Distributing your music effectively

The ways your music can be distributed have already been discussed briefly above. In addition to old standards such as vinyl, CD’s and cassette tapes, the internet and digital technology now also provides you with an enormously broad basis to show others your work. If you choose one of the older methods, make sure you search out a reputable company to produce physical ways to store your music on. Vinyl and cassettes are actually making a fun retro comeback, so it might be an idea to invest in such alternative methods. For example, when you bring out a special track, or a special edition of a successful track. That way, your audience will be able to store your music physically – especially collectors like these extras you can offer with your label. But if you are just starting your music label, we strongly advise you stick to the easiest and most beaten path at the moment: digital distribution of your music. This is a lot simpler and cheaper, which makes it possible for you to produce and distribute many tracks at once. Before, this was simply not possible due to the relatively large costs for physically distributing your music. Digital distribution has made it much easier for musicians to break through, and you can profit massively from this.

Digital distribution also varies, since you can choose from options such as downloadable music, streaming and live broadcasting, for example. As the owner of your own record label, it's important to think in advance about which channels you want to reveal your precious music to the public through. If you decide on streaming music, keep in mind that you will have to do this via a so-called aggregator. This is like a third party in between you and streaming channels, such as Spotify, that you will have to establish a distribution agreement with. Under this distribution agreement, the streaming app pays out directly to the label, but sometimes also through the aggregator. The label then pays out to its own artists. Of course, digital distributors also receive their own share, usually directly from the streaming apps. Percentages for the aggregators are very diverse and are usually somewhere between 10% and 85%. This means that you might initially have to do some digging, in order to find a reliable and cost-friendly aggregator. Be mindful to carefully read the conditions and royalty percentages that are mentioned in the digital distribution contract. This way, you save yourself from very unpleasant future surprises.

Marketing and promotion of your record label

A good marketing and promotion strategy is an integral part of any successful brand. In the past, you would have to create hard copy materials such as business cards, flyers and posters. Or you had to cough up large sums of money to generate a radio and/or TV commercial. But since digitalization, online promotion has become the general standard. Social media, for example, are a perfect way to promote your label and any events you might plan, such as concerts. Almost everyone on the planet has a social media profile somewhere, which makes it possible for you to reach the entire world with your music. This is something that has never been possible before. If you do this, make sure you respond to people who send you messages during the first few years. This will provide you with a much-needed positive image, because it shows you genuinely care about the opinions of your (target) audience. If you like, you can also outsource such activities to a marketing and promotion company. They generally offer extensive packages, tailored to your label’s needs specifically. They can, for example, handle all in- and outgoing communication. Some musicians aren’t born with a talent for communication, so hiring the expertise you need might prove to be a very solid investment.

If you decide to do the marketing and promotion part on your own. You should invest in a good customer relations management (CRM) system. With the aid of such software, you will be better able to manage and keep track of your client database. Of course, you can also add all business relations to such a program. This will enable you to send periodical newsletters, inform your clients and partners about new tracks and special promotions, concert dates and release dates. If you invest a bit in communication with everyone you work with and your audience, then you will seem approachable, professional and just genuinely nice. This will aid your overall image as a musician immensely. A good CRM also offers a wide variety of action-oriented insights. When you work via the cloud, various apps are compatible to commit to what you need to keep your record label running smoothly. You can also file all existing contracts and legal documents, providing you with a broad overview of everything that you are achieving and doing.

Other ways in which you can promote your record label

Promotion of your label is absolutely vital, because without any promotion, no one will even know your label exists. No matter how good the music is, if no one is aware of its existence, then there is no turnover and no growth. Your record label is also a company, so you need to make sure it’s viable by approaching the appropriate target audience. Often, it is advisable to think about a good marketing strategy. This will allow you to pinpoint a fitting target audience, which in turn enables you to adjust your promotion activities to target this group of people specifically. It is very possible that your audience will grow and become more diverse over time, as your music progresses. But in the beginning, it’s smart to focus on the people that resonate with your specific type of music, since the chances that they will actually like it are positive. Even if you have a small budget, you can still create a good marketing and promotion strategy. If you have money to spend, you will obviously be able to do more and reach a larger audience. We will give you some helpful tips and tricks in the field of possible promotional activities, that will help your label become more well-known.

Tell everyone you know what you are doing

One of the most effective ways to inform people about your plans, is to simply tell them. Word-to-mouth is still one of the most trustworthy ways to get attention for your label, and business in general. If you have a wide circle of friends and acquaintances, it’s a good idea to create some basic promotional materials such as flyers, and hand these out amongst your circle. They, in turn, will share it with their networks, and this in itself can actually generate quite some attention for you. The internet allowed everyone to become connected with each other, so telling people about your label with literally cause the word to go fast.

Develop your own app linked to the label

With the latest technological developments, every brand that takes itself seriously now also has its own app. An app is an excellent way to communicate directly to your audience, plus it enables you to promote other parts of your label, such as merchandise you might sell. You can offer the option of live-streaming on the app, or direct downloading of new tracks you make. People don’t always have their computer with them, but everyone carries a mobile phone. An app will actively engage others with your label and vision. In order to use the app, please note that users of the app must agree to your license agreement. This online contract contains the terms and conditions or terms of use. You can connect various payment methods to the app, so you can generate income to sustain your label.

Your own streaming channel on the internet

Another way to promote yourself, is to create your own streaming radio station. When you had to do this on the radio in times past, you would often have to resort to pirating, but nowadays, there are plenty of possibilities to create a valid radio channel. Again; digitalization is any musician’s best friend! You can then send links to your network, who can share it with others as well. If you collaborate with other artists, you can provide them with time slots too, so they are also able to showcase their work. You also get experience with  hosting a radio show for free, which will make you more relaxed with audiences in general. You can stream from your own website, but also from a well-known streaming channel. You should be informed, that you need to conclude a streaming agreement with Sena and Buma/Stemra, even if you solely stream your own tracks. The license this will provide you with is valid for the duration of one year, so you have to renew it yearly, if you wish to continue your radio show.

Pitching to existing radio stations

If you don’t want to start your own radio show, but would like to be heard on the radio nonetheless, then you can try to promote your music the old-fashioned way: by sending samples to radio stations. This can be frustrating for some, because they rarely bite immediately. But if you consistently send samples and keep coming up with new tracks, chances are much larger that one or multiple radio stations will finally take an interest in your label and music. Of course, your music needs to be good and produced well. When well-known DJs or radio stations love a single or album, it can go very fast. The numbers of your downloads and streams will skyrocket. As a label and artist, and basically everyone involved in the creation of the tracks, you will then benefit from it through various cash flows and, possibly, fame. Do you want to outsource plugging or pitching? Then conclude a promotional agreement with a professional plugger. This person then lobbies on behalf of the label for your single or album.

Drafting contracts for yourself and the people you will work with

If you plan to start any business, there will always be contracts involved. This is no different for a record label. The first type of contract you should think about, is an employment contract. If you plan to hire any staff at all, this is mandatory according to Dutch law. You can choose whether this contract will be valid for a fixed or indefinite period of time. If you hire an intern, you will need to draft an internship agreement. In the employment contract, you make agreements about matters such as wages, duration, probationary period, working conditions and a non-competition clause. The agreement always needs to be written. Please make sure you know everything about Dutch labor law and income taxation. If you are in doubt, you can always contact Intercompany Solutions for helpful information. You can also outsource the pay rolling to us, which will save you a lot of time and hassle.

Once you are making your music and start to collaborate with others, you will also need to draw up artist contracts. Setting up a record label is not possible without an operating agreement. This contains the obligations of the label towards the artists and vice versa. You can register talents by means of a written contract. By means of an exploitation agreement, the artist gives permission to the record company to market his tracks, in exchange for promotion and fair compensation. Manifestations of an exploitation contract are the artist contract, a producer agreement and a record contract. These can be both exclusive and non-exclusive.

These differ a lot from regular employment contracts, since the hierarchy is different. Have the artist contracts drawn up by an experienced professional who can empathize with the position of both contracting parties. A label and artist have a number of common interests, but also some clearly opposing interests. Intercompany Solutions can also help you with this. You always need to be able to have contracts ready at hand, to provide artists, producers and other musicians with a good deal. Next to that, take smaller things into account, such as the use of samples from their music. Make sure there is sufficient clearance for doing this, because using other people’s work illegally is out of the question. This will not only ruin your reputation instantly, but you will also be subject to large fines and possibly even incarceration. That is not worth your time nor effort. When you are discussing the terms and conditions of any contract, make sure you record this during the meeting. This will provide you with all the information you need, as well as proof.

Details that should be included in any record label contract

The core of every contract involves the fact, that your record label receives permission from the people you collaborate with to exploit their work and recordings. In turn, you provide them with an audience by actively promoting their work. You also take care of the distribution of the music, which saves them a lot of time. After deduction of all costs made by your label, you share the compensation obtained for this with the person you are collaborating with. So if all goes well, everyone wins. We made a short list of some things you should probably include in the contract, in order for business to run smoothly between you and the collaborators.

Usage of rights

Since you create contracts with other artists, this gives you the right to use their data and music for your record label. This includes the trade name of the artists, any trademark rights, but also simpler things such as their biography and portrait. You should include this information in the contract clearly, so it is known between all parties involved what you are allowed to use, and what not.

Original work

One of the most important parts of your collaboration, is trust. You need to be able to trust that everything goes fairly, and that one of your artists doesn’t use someone else’s material, for example. Make sure that the artist guarantees that their tracks are their own work, or that he or she has obtained permission to use samples and create remixes. Also make sure that the works have not been previously published. The artist must issue an indemnity for this. This will dissolve any liability for your label, in the case something goes wrong.

The obligations of the artists

The work the artist is supposed to do for you needs to be very clear. Agree on the obligations of the artist and phrase this consistently. In addition, you can pay attention to a minimum number of tracks to be made, the exclusivity and of course the license. If you are going to work together, then it needs to be known what to expect from each other.

Summary of all agreed upon activities

Just like the artist’s obligations need to be written down, you will also need to record what you as a record label are going to do for your collaborators. You should state the activities, where you will do this and for how long you will continue to do so. If you are going to do more than just the distribution, then perhaps a special clause is in order. This gives you a percentage of the artist's income, even after the end of the agreement.

The definition of a release

You should define well when a record is officially released. In some cases, artists don’t finish a record for a long time and leave the label, but then release the track anyway on a different label. This, of course, is a massive waste of your time and effort. In such cases, it might be unclear whether the trial version was a release. If that was the case, then the song fell under the deal and the label can therefore cash in. This example shows how precise the wording of contracts should be to avoid mistakes, and that makes label deals complicated. Make sure to consult a professional, before you end up being taken advantage of by someone. This can end up to be a costly mistake.

The ownership rights to the sound recording

Always contractually record the master rights to music in a label contract with the artist. These rights are divided into commission for the music agreement and producer contract, but also intellectual property rights to the sound file or master tape. We can provide you with legal advice regarding the permission to use music and the master license. You can also choose to have your artists sign a so-called 360-degree contract. In such a contract, all possible sources of income from the artist are lumped together and divided between society and the artist. You can think of all sorts of revenue, such as from live performances, merchandising, sponsorship, licensing, copyright and neighboring rights.

[CTA]

Copyright and intellectual property

It’s very important to know about the copyrights on music, if you plan to start a record label. You cannot just use whatever music you like, since all music has a unique origin: its creator. This creation process is guarded and protected by copyright and related intellectual property rights. It means something came from your brain and is, therefore, yours. As a musician, you need to be aware of the legal basics, such as the difference between copyright and other related rights. You must always have written permission to use copyrighted works. Typically, related rights are the rights category that a digital record label will have the most to do with. You need to be aware of the difference between copyright and neighboring rights as well. As already explained, copyright is the right of the creator of the music. This includes (but is not limited to) the beats and the lyrics of a song. Neighboring rights, however, are the rights of performers and those who record the tracks: so you and the artist. So copyright is more centered on the productions, whilst neighboring rights are focused on the individuals that create the productions.

As a label, you are therefore mainly dealing with the neighboring right, because it concerns recordings, also known as ‘phonograms’. The mixed recording is called the master in professional language. It is essential that you are legally allowed to exploit the recording and master rights. As stated above, you can make sure of this by drawing a concise and clear contract between you and any artists you collaborate with. As a rule, the master rights will be or become the property of the record label. This is due to the fact, that the label manufactures and finances the master in its own studio, or because the producer transfers it to the label by means of an exploitation contract. This transfer can be for an indefinite period of time or a number of years, and you can freely choose the applicable territory yourself. By means of a record contract, you can record the master rights in favor of your record label.

Registering a brand name or logo of the label with the BOIP

It is recommended to register the brand name and logo of the record label, so you can be sure that no one can steal your idea without consequences. You should also make sure that you register it in the correct product class. You can do this at the office of the BOIP in The Hague. A successful trademark registration costs 240 euros in fees, which consist of  the registration costs of the BOIP itself. There are a number of formal and material requirements for successful registration. Also note, that earlier trademarkowners may oppose the filing of a trademark. Any trademark must be sufficiently sensory distinctive and must not infringe earlier marks. The trademark rights of the holder can be exercised in a certain territory. The trademark registration is valid for ten years and can then be renewed for another ten years. The use of a trademarkcan also be licensed to someone else. The trademark application has legal force within the Benelux. If you want to roll out internationally at some point, a European trademark registration at the OHIM is worth considering. You can also opt for an international trademark registration with WIPO in Geneva.

Word mark and figurative mark

The possession of a word mark and a figurative mark increases the value of the record label and provides protection against infringements thereof. It offers the trademark owner more legal tools to fight against infringers than with a simple trade name. For example, in the event of fraud, identity theft, misleading the public or a risk of confusion. This secures your position when it comes to your own creation and label.

Sena and Buma/Stemra

These two Dutch organizations are involved in the intellectual rights regarding music, amongst other things. It is recommended to work with your own ISRC codes. These can be requested free of charge from the Sena. ISRC codes are defined as a digital fingerprint for the repertoire of producers. It is a unique identification number for each individual recording. The ISRC has been developed in such a way that you keep control over the use of your work, according to Sena.[1] After Sena registration, do not forget to register the tracks with your own ISRC codes in the Sena portal. Otherwise, Sena does not know to whom the audio fees should be paid. Sena rights are becoming increasingly important within the music industry. You can then register your publisher with Buma/Stemra as the owner of the copyrights to the songs. This works in the same way as the registration of the record label with the Sena as the owner of neighboring rights. After registration, remember to register the works in the Buma/Stemra portal. In addition, make sure that the performing artists involved in your music initiative register with Norma and Sena. When using someone else’s music, also remember to report this use, including the date and place, in the Buma portal. This makes the process of repartition easier for Buma/Stemra. Repartition is the distribution of incoming audio funds to the rights holders. With Buma/Stemra you agree on an operating contract.

Are you also going to sell byproducts such as merchandise?

Any record label can choose to have its own web shop on its website. Next to selling digital items such as tracks, you can opt to sell physical wares as well. You can offer physical copies of the releases, as these are growing in popularity again. Next to that, you can sell various brand related items, such as merchandise. Everyone loves a nice t-shirt, for example. You should take into account that every web shop must handle and provide general terms and conditions for its consumers. A privacy statement and a disclaimer should also not be missing. If you want to sell merchandise in your web shop that includes names and other things that belong to artists that you have contracted, then you must create a merchandise contract between you and the collaborators. A merchandise contract regulates permission for use of an image or artist name on merchandise such as t-shirts, mugs and caps. The merchandise contract also describes the exact distribution of income between the artist and the record company. A provision on the deductibility of costs is also always included. It is also possible to arrange these matters in the artist contract, this way you don’t have to draft up two contracts.

Look for an umbrella organization

If you are just starting your label, it might prove interesting to join with a larger organization that works with smaller and indie type music labels. One of such organizations is Merlin. This organization is seen as a sort of advocate for independent record labels, because they believe in aiding each other to become strong together. That in itself is a nice ideology. Merlin stands up for the digital rights of independent record labels and has offices in Amsterdam, London and New York. Merlin also provides international music licenses for independent record labels, so they can help you with things that might be difficult for you to handle on your own. The combined expertise of so many parties together will definitely help your label at some point or other. The organization is also constantly looking for new sources of income for its affiliated members. This entails thinking about new revenue models for independent music labels. Merlin enters into international music licensing deals with different types of well-known music services. You can see them as a stepping stone towards independence and success.

How Intercompany Solutions can assist you along the way

After reading this lengthy article, setting up a record label might seem like a lot of work. Of course, this is true, but this is also true for setting up any type of business. As a record label owner, you will also be a business owner. This means you get to make your own decisions, manage your own time, set your rates yourself and generally just do what you love in freedom. You will be able to show the world what you like to do most: creating music with like minded individuals. One of the main benefits of owning a record label in the Netherlands is the fact that the country already houses legendary DJ’s and musicians. It’s almost the cradle of house music, which expanded and evolved around the globe. There is a vast array of artists to collaborate with, which can make your label thrive in no time.

Nonetheless, owning a business also requires responsibility, autonomy and discipline. Most great artists struggled a lot before they finally hit the proverbial jackpot. There is no guaranteed way to success, but in general, hard work always pays off. It might take time in the beginning and a lot of input, but after some time you will start to see clear results. Intercompany Solutions is specialized in setting up Dutch businesses. We have aided more than 1000 companies in establishing a business in the Netherlands. We can take care of all the paperwork for you required for registration, as well as offer complementary services such as opening a Dutch bank account. Next to that, we can also assist you along the way, by providing tax services and all sorts of legal advice. Feel free to contact us for more information about our services. If you like, we can also provide you with a clear quote for any services you might need from us.

Sources:

https://www.muziekenrecht.nl/platenlabel-oprichten/

[1] https://sena.nl/nl/muziekmakers/rechthebbenden/isrc

Are you a foreign based entrepreneur who wants to establish a company abroad? And have you already considered the Netherlands as a base of operations? This would be an exceptionally good bet for you, as Holland is one of the most economically stable countries in the world. The country also has a solid reputation when it comes to doing business, and structurally shows up high in international business, innovation and competitiveness rankings. You also have the advantage of having a world-famous port in Rotterdam nearby, as well as an internationally renowned airport in Amsterdam. And these locations are only an hour apart, making any location between these two cities ideal for a (international) logistics business.

Once you decide that you want to establish a Dutch company, we can imagine that the sheer amount of things you have to do and arrange might put you off a little bit. Therefore, we have made a list of all the possible aid we can provide you with during the establishment of your company, and also afterwards. Our service doesn’t stop when your company is registered; on the contrary. If you have any questions or insecurities about the subject, Intercompany Solutions is there for you to make you feel confident about all your business endeavors. Read on for helpful tips and information.

1. Help you with a fitting company name

One of the first things you think about when contemplating about starting your own business, is the name of your future company. It needs to reflect the product and/or service, but also the market in general. Next to that, the title of your company needs to appeal to a large target audience, in order for your service and/or product to become successful. Naturally, much time is generally spent to acquire the perfect company name. When you think about a possible company name, take in factors such as:

These questions will help you in deciding the best name. Keep in mind, that it’s wise to do some research into your target audience and find out more about them. What is their age group, do they have hobby’s and preferences, where do they live, what do they want? Once you have answered such questions, it’s way easier to find an appealing company name that will ring right in the ears of your target audience. If you need support, you can always call us for helpful advice.

2. Explore the best location for your company in the Netherlands

Next to the name of the company, the location is also of the utmost importance. This is especially true, if your company will be focused on some logistical activities such as import and export, or drop-shipping. In such cases, it’s important that you are based next to a highway, that has good connections with ports and airports. If you decide to settle in the Netherlands, anywhere in the ‘Randstad’ (the central part of the Netherlands that is also most densely populated) will be good. But it’s not only important to think about the location when you are starting a logistics company: in essence, every company should think about the location of its headquarters. You will have many clients visiting you, as well as investors and potential future business partners. Thus, it’s important that your offices are easily accessible by multiple ways of transportation. Furthermore, we can state that a business address in a large city looks much more professional, than an address in a small town no one knows. Intercompany Solutions can think along with you, regarding the best address for your new company.

3. Provide you with advice concerning your business plan

A very important part of your business, is your business plan. A business plan shows potential investors and other interested parties, what your goals are with your company, and how you intend to attain these goals. It should include chapters such as:

As you can see, a standard business plan is rather elaborate. Why? Because it’s mainly the business plan you use, in order to attract investors and financing. If you need to buy a lot of machinery, for example, chances are you need an investor. A business plan will make it easy for third parties to see what you want to achieve with your company, how you plan on doing this, and whether your goals are realistically attainable. Without a business plan, you can basically forget about receiving a loan from the bank. Of course, Intercompany Solutions is ready to assist you, wherever you need.

4. Assist you with ways to attract investors

Once you have a business plan, you can look around for investors and/or financing. But do you know all the routes and platforms you can use nowadays? The days in which you could only get financing from a bank are long gone. Today it is entirely possible to receive financing from a third party, such as an angel investor, or maybe an acquaintance who would like to see you succeed. We strongly advise that you inform yourself about all the potential options when it comes to investments and financing, to be able to figure out which option would suit you and your company best. Once you find an appropriate platform, such as crowdfunding for example, it is important that you know which documents and information you will need to have a chance at actually receiving funds. If you would like assistance with finding a suitable form of financing and/or investor, you can always contact our team for guidance and support. We have an extensive network of national and international entrepreneurs and investors, which is why we are generally able to point you in the right direction.

5. Provide you with advice about hiring employees

Do you want to start a company that will also hire personnel? Then you will need to inform yourself about Dutch labor laws and everything related to employment. For example, there are multiple ways in which you can hire employees:

A lot of companies choose a payroll construction, since the company that pays the salaries is also the legal employer of the personnel you have working for you. This saves you a lot of time and hassle with keeping your administration up-to-date, as the payroll company takes care of this entirely. If you want to hire employees with your own company, we advise you to read about the various contracts you can offer, and which option would be most suitable for your company. You can always contact us for information regarding this subject and personal advice.

6. Assist you with payroll services

If you want to outsource employment, then payrolling is by far the best option for you. Intercompany Solutions can take care of the entire process for you, so you only have to make sure that your employees feel at home with your company and know what to do on a day-to-day basis. We can also guide you towards other companies that offer payroll services, for example if you want the company to be physically close to the location of your own company. In any case, we can provide you with all the advice and services you need in order to hire employees legally and correctly. If you don’t know what an appropriate salary would be, we can also assist you with calculating a competitive salary for your employees. Feel free to ask us any questions regarding employment and/or payroll services.

7. Establish your company with the Dutch Chamber of Commerce and Tax Authorities

Once you have figured out all preparatory actions and have taken care of them all, it’s time to finalize your plans and actually register your company in the Netherlands. When you aren’t well-acquainted with the company registration process, it might seem a bit daunting and extensive. You will need to collect documents and paperwork, such as your future company’s name, valid identification of you and potential business partners, the company’s address and so on. If you would like to take care of this entire process smoothly and rapidly, we advise you to outsource it to a professional company such as Intercompany Solutions. We have been taking care of the registration process of foreign and national companies for multiple years now, and with tremendous success. If you provide us with all the information we need in order to register your company with the Dutch Chamber of Commerce, we can take care of the process in just a few business days (provided that there are no surprises regarding you as a person or other setbacks). Afterwards, you will also automatically receive a VAT-number (in Dutch: BTW), so you basically can start doing business immediately!

8. Open a Dutch bank account

If you want to be able to do business nationally and internationally, you also need a bank account for your company. A business account differs from a personal account, since it’s linked to your business and not to you personally. This also aids you in keeping your business and private affairs separated, which is good for your general overview. If you want to open a Dutch bank account, it’s smart to first research all the available banks and what they offer exactly. The rates vary a lot, and are often dependent on the amount of profit you make. There are also banks that put time and effort in sustainability and the environment. If this is something you care about, we suggest that you choose a bank that has similar views and ambitions about the world. If you need any assistance with opening a bank account, then Intercompany Solutions can take care of this for you. If you let us know the bank of your choosing, we will immediately start the procedure.

9. Help you with your taxes

Once your company has been established and active, you will be burdened by taxes. Alas, it’s no different anywhere in the world. Since you are establishing a Dutch business, you will also be legally required to pay taxes in the Netherlands. You can find all current rates on the website of the Dutch Tax Authorities (Belastingdienst). If you also ship goods or offer services internationally, you will need to figure out where VAT should be paid. The Netherlands has a vast array of tax treaties with both EU-member states and countries outside of the European Union, that dictate where and when you should pay certain taxes. If you prefer personal advice about the subject, then feel free to contact us anytime with your tax-related questions. We can also take care of your yearly tax return and periodical tax return, so you can rest assured that you are complying with Dutch taxation laws and regulations. Please do note that if you don’t, you risk hefty fines and even incarceration. Make sure your administration is well-maintained and up-to-date at all times.

10. Business and legal advice in a wide variety of matters

As you can see, there is a large plethora of ways in which Intercompany Solutions can assist you. Next to general matters, we can also provide aid and advice in more complicated legal matters, such as mergers and acquisitions, setting up one or more branch offices, converting your business to a new legal entity and partnering up with third parties, to name but a few. If you ever need support regarding legal and fiscal matters, you can count on us. We can evaluate your situation, research the best options for you, and provide you with solid and efficient advice on how to proceed. Please do not hesitate to contact us when you are in search of legal assistance.

Intercompany Solutions is there for your company: from A to Z

Whether you want to establish an entirely new company, set up a branch office, need help with your yearly tax return or simply have a legal question about doing business in the Netherlands: Intercompany Solutions is there for you every step of the way. We can take care of entire processes, but also help you with questions and support in between your daily business activities. We love to see entrepreneurs thrive and do all we can to ensure your company has the best possible basis for success, right from the start. You can take a look at our website to inform yourself about all the services we offer, but you can also contact us directly with any of your business-related questions. Our experienced team will do everything in their power to get back to you as soon as possible, with viable and effective solutions.

Every Dutch company has to deal with taxes and the obligation to adhere to Dutch tax laws, as well as possible foreign tax laws if you do business internationally. When you own multiple corporations in different countries, you will also be subjected to foreign taxation laws and regulations, next to the applicable Dutch laws. This can create confusing situations, if you have no knowledge about which laws apply in any given scenario.  If you want to make sure that your company adheres to all applicable laws and regulations, it is wise to seek advice from a professional third-party. Intercompany Solutions can assist you with any tax-related matter that affects your company.  We therefore offer a broad range of corporate tax services for entrepreneurs who wish to establish a Dutch company, or already own a Dutch business. We will outline the entire scope of our corporate tax services on this page.

Advice about corporate tax in general

Intercompany Solutions advises a wide range of foreign and national clients about various tax-related topics, such as:

Other areas we are actively engaged in include (but are not limited to) company establishment, investments, corporate structuring, mergers and acquisitions and company reorganizations. Due to many years of experience within these fields, we bring added value to your company by always being up-to-date regarding new laws and regulations, both nationally and internationally. We have already assisted thousands of entrepreneurs about the possibilities of owning a successful Dutch business, and we will continue to do the same for every new client we encounter. We are capable of analyzing the fiscal position of your business, provide you with  advice about the most effective tax strategy in your case, and help you find appropriate solutions when anything goes wrong. In order to be able to inform you about what we do, we will explain the concept of corporate income tax below.

tax-netherlands

What is corporate income tax?

When you are the owner of a private or limited liability company, then you have to pay corporation tax on the profits of this company. Such companies are also called 'legal entities' by the Dutch Tax Authorities. For every ‘entity’ that is established in the Netherlands, you are lawfully obliged to submit a yearly corporate income tax return. Corporate income tax is calculated based on the taxable amount you earn in any financial year. Corporate income tax is thus levied on the profits of companies that are driven by legal entities, such as BVs and NVs. In some cases, other legal forms such as cooperatives, foundations and associations also need to pay corporate income tax, but only if, and insofar they run a business that actually generates any profits.

What are the current corporate income tax rates?

In the Netherlands, the income tax rate is higher than the corporate tax rates. This makes owning a Dutch BV a lucrative solution, especially when you plan to generate more than 200,000 euros in annual profit. Please keep in mind, though, that you also pay tax over dividends. If you want to know what the most cost-efficient option would be for you, please do not hesitate to contact Intercompany Solutions for personal advice. In addition, income tax has certain deductions for entrepreneurs that corporate income tax does not have. In short, it is always a matter of calculating every individual situation, when a choice for the Dutch BV is only based on obtaining tax benefits. The current corporate income tax rates in the Netherlands are as follows:

Taxable amountRate
< 200,000 euros19%
> 200,000 euros25,8% [1]
2024 Rates Table

Corporate tax advice

When you want to be sure about the exact variety of taxes you will have to pay once you establish a Dutch business, it is advisable to inform yourself very well about all existing national taxes, as well as tax treaties the Netherlands has made with other countries. Because knowledge about this can save you an ample amount of money. As we already stated above, companies with a NV or BV legal form are obliged to pay corporation tax, but under certain circumstances foundations, associations, partnerships and foreign companies that are active in the Netherlands are also obliged to do so. Intercompany Solutions has extensive experience with advising on and drafting the corporate tax documents of all types of companies.

We prefer to know our clients well, in order to be able to provide you with tailor-made advice at all times. Our permanent team of tax specialists is always aware of what is going on, and can therefore anticipate (upcoming) changes in legislation and regulations. We are also involved with many corporations internationally, which means that we can provide international companies with solid advice regarding the tax legislation per country. We can unburden and execute corporate tax returns in all countries flawlessly. This way, you know exactly where your company stands.

What kind of advice on corporate tax do we offer?

Tax laws are considered highly complex, partly due to the many special facilities and anti-abuse provisions. Every country needs to safeguard itself against tax evasion by companies, hence the ample amount of tax-related provisions. In essence, it requires expert knowledge to work with these laws and regulations. For any Dutch company, it is important to have a good idea of all possible tax consequences in advance. We can take care of the entire yearly corporate income tax return for you. In addition, we can also provide specific services or advice regarding the subject. Examples of some of our services within this field are:

Advice about tax reporting and periodical tax returns

When you pay taxes in a certain country, you will also be exposed to the obligation of reporting all the income your company generates to the national tax authorities. If you have income that comes from several countries, you should note that it is highly possible that you will have to file tax reports in multiple countries simultaneously. This means that it can be a difficult task for any international entrepreneur to sort out their financial situation, if this person has no knowledge about taxes whatsoever. In general, every business owner in the Netherlands is required to submit several digital tax returns on a yearly basis, such as the following:

If and when you don’t file the necessary tax returns on time, you can expect to receive a warning at first. If you consistently don’t file tax returns or don’t pay taxes, you can expect consequences such as hefty fines and even jail time. So, always make sure your financial administration is correct and up-to-date, making it easier for you to meet all obligations. Intercompany Solutions can advise you about clarifying the scope of the reporting obligations, the classification thereof, complying with specific reporting obligations and assist you with building the required local and master files. Feel free to contact us with your inquiries about his subject.

How to file an income tax return from abroad?

When you own a Dutch business, there are many sources of information you should educate yourself about. One very important factor is the source of your profits. As the owner or director of a company, it is important to look at how the profit from your company is earned internationally, and where the profit is generated. For example, tax-attractive structures can ensure that the tax burden of your company can be significantly reduced, in terms of profit from your company, but also with regard to royalties and dividends. When your company has to deal with foreign tax rules, it is essential that you know all the relevant national and international laws and regulations, as well as treaties between countries. You should ask yourself some questions to know where you stand as a business, such as:

A distinction must be made, and it must be determined, whether a company owner is liable to tax at home, or abroad. It is therefore useful to look at the taxing power of countries if you live in the Netherlands, but have a share in a company abroad or if you have a foreign nationality, live abroad and are therefore liable to tax abroad, but have a substantial interest in a Dutch company. The distinction you will need to make is the ability to either underride, override or half-ride new international treaty provisions. The implementation of any international treaty obligations is basically left to each individual country, as it deliberates internally under its main constitutional structure. Hence, there isn’t any guarantee that all involved states will fully implement the treaty obligations. Therefore, you will need to find out per country whether a certain treaty is implemented, half-implemented, or not implemented at all. This makes international taxation issues very tricky for entrepreneurs who have no financial and/or fiscal expertise, knowledge or background.

Do you live in a foreign country and do you also pay income tax in the Netherlands levied over (almost) your entire income? Then it is worthwhile to check if you are a qualifying foreign taxpayer. Do you meet these conditions? Then you are entitled to the same deductions, tax credits and tax-free capital as a resident of the Netherlands.[2] Intercompany Solutions is happy to use our knowledge and international network to help you with your international tax issues. Our tax advisors keep a close eye on developments and new legislation within the field of international tax law. We can explain amended and new legislation in a clear way to you, whether this concerns Controlled Foreign Company (CFC) legislation or developments in the field of national and international corporate tax, dividend tax, transfer pricing and anti-abuse provisions. If you feel safe to be able to rely on an expert tax specialist for your international tax questions, then Intercompany Solutions is the partner for your company. We can help you with complying to certain mandatory international reporting obligations, such as:

Common Reporting Standards (CRS)
Base Erosion and Profit Shifting Rules (BEPS)
Foreign Account Tax Compliance Act (FATCA)

Advice about corporate income tax compliance

When you set up a company anywhere in the world, you can expect to be obligated to comply to the current tax laws and legislation in any country. This obligation is also referred to as (corporate income) tax compliance. This is essentially a requirement in almost every country and jurisdiction worldwide. Most tax laws and rules are extensive and plentiful, plus they are often interconnected with international tax deductions and credits. The fact that these laws keep changing and being added, makes it complicated to stay up-to-date about the exact amounts you will need to pay as a businessowner. Intercompany Solutions has many years of extensive experience in handling the corporate tax compliance workload of various national and international companies. We can also assist you in meeting any reporting obligations and strict deadlines, so you don’t get into trouble with national or international tax authorities.

We combine our corporate expertise with knowledge of many thriving industries, whilst also adding flexibility to always be able to suit your company’s needs. This enables us to address a large variety of corporate tax compliance necessities and needs. We offer transparency by pairing different compliance services, including outsourcing options. This enables you to meet all tax related obligations efficiently. You can ask us any question you have about international tax compliance, which we will strive to answer to our best ability.

Several ways to measure corporate tax compliance

In essence, most companies and corporations adhere to the current tax regulations and thus, pay the correct amount of taxes. Nonetheless, there will always be businesses and corporations that try to evade tax laws for their own benefit. Therefore, the fines and punishments for tax evasion are hefty, and you should always be vigilant concerning this matter. Countries and their national tax authorities use a plethora of approaches to support their compliance engagement with corporations and large businesses, which also includes correcting and preventative actions. Once a company or corporation is flagged as concerning, that company will be monitored and assisted with existing compliance issues. Tax authorities generally tailor their engagement with corporations based on several factors that enable them to understand the company’s corporate affairs, such as:

Intercompany Solutions can effortlessly handle all corporate income tax compliance matters that your company is involved in. You can choose which services are a good fit for your business, based on your individual wants and needs. We offer a variety of services aimed at tax compliance, such as:

Advice about tax risk management, tax law and tax rulings

Next to managing your fiscal day-to-day responsibilities, it’s also very important to make a tax risk assessment and implement certain task risk management procedures for your company. This involves minimizing and even excluding task risks, but also keeping yourself informed about recent national and international law amendments and tax rulings. Minimizing task risks generally revolves around a solid tax compliance strategy, since this effectively eliminates tax risks in itself. But what happens, when you file a late tax return? Or you lose a part of your administration? Or if you pay the VAT, you owe the Dutch government too late? Such questions are answered beforehand when you implement a tax risk strategy, making it much easier for you to omit such risks in the first place.

Minimizing and excluding tax risks

The larger your company will be, the more time and effort you will have to put into preventing and minimizing tax (compliance) issues and risks. This is due to the fact, that larger profits inevitably also create larger sums that have to be paid to the involved tax authorities. Large companies also have a name to uphold. The reputational risk for these companies is high. The best way to avoid any problems is to consult with the tax authorities on time about any issue that might have arisen. Minimizing tax risks logically also causes less stress for entrepreneurs, making it easier for you to focus on business goals instead. Excluding tax risks is only possible in cases where there is enough money to be paid upfront, so for starting entrepreneurs this is more challenging. 100% exclusion is very rarely possible. Rules can be interpreted differently, and this can create miscommunication and faulty conclusions.  Intercompany Solutions is happy to look with you at how you can minimize your corporate tax risks. Our experts are able to provide you with solid and thorough advice, so you don't have to lie awake at night from stress. We ensure that your financial situation is monitored and managed correctly.

Since we are a team of experienced legal and tax professionals, we can offer you advice regarding the current scope and/or level of any tax risks your company might be vulnerable to, as well as possible solutions to mitigate such risks. In Holland, it is actually quite realistically possible to obtain a large level of certainty regarding taxation matters in advance. For example, you can opt to obtain certainty in advance concerning your tax position in a transaction your company has started or anticipates. Or you can mitigate risks by filing a 100% correct tax return. Intercompany Solutions has many years of experience in negotiating with the Dutch Tax Authorities, making it easier for you to hold a firm position with your business within your specific niche. In a lot of cases, we see that the tax inspector sometimes misinterprets relevant facts and applicable circumstances. In general, you as a company owner are responsible for providing the tax authorities all necessary information. If you don’t do this, or don’t deliver all the relevant information, this can result in the tax inspector having a lack of information.

This can result in fines that are unjust, hence the importance of having a partner who can easily communicate with such organizations for you. Intercompany Solutions can help you avoid messy situations that sometimes even end up in court. When you outsource your financial activities to us, we make sure that you are properly represented in a professional and neutral way. This ensures that your tax position is respected and the situation stays under control at all times. Feel free to contact us for more information regarding your specific request.

Some well-known tax risks explained

There are a few standard issues that might arise, which can get your business into trouble if you don’t handle these problems efficiently and correctly. The most well-known risk is, of course, a late tax return or payment. Especially with payroll taxes and sales tax (VAT) this occurs regularly. For these taxes, all returns and payment must be made exactly on time. If you cannot manage to do this, fines immediately come into play. If you forget to file or pay once by accident, that's not a big deal. If this happens more often, though, fines will be imposed and if you do not pay these consistently, there is a good chance that the tax authorities will actively seek contact. This is done by ways of reminders and subpoenas. In the case of corporate income tax, this is slightly less important. In that case, you first file a declaration, after which the assessment is imposed. That is the only moment the tax can and must be paid. Fines follow here less regularly, due to it being an annual process and does not return every month. It is useful to check carefully within the company how all tax processes work. Who is responsible for the calculations, declarations and payments? Where do the blue envelopes from the tax authorities come in? If these processes are clear, it saves you a lot of extra work and research.

Another well-known risk is having a complex business structure. Many holdings have a complex structure of underlying companies, sometimes with branch offices in multiple countries. This often leads to complications for taxes, such as the question which legal entity you choose and what kind of consequences this will have for your tax return.  When you establish a holding structure with multiple underlying private limited companies (Dutch BV), you need to take into account that you will have extra payroll tax returns, VAT tax returns and corporate income tax returns for each separate BV. Essentially, this means: more rules to keep an eye on. Therefore, see if the structure could be as simple as possible. It’s always best to focus on the future costs to maintain the structure.

A third risk entails VAT on cross-border supplies of goods and services. As soon as goods or services cross a national border, you as a company must take into account other requirements and a different rate than the current 21% Dutch VAT. These requirements can also differ per delivery, for example when VAT is shifted, 0 percent VAT for an ICP delivery or export and simplified ABC-deliveries (which include 3 or more companies in different nations). In addition, these requirements may vary per delivery and/or country and/or supplier. In the case of cross-border supplies, every entrepreneur must prove that the goods have actually crossed the border. And regularly that is not the case. Another common mistake, is that an invoice has the wrong VAT number, which means that an ICP supply to the supplier does not match the ICP supply that the customer indicates. Such circumstances should also be looked at carefully with incoming invoices, sincethings regularly go wrong. That is why an inventory of all goods and services flows with foreign parties, or with goods that actually go abroad or originate from abroad, is absolutely necessary. So make sure you set up an up-to-date IT system, that always shows the exact amount of goods available and in transit. This match between actual goods flows and IT systems also creates insight into possible carousel fraud – which can also affect a party that is in good faith. If you need any help with such issues, feel free to contact Intercompany Solutions for help and advice.

Advice about due diligence

Another important factor, when buying or investing in a company, is a due diligence investigation. During a due diligence investigation, a company or an individual is carefully analyzed for economic, legal, tax and financial circumstances. This includes, for example, turnover figures, company structure, and also possible relationships with economic crime, such as tax fraud and corruption. Such an investigation is necessary as soon as a company maintains relationships with business partners, or when another company needs to be acquired. A definition of business partner is: "anyone who maintains business contact with a company and is not an employee or body of it". It doesn’t matter what the size or significance of the business relationship is, this includes suppliers, customers, sales representatives, subcontractors, partners and advisors in joint ventures, as well as intermediaries and small-scale service providers. By carrying out due diligence research, organizations are able to map out all possible risks and opportunities regarding a certain transaction or goal. This way you avoid negative surprises. Which form of due diligence is applied, depends on the situation in question and the extent of the risks.

The purpose of a solid due diligence investigation

Due diligence investigations are carried out for a wide variety of purposes. One of the main reasons to start a due diligence process, is when a company wants to buy another company. For the buyer, the first purpose of a due diligence investigation is to find out more about the company to be purchased. The buyer will try to determine whether the company is worth the purchase price, and what risks are associated with the proposed acquisition of the company. Next to that, a buyer has an obligation to investigate. This duty of investigation is opposed to the seller's duty of notification. Although the obligation to notify in principle precedes the duty of investigation, the buyer may still fail in his duty of investigation if he does not carry out sufficient research. In that case, he runs the risk, among other things, that he cannot recover any damage from the seller. So, we always strongly advise performing due diligence, to limit your own risks as much as possible. It’s always better to be safe than sorry!

This will ensure that the buyer doesn’t blindly rely on the seller's communications, and will therefore choose to investigate all matters that are (or seem) important at first glance. On the other hand, if the buyer receives certain information during the due diligence investigation, but does not notice the risks, this can affect his legal position later on. The examination should therefore be carried out in a professional manner. In general, we advise entrepreneurs to seek out specialized third parties to assist them with a due diligence investigation. This will exclude all risks, since a professional knows exactly where to look for possible future risks.

In addition to the abovementioned, there are regularly matters that are of particular interest to the buyer, but of which the seller does not always have to assume the interest. This means, that the seller might fail communicating these matters. It is therefore important that the buyer asks the right questions during the investigation, and also knows how to ask the right questions. This accentuates the importance that the buyer attaches to certain characteristics of the company she or he wants to buy. How extensive a due diligence investigation should be, will often depend on the type of company being purchased, the size of both companies, the niche of both companies, the geographical location of the companies and the financial importance of the transaction. An investigation usually involves at least legal, financial, tax and commercial aspects of a company.

Special points of interest to focus on during a due diligence investigation

When you start a due diligence process, you need to take into account that you will need access to a large and varied set of resources, and not all of these resources are free online resources. This makes due diligence a rather complex activity. For a thorough analysis, there are several special sources you will need to consult, some of which we will explain below in more detail.

Watch- and blacklists

In a due diligence investigation you should definitely screen against relevant lists from Interpol, The U.S. Federal Bureau of Investigation (FBI) and national and regional search lists of the country where the company or individual is located, such as the Dutch AIVD. These lists contain the names of persons who are related to international crimes or terrorism.

Immigration Netherlands

Crime-related lists contain information about the individuals who are characterized as being at risk, which includes convicted criminals and names from organized crime. Examples of these lists are the 'FBI Most Wanted Terrorists' and 'Interpol Most Wanted'. If you want to make sure you are getting into business with ‘clean’ individuals, looking up such lists is a must.

Politically Exposed Persons

The reason you should look this up, is due to the fact that politically exposed persons can be assumed to be at a higher risk of being exposed to criminal activities such as bribery, money laundering, corruption, or other (economic and fiscal) offenses. This is because of their influential position, whether in government or in another large corporation or organization. Note that a distinction is made between international and national politically exposed persons (such as heads of government, prominent politicians and top soldiers), and persons who hold or have held an important position in an international organization (directors, top managers) and their direct subordinates. If a potential client or business partner is identified as a politically exposed person, you need to ensure effective risk management through an extensive due diligence process.

Sanction lists

Sanctions lists include countries, entities and individuals against whom national or international sanctions have been taken, for example through conflict, terrorism, human rights violations and other serious violations. This means, that these countries or entities are violating international law agreements. These sanctions may result from various sources, such as United Nations Security Council resolutions, decisions of other international cooperation bodies and regulations of national governments. Examples of sanctions are: trade embargoes, arms embargoes, freezing of bank balances, entry bans, and the limiting of diplomatic or military relations. Important sanctions lists include those of the United Nations, the European Union, the US Office of Foreign Assets Control (OFAC) and the UK Treasury.

Other data sources that might be of importance

Next to the lists mentioned above, there are also other sources you can view. One example is an overview of legal proceedings. In overviews of legal proceedings, you will find information about lawsuits in which the legal or natural person concerned may have been involved. This can tell you a lot about their intentions, and how they have behaved in the past. You can also consult recent news items, since current and archived news items can play a useful role in checking the reputation or official status of natural and legal persons. You should, however, consider news stories as complementary to the "traditional" sources for due diligence research. Last but not least: you should always consult their company profile. This contains information about the formal establishment of the company in question, the company structure, the ownership relationships and its control mechanisms. In the Netherlands, you can look this up via the Dutch Chamber of Commerce (Kamer van Koophandel).

Intercompany Solutions can assist you with conducting a due diligence whenever you need more information about another company or person. Do you want to acquire a company, or merge with a company? Or are you curious about a potential future business partner, but not yet sure whether their company profile fits your expectations? We have a team of experts who can carry out the investigation for you, including various fields related to taxation and their behavior during the past years. Our research is then specifically tailored to your needs, i.e. we translate the outcome of the due diligence investigation into readable material that tells you all you need to know in the form of an effective risk analysis. You can then proceed with your plans safely, by mitigating certain risks via an effective risk strategy. Please contact us for more information about the topic, we will gladly show you the way.

Advice about transfer pricing

Transfer pricing is an interesting topic when you do business internationally. If you, as a company of sufficient size, are active in different countries, you are obliged to work with transfer pricing. These are market-based amounts based on business principles. In essence, all existing companies strive to arrange tax matters as favorably as possible. Internationally operating companies can take advantage of the differences in tax rates between countries, by exchanging goods and services internally. But this exchange of products and services within an internationally operating group eventually has consequences for the tax that has to be paid in the various countries you operate in. In order to ensure that this exchange takes place in a manner acceptable to all parties, the tax authorities apply so-called transfer pricing. By means of transfer prices, market-based amounts are agreed for the goods and services exchanged within such a company.

Making transfer pricing agreements in advance

When you own a company that has multiple branches in different countries, then your internal services and supplies also switch between these destinations. In such cases, you can make agreements with the national tax authorities in the different countries regarding the remuneration of these. This is preferably done in advance, so you know what your obligations are as a business owner. Such an agreement is called an Advance Pricing Agreement (APA). In doing so, you as a company have to submit documentation on the determination of the transfer price, and also about how it was determined exactly. This way, the national tax authorities can check whether the transfer price is in line with the market and whether all the conditions are met.

How to set a transfer price for your company?

When you try to set a transfer price, you need to know that this contains much more work than, for example, finding a comparable price between parties or setting a surcharge. In order to set up a reasonable transfer price, it is essential to follow some basic steps during the process. The final price is actually less important, than the way you decide about this price. We will outline these steps below.

1. Obtain knowledge about your transactions

The first thing you will need to do, is gain knowledge about your affiliate transactions. An affiliate transaction is basically a transaction between parties, that are part of the same group. If you work directly with the company that is involved in the affiliate transactions, you should be able to look up this kind of information quickly. Often, entrepreneurs already know this information from experience. Therefore, this first step should not take you too much time and effort. Nonetheless, it is very important. To be able  to assess whether a potentially similar transaction is indeed comparable enough, you need to have a good idea of the affiliate transactions.

2. A functional analysis of transactions

Once you have gained sufficient knowledge about your transactions, you should carry out a functional analysis. This is a query that identifies the functions, assets and liabilities relevant to the related transaction(s). Then, you assess which of the parties involved in the transaction performs which functions, who runs which risks and who owns which asset. This is highly important, since it shows you who exactly is responsible for what. The distribution of functions performed, assets used and risks incurred should be comparable to the division of functions in a potentially similar transaction.

3. Selecting the method of transfer pricing

Once you have completed the functional analysis as well, you should choose an appropriate transfer pricing method. When you start looking this up, you should focus on the best fitting method for your company and its goals. In doing so, you take into account the strengths and weaknesses of each transfer pricing method. So, this is generally a comparison of all potential options. You can read more about the different transfer pricing methods on this page.

4. Determine the correct transfer price

Once you have gained knowledge about the affiliated transaction, performed a functional analysis and selected a fitting transfer pricing method, then you can finally look for transactions that are comparable to your company’s transactions. Thus, you will also be able to set a proper transfer price that matches your preferences. The transfer pricing method you chose greatly influences the way you can look for similar transactions. For example, if you chose the comparable uncontrolled price method (CUP), you essentially search for similar transactions carried out by other independent parties. Then, you can apply the same price to your affiliated transaction.

However, when you are using the transactional net margin method (TNMM), the transfer price is determined indirectly. This is one of the most popular methods. This involves a benchmark study, which will make it possible for you to determine the so-called EBIT margin other independent companies use in comparable transactions. The EBIT margin can be described as a financial ratio, that can measure the profitability of any company. This is calculated without taking the effect of rates and interest into account. EBIT stands for earnings before interest and taxes, so the calculation takes place by dividing this by the total sales or net income of the company. The EBIT margin is also called the operating margin, since it shows the profits or benefits generated by any company’s economic activity alone. It is characterized by it ignorance regarding the way a company is financed, for example, or the possible intervention of the state. In any case; whichever method you choose, at this point you should be able to come up with reasonable and fair transfer prices.

Intercompany Solutions can provide you with qualified and expert advice regarding the correct transfer prices for your company. We can provide you with tips and tricks regarding applicable national and international transfer pricing rules, as well as management of all the transfer pricing documentation requirements. Contact us for more in-depth information, or a clear quote.

Looking for representation for your business in legal tax matters?

When you deal with international tax matters, we strongly advise you to seek specialized representation. When you let someone represent you in certain matters, this partner generally also takes care of all necessary contacts on your behalf, such as the Dutch Tax Authorities. This makes it easier for you to deal with daily business activities, as Intercompany Solutions can handle all financial and fiscal responsibilities. In addition, in most cases you will have to authorize a representative by issuing a written statement that clearly states this. In it, you give your authorized representative permission to act for you at the Tax And Customs Administration. This is also possible for 1 specific case, for example an objection, or for certain declarations.[3] Intercompany Solutions can analyze your company’s financial and fiscal position, by carrying out an investigation. With the results of this investigation, we can assist you with creating an efficient tax strategy, as well as a risk management strategy. If you encounter any stand-alone fiscal issues, we can also help you with finding the most effective and appropriate solution. We can also advise you about tax compliance services, which include your administration and payroll duties. We always strove to come up with solutions that match your business objectives and future goals. If you are worried about the level of compliance of your company, then we can make sure that you stay compliant with both Dutch and international fiscal laws and regulations. We can also enter into negotiations on your behalf, for example with the tax authorities in any given country. We can assist you with a tax audit, negotiate with the tax inspector, or assist with tax mediation. Keeping a good relationship with tax inspectors can be tricky, due to the large amount of conflicting laws and regulations. In some cases, endless discussions can easily escalate into a long-term conflict. Our knowledge of tax regulations and our experience with dealing with the Dutch Tax Authorities and tax inspectors, helps us to avoid unnecessary conflicts and court procedures. You can contact us anytime for proper representation, or simply more information on a matter your business is


Sources:

[1] https://www.belastingdienst.nl/wps/wcm/connect/bldcontentnl/belastingdienst/zakelijk/winst/vennootschapsbelasting/veranderingen-vennootschapsbelasting-2022/tarief-2022

[2] https://ondernemersplein.kvk.nl/belastingaangifte-doen/

[3] https://www.belastingdienst.nl/wps/wcm/connect/bldcontentnl/standaard_functies/prive/contact/rechten_en_plichten_bij_de_belastingdienst/wanneer_aangifte_doen/vertegenwoordiging_of_machtiging

Owning a business in the Netherlands proves to be a solid investment time and time again. This is also the reason why many foreign entrepreneurs decide to branch out to Holland, or even start a completely new business here. There are many different business opportunities within several interesting niches, making it possible for you to make your entrepreneurial dream come true oversees. The Netherlands profits from being situated in a very strategic location, with its large international airport near Amsterdam and a port in Rotterdam, which are in close proximity of each other.

Next to that, Holland offers a thriving pro-business climate, which makes it easy to find customers and appropriate business partners. Furthermore, the national and European tax system is highly attractive, making it possible for you to enjoy the benefits of the European Single Market. If you want to open a large business, you also profit from an international, multilingual and highly educated workforce. And let’s not forget the fantastic physical and digital infrastructure. These are just some of the many advantages of opening up a Dutch business. In this article, we will inform you how and why the Netherlands is seen as a solid stepping stone into the European and even international market.

One of the best countries for business worldwide

The Netherlands structurally scores very high in many international top business lists, such as Forbes’ “Best Countries for Business”, where Holland holds the 4th place currently. The country also holds the 4th position in the “Global Competitiveness Index” which is published yearly by the World Economic Forum. The Netherlands is currently the sixth-largest economy within the European Union (EU), due to the fact that the country performs extremely well economically. The country houses more than 8000 foreign companies, amongst which are some world-famous companies such as Discovery, Swisscom and Panasonic. But not only large corporations choose to open an office here; many small foreign entrepreneurs also tried out their luck, and often with success. Did you know, that the Netherlands has one of the highest incomes per capita in the entire EU? Pair that with very low unemployment levels, and you have a basis for success. Next to the outstanding business climate, the country offers affordable living costs and an exceptional quality of life. The schools are considered one of the best worldwide, making it possible for you to potentially move here with your family. This makes Holland a very competitive and world-class destination for your (future) business.

Strategically located

One of the main benefits of doing business in the Netherlands, is the fact that you can instantly access the entire international market due to the strategically beneficial location of the country. Due to being situated directly next to the UK, Germany, Denmark and Belgium, as well as having a large coastal strip with multiple ports, the Netherlands has immediate access to many European countries. In general, it has been proved that the country has direct access to 95% of the most lucrative consumer markets within the entirety of Europe within 24 hours. You also benefit from a world-famous airport, namely Schiphol, plus the huge port of Rotterdam. If you are interested in starting a drop-ship or logistics business, then Holland is a very safe bet to start. Holland has been known for its proficiency in trade throughout the centuries, making the Dutch experts within this particular niche. They are also very apt in working with water, since most large cities have a vast network of canals which are actually directly connected to each other. Hence,; you can travel by boat to almost all large cities. Pair that with a fantastic infrastructure (which we will discuss later on) and it’s no coincidence that many large multinational corporations have already chosen the Netherlands as their base of operations.

Innovation plays a large part in Dutch business endeavors

The Netherlands was ranked number 5 in the Global Innovation Index of 2022.[1] The Dutch are basically always trying to find ways to do things better, faster and more efficiently. This makes the country an ideal base for interesting new concepts, innovative business ideas and entrepreneurs who value working together in new and innovative ways. This mindset is paired with a very attractive international test market, a very open and friendly business culture and highly knowledgeable and adaptive consumers. If you want to market a new technological product, then the Netherlands provides you with a good starting point. The Netherlands also houses a good deal of Research & Development (R&D) offices of well-known multinationals, which leads to the country having the second-highest number of patent applications in Europe per one million inhabitants. This just shows that innovation is a very high priority in the Dutch business climate. A lot of patents actually come from start-ups, which means that it would be possible for you to try out the success of a possible invention here.

Next to the innovative business climate, Dutch universities rank amongst the top in several international rankings regarding their research and teaching methods. Examples are the University of Leiden, Wageningen University, Eindhoven University and the Technical University in Delft. If you are looking for opportunities to develop your knowledge even further, these are some of the best choices for personal growth and business expansion. One of the main benefits of the way the Dutch work, is the extensive amount of solid public/private partnerships. Often, the Dutch government can provide funding for innovative ideas within many different sectors. If you have an idea that matches some of the government's current goal, chances are high that you will be able to put this idea into practice successfully.

Highly skilled international and multilingual workforce

The Netherlands currently houses a population of almost 17.8 million people. Amongst this population are not only Dutch residents, but also a wide plethora of expats, foreign entrepreneurs and immigrants. This makes it possible for every new business owner to find appropriate staff for a new company, often even in the language you desire someone to speak. Around 1.8 million inhabitants are foreigners, who come from 200 different countries and nationalities.[2] This makes the Netherlands even more diverse than the US, since the amount of land Holland covers is substantially smaller. Due to housing so many nationalities, the Dutch culture is very flexible, original and international. Because of the fact that so many people from so many backgrounds mingle daily, the workforce is considered productive, highly skilled, adaptive and often bi- or even multilingual. The country has the 1st place out of 112 other countries in the EF English Proficiency Index 2021, with Amsterdam being the number one city in the world when it comes to being able to speak proficient English. This makes the Netherlands the best English-speaking country in the entire world, without actually having English as a first language. If you want to open an international business, then this little fact will definitely help propel your business forward, since your employees will have no trouble at all to communicate in English.

Apart from English, the Dutch are also proficient in a variety of different languages, such as French, Spanish, Russian, Chinese, German and Italian, for example. Next to lingual proficiency, the Dutch also score high on various other subjects such as ICT, numeracy and literacy. The OECD Skills Outlook 2021 provides you with a broader overview of how the Dutch currently score, in comparison to other countries.[3] Another bonus regarding the Dutch population is the fact, that a large portion is in the so-called ‘economically active’ age range, which is from 15 to 64 years old. There are so many skilled people, that the country outranks most other large competitors, even though the country itself is very small. Also, due to a very high standard of education and training, IT investments and logical labor laws, the workforce is internationally seen as extremely productive. Due to the government's pragmatic approach to business activities, there are very few labor disputes compared to the entire EU. Due to its international orientation, it is possible to obtain a “Highly Skilled Migrant Visa” which allows businesses to hire qualified expats from all over the world. One of the main benefits for foreign business owners is a certain level of assurance, that they will always find personnel and/or freelancers here, when needed.

The Dutch infrastructure is one of the best in the entire world

Holland offers a superior logistic as well as technological infrastructure. Due to the existence of world-class airports and seaports, the Netherlands benefits from an extremely extensive network of roads and rail. The roads itself are seen as one of the best in the world, due to constant maintenance and refurbishing. This means that any goods shipped from the country enter international territory in just an hour or two, making the country perfect for logistics businesses. Next to the physical infrastructure, there is also the 100% digital telecommunications network. This Dutch network is seen as one of the best on our planet. Due to the density of the infrastructure, it is able to provide everyone with very fast connections, no matter where you are or where your goods are travelling. This dense infrastructure also offers the highest broadband penetration per capita in the entire world, namely 99% of all households are connected to it. Next to the high level of connection, it also offers one of the planet’s fastest broadband speeds. This makes the Netherlands the literal digital gateway to Europe, but also North America, due to the fact that most transatlantic sea cables are going directly to the Netherlands.

The Netherlands stimulates foreign investment and entrepreneurship actively

The corporate income tax rate in the Netherlands is seen as very competitive. In 2022 the tax rates were 15% up to 395,000 euros, above this sum the rate is 25.8%. (2024: 19% until €200.000 and 25,8% above). Next to an attractive tax rate, the Dutch government also offers many incentive programs and a very supportive fiscal climate for foreign entrepreneurs and international companies. This makes it very easy for you to either invest in an already existing business, or try out your luck with your own Dutch company. The country also has a very wide tax treaty network, not just within the EU, but worldwide. This means that you benefit from treaties that avoid double taxation, which means you as an entrepreneur are protected when doing business internationally. This aids in making it possible for international and multinational companies to thrive in Holland. Furthermore, the country stimulates innovation by promoting to engage in R&D activities. You can do this internally within your own company, or together with partner businesses. There is a favorable corporate tax structure in place to facilitate this, next to special R&D tax incentives.

A stable government

The Dutch government is seen as one of the most stable in the world, until this day. The World Bank actually named the Dutch government one of the most effective governments in the entire world. The country itself is stable as well, without any dramatic political changes or civil unrest. This makes it much easier for you as an entrepreneur to safely base your company here, since you know that there is almost no risk involved. It also makes it possible to make stable medium as well as long-term decisions, without any fear of the situation changing anytime soon. The government’s financial situation is seen as relatively healthy. There is not much criminal activity on the streets either, making it possible for every business owner to do business safely and securely.

How Intercompany Solutions can help you set up your Dutch business

Have you thought about setting up a foreign business? Then maybe the Netherlands is exactly the place you are looking for. As we already discussed above, the country offers a wide array of possibilities for motivated and ambitious entrepreneurs, who want to create a visible change in the world. The infrastructure makes it possible to do business all over the world, whilst you don’t even have to leave your country of origin. A Dutch business can be set up from afar, as long as you provide us with all the necessary documentation. Please note, that the Dutch business market is highly competitive as well, so you will need to work hard to turn your company into a success. There is a lot of fierce competition, but with the right mindset, you can actually be able to learn from your competitors. If you would like to know more about setting up a business in the Netherlands, you can look at our main page about this subject. Still have questions? Then feel free to contact us directly for personal advice, or a cl


[1] https://www.wipo.int/global_innovation_index/en/2022/

[2] https://www.nu.nl/binnenland/4036992/nederland-telt-tweehonderd-nationaliteiten.html

[3] https://www.oecd.org/education/oecd-skills-outlook-e11c1c2d-en.htm

1.    Introduction

In this memorandum, we aim to provide you with advice about the best way to set up a solid company structure. This also involves making it tax compatible and profitable. We are going to look at factors such as the structure of the company, income taxes and the minimum wage for the director-shareholder (Dutch: DGA). Also, we will outline how to adapt to a DGA living abroad, for example in cross-border situations. For this article, we use a theoretical case with a Dutch BV with a DGA living in Italy. With this information at hand, we did research about the necessary DGA wage, if it is preferable to set up an Italian holding and how dividends will be taxed.

Every DGA has shares in their company and, thus, receives dividend. Dividends that come from a substantial interest are taxed in the Netherlands against 26,9%, while generated income is taxed at a minimum rate of 37,07 % and a maximum rate of 49,5%. The income tax is a lot higher than the tax for dividends from a substantial interest. Because of this difference in percentage, the Dutch government introduced a fictitious employment for the DGA of a company. This essentially means, that a DGA is required to receive salary from his BV. We will discuss this topic next.

2.      The salary requirements for a Dutch DGA

The Dutch tax law requires every director-shareholder to pay him/herself a wage from their Dutch BV. Article 12a of the Dutch wage law (‘wet op de loonbelasting’) requires a DGA to have a wage that corresponds to the largest sum of the following three options:

This wage is taxed in the income tax as mentioned in the introduction, against a rate of 37,07% or 49,5%, depending on the height of the salary.

2.1  DGA salary in cross-border situations

The above-mentioned wage requirements are for any Dutch DGA, who is also physically living in the Netherlands. In our theoretical case, however, we have a DGA living in Italy. This fact makes our imaginary situation a so-called cross-border situation. The DGA wage is something only the Dutch tax law has introduced, so it is not something other countries also apply and/or know. In cross-border situations, we must always investigate the existing tax treaty between The Netherlands and the country that is applicable, in this case Italy like we said. Because of the uniqueness of the required DGA salary, a country must first accept this Dutch regulation before it is also applicable to their own citizens. If you look at the Tax treaty between The Netherlands and Italy, you will not find such a law or regulation.

This simply means, that a DGA of a Dutch BV who is currently living in Italy, doesn’t have to take the legally required Dutch minimum DGA salary into account. Also, we don’t find anything about a minimum wage for a DGA living abroad in relevant case law about this subject. This means, that a DGA is not obligated to pay him/herself a salary. Furthermore, the fictional DGA salary is not taxable in the Netherlands. So if a Dutch DGA who lives abroad wants to receive a salary, then they are free to choose to do this. Needless to say, this salary will then be taxed in The Netherlands.

2.2  Dividends

A DGA obviously has to receive money for a living. Please note that everything that a DGA receives, which cannot be classified as ‘salary’, is called dividend. Dividend in the case of a substantial interest, which is when you own 5% or more of the total amount of shares of a company, is taxed against a rate of 26,9% according to the Dutch tax law. When we look at the DGA living in Italy, we must again investigate the tax treaty between The Netherlands and Italy in order to find out where the dividend is taxed. In article 10 of the tax treaty, we find that dividend is taxed in the other country, meaning where the DGA lives, in this case Italy. Nonetheless, the Netherlands is also allowed to tax dividend against a rate of 15%. To avoid double taxation, the tax paid in the Netherlands is therefore deductible in Italy.

 

3.      The structure

Now that we know how everything is taxed, we can take a deeper look into how to structure the company itself most efficiently. There are two options to choose from in this scenario. The first option is to start a holding company in Italy, and receive the dividend with this holding, before giving yourself this dividend. The second option is to receive the dividend directly without an extra holding. We will outline and explain both options in more detail below.

 

3.1   Italy Holding

When you decide to opt for an Italian holding in our theoretical situation, the Dutch BV then pays corporate tax in the Netherlands. Afterwards, you are left with earnings after taxation, and you can pay dividend to the shareholder; the Italian holding. Normally, the Dutch tax authorities will withhold 15% as tax on the dividend. But in this case, the Dutch tax law offers the possibility to pay the complete 100% as dividend to the Italian holding, without paying taxes in the Netherlands.

This is only possible when the following conditions are met:

This last condition can, in theory, get you into discussions with the Dutch tax authorities, although we have not seen such a case before. Keep in mind that tax evasion can lead to hefty fines in the Netherlands, and, in the worst case scenario, jail time.

3.2   No holding in between

In case of not choosing for an Italian holding, the picture above shows us the alternative structure for the company. The shareholder will receive the dividend directly from the Dutch BV. In this case, 15% will be taxed in The Netherlands, which is then deductible in Italy, because of existing rules regarding the avoidance of double taxation. The shareholder will obviously also pay taxes on the received dividend in Italy.

4.      Conclusion

In short, we can conclude that there is no such thing as a fictional employment and salary for the DGA in the example we just discussed. This means, that the DGA doesn’t have to pay him/herself a salary but can choose to pay dividend instead. Therefore, the DGA can avoid having to pay the Dutch income tax for the salary part. When they, however, choose to pay themselves a salary, this will be taxed in The Netherlands against a tax rate between 37,07% and 49,5%, depending on the height of the salary.

Depending on the structure one chooses, the received dividend will be either taxed in Italy, or in The Netherlands and Italy. When an Italian holding receives the dividend, the Netherlands won’t tax the dividend, but solely under the conditions that the Italian holding doesn’t hold the shares in the Dutch BV to avoid taxes, and secondly that the chosen structure must be chosen because of business or commercial reasons. When the shareholder receives the dividend directly from the Dutch BV, the Netherlands will tax this dividend against a rate of 15%. Because of the tax treaty and due to avoiding double taxation, this will be deductible in Italy and the dividend will be taxed in Italy.

Summary

If you have a company in NL and a holding in Italy, then it is possible to pay 0% dividends in the Netherlands. For example: a client named Giovanni, has a company ''Armani Holding'' in Italy, and he also owns a BV ''Armani Netherlands'' in Holland. He makes €100.000 profit. He then pays 15% corporate tax in the Netherlands (€15.000). After taxation, €85.000 of the profit remains. He uses this to pay his Italian holding company €85.000 in dividends. This will not be taxed. This 0% is because of the mother-daughter directive in Europe (if your holding owns the company as a subsidiary, there is no tax). And then the money is received by his Italian holding company. If he wants to pay from his Italian holding company to himself personally, he will have to pay regular taxes in Italy.

In this case, Giovanni owns the Netherlands BV directly, but he lives in Italy. So: Giovanni is 100% shareholder of “Armani Netherlands”. In this scenario, he makes the same amount of profit, and then pays himself €85.000 in dividend. If he does not own a holding, he will pay 15% dividend tax in the Netherlands. This means that he will pay (€85.000 * 15% = €12.750) in tax. And €72250 is received by Giovanni on his Italian personal bank account. He will have to find out what the personal income tax amounts to, in this case, in Italy.

So, how does it work with the required DGA salary? Due to the fact that Giovanni is not a resident in the Netherlands, there is no minimum salary requirement. However, he is allowed to pay himself a director salary from The Netherlands, and pay tax in The Netherlands, but this is optional. If you have any questions, feel free to contact Intercompany solutions for more detailed information about this topic.

We deal a lot with foreign entrepreneurs who want to start an entirely new business in the Netherlands, in order to expand their expertise and company’s reach. But did you know; that you can also choose to buy an already existing (successful) Dutch company? In many cases, this can prove to be a good investment, as it saves you a lot of time and effort related to establishing a new company. For example, you won’t have to:

These are just a few advantages of buying a company that already exists. Nonetheless, buying a company also includes necessary research and work. You also need to take into account that you will need capital to be able to acquire a company. In this article, we have already explained the basics of mergers and acquisitions. We will now further outline the steps you need to take, when you want to buy a Dutch company.

Some interesting background facts

Did you know; that around 15% of all company owners in the Netherlands foresee that they will sell their business within the next 5 years? When you calculate this figure to a yearly number, this means that roughly 20,000 Dutch companies are sold every year. This means, that there’s a good chance that a company within your specific niche will be sold in the near future. So in essence, entrepreneurs are often just as interested in companies, as they are in goods and services. Even though you will have to invest a substantial amount of money, buying an existing company assures you of instant profits from day one. Research by the Dutch bank ING shows, that this form of entrepreneurship has the highest chance of success, since the basic building blocks are already in place.

The basics of the purchasing and financing process

In general, a very structured and systematic approach works best when acquiring someone else’s company, as this prevents you to unnecessarily lose time on something that might not be worthwhile in the end. This is also where due diligence becomes important, so you know what you are buying. Also, when you plan things from the start, this will inevitably provide you with a clear and concise overview and timeline. Growth acquisitions, as well as management buy-ins, currently offer plenty of financial opportunities. You always need to take into account, that a successful purchase transaction does take time. A structured and systematic approach prevents unnecessary loss of time and provides an overview.

When you want to acquire a company, Intercompany Solutions can help you with several important steps during the process. For example: we can investigate proper financing solutions for you. We have many contacts within banks and other financial institutions, making it possible for you to buy a business that might be outside your current financial scope. This way, we can also introduce you to suitable investors. Next to banks and investors, there are other lucrative opportunities to finance your new business, such as factoring and crowdfunding. If you already have a rough idea about the type of business you are looking for, we can help you with searching for something that matches your expectations. We can also assist you throughout the entire process, by taking care of the negotiations and contractual settlement. We will now further outline the complete acquisition process, making it possible for you to become acquainted with the necessary steps to buy a Dutch company.

The process of buying a Dutch business

As we already discussed above, if you plan to buy a company in the Netherlands, it is essential that you prepare well for this endeavor. Buying a company is a careful process that involves a lot of actions and information. For example, how can you find a suitable company to buy? What are specific factors you are looking for? Do you want to operate in a certain niche? Or is the geographical location of the company more important to you? Once you have decided on what you want, you also need to figure out what the right value is for a certain company you have your eyes on. This involves a lot of planning and organizing, which is why we have assembled a list of general steps you need to take when you wish to acquire a Dutch company. All in all: when buying a company, first make sure you are well-prepared. Please read on to find out what is expected of you as an entrepreneur, when you want to expand overseas.

Create a buying profile

The first thing you need to do when you have the intention to buy a company, is choose the way in which you will execute this. In general, there are two ways of acquiring a company:

When you buy through a strategic acquisition, you essentially acquire another company to further your own current company. This will also enable you to grow and expand your share in the market. If you want to realize this, it is advisable to buy a customer or supplier, since you already benefit from being each other’s contacts. Next to that, with partners there is already a foundation of trust, which will make doing business together in the future a lot easier. As an alternative, you can also opt for buying a company that allows you to tap into new or larger markets. In any case; the acquired company will exist further under your current company’s name.

Alternatively, you can choose a Management Buy In. With this option, you buy a controlling ownership stake in another company, with the intention to replace the current management team. With this option, you can choose to buy an entire company, or just a part of the total sum of the shares. Often, this type of acquisition is chosen when the current management team provides below-par results, or when a company is visibly failing. If you have the expertise within your own company to take another company back to success, an MBI might be the best choice for you. Another option is the Management Buy Out (MBO). If you want to purchase a company where you are currently working, then this sometimes falls under the scope of business succession. If you are simply an employee, the MBO can be a good method. If you are taking over a family business, then the method of choice is business succession. Internal acquisitions involve other matters than external acquisitions, such as emotions, but also tax arrangements, such as the business succession scheme. It is a smart idea to look up information about all these methods, to see which one is best for your situation.

Once you have chosen your preferred method of acquisition, you need to create a good buying profile. This profile will help you to target your search, by making a list of things you want, and don’t want. There are several factors that you need to research when you make a buying profile:

Once you have created a buying profile, your search will be a lot faster and easier, since you narrow your query to fit your exact preferences. It will also allow you to pinpoint multiple companies, that might be of interest to you.

Create a business plan with an analysis

Once your buying profile is complete, it’s also very important to create a solid business plan. A business plan will make it possible for you to determine, whether the acquisition will benefit your current situation. You map out your strategy and expertise, whilst also focusing on the goals you have for the (near) future. If you want to create a complete business plan, there are certain things you should include:

You can find many templates online to create a good business plan, which will help you on your way. You can look at Dutch governmental organizations, such as the Dutch Tax Authorities and Chamber of Commerce, for plenty of in-depth information. It is also wise to request the seller of a company for a so-called ‘sales memorandum’. This will provide you with an ample assortment of figures, statistics and information about this company. Alternatively, you can also choose to outsource the process of creating a business plan to a specialized third party, such as Intercompany Solutions. With years of expertise and experience, we can create an attractive business plan for any imaginable company. This will also aid you tremendously, when you are looking for financing and/or investors.

Consider hiring an advisor

As we mentioned above, some steps of the process can be too complicated for some entrepreneurs to carry out themselves. This is due to the fact, that there are many financial, legal and tax aspects involved with buying a company. It may, therefore, be wise to hire a third party with experience in business acquisitions at an early stage. When looking for corporate advice, make sure you choose a team of qualified professionals who are legally allowed to provide services and advice. For example; not everyone can carry the title ‘accountant’ in the Netherlands, so make sure you research a potential partner well. Make sure the third party has legal, fiscal and financial knowledge, and knows all current Dutch tax laws and regulations. With many years of experience within the fields of business acquisition, Intercompany Solutions can provide you with all relevant services regarding this specific field of expertise.

View the acquisition offer and express your interest to the seller

Once you have finished all the research and created a buying profile and business plan, it’s time to look at actual companies for sale and contact potentially relevant sellers. With the buying profile you created, can orientate yourself on offers. You can look on special acquisition platforms to find a vast array of companies for sale, such as Brookz or The Company Transfer Register. Also note, that a lot of company acquisitions take place within certain networks. For example; business partners might decide to merge, or one partner buys the other. For this reason, it’s considered wise to share your plans within your own business network. You can also use social media to express your interest in a certain niche or market, and see what comes up. Next to that, you can also attend special events that invite entrepreneurs for special occasions.

Once you have actually found a suitable company (or multiple), you can contact the seller to let them know you express an interest in their company. It’s important that you research the company beforehand, to show that you have done your proverbial homework. Make sure you know enough about the company, in order for the seller to seriously accept your interest and offer. This will also provide you with the necessary confidence. Always keep in mind, that selling a company might be an emotional undertaking for the seller, since he or she has put a lot of work and time into the business. This means, that you will have to show them why you would be the best bet to lead the company into further success. This also enables you to show your expertise and ideas in your buying pitch.

Start the negotiations and record the agreements

Once you have found a potential company to buy and the seller is also interested in your offer, it’s time to start negotiations and creating the necessary paperwork. This means you will officially enter a purchase agreement, which also includes a lot of administrative tasks. For example, you will need to draw up a so-called “Letter of Intent’ (LOI). In this document, you basically record all the results of the negotiations between you and the seller. Keep in mind, that you are still able to change the LOI in this stadium, if anything changes. When negotiating, you will discuss a wide variety of things, such as (but not necessarily limited to):

As you can see, there is a lot that needs to be taken care of and agreed upon. We therefore highly advise every entrepreneur involved in an acquisition, to hire a third party that is specialized in such activities. You can then also take your partner or advisor to the negotiations, which can make a huge positive impact on the outcome of the negotiations and sale.

Have a valuation and due diligence carried out

One of the most important factors of any sale, is, of course, the price you have to pay. Keep in mind that you should never overpay, which is actually one of the biggest pitfalls when (starting) entrepreneurs want to buy a business. When you buy a house, you also look at houses in the neighborhood, to see if the valuation of the house is correct. Now, in business, this works similarly. The best thing to do is to let your financial partner or hired third-party draw up a valuation. This valuation will not automatically be the exact price you will pay, but it rather serves as a basis for the future negotiations about the final selling price.

There are several methods for valuation, each with its own benefits and characteristics. The Discounted cash flow (DSF) method is the most commonly used method for a valuation, due to the pure image of a company. With the DSF method, you look at the current and the future value of the company to acquire a clear picture. Another method is by calculating Goodwill, which means you look at the assets and liabilities of the company you wish to buy, but also at its capital gain. This can be its customer base, reputation and profit potential. A third method is calculating the intrinsic value of a company, which is basically its equity. This means, that you subtract the debts of the business from its Goodwill and market value. A fourth method implies you calculate the profitability of the company, which implies that you determine the enterprise value based on average past profits and the desired return.

All these methods work well, but it’s important that you choose the right one for your endeavor. Intercompany Solutions can help you find out, which valuation method suits your needs best. Next to the valuation, a due diligence research is also very important. With a due diligence, you look at factors such as financial and legal records. Is everything correct and justified by law? Are there any criminal activities connected to the company? Are there any persons working for the company, who might pose a future threat? Are there any current lawsuits or claims against the company? During the due diligence, all these potential risks are researched to find out, whether the information the seller has provided is indeed correct. You can look up more about due diligence on this page. When information turns out to be incorrect and, therefore, risks are involved, you can take countermeasures such as lowering the selling price. Alternatively, you can also choose to refrain from buying the company, if its misconducts might put you at risk in the future.

If necessary: arrange financing

In some cases, business owners already possess sufficient capital to buy another company. If this is not the case for you, know that there are plenty of options nowadays to attract funding. The most conservative option is a bank loan. If you have a good business plan, chances are a bank will provide you with a loan if they expect you to succeed with the acquisition. You can also opt for crowdfunding, which is especially worthwhile if you have an original or sustainable idea. Next to that, you can choose an informal investment, or accept capital from someone in your network. Out of experience, we know, that financing for buying a company often involves a combination of financing methods. Also note, that the seller sometimes leaves part of the sales price in the company you buy. You can then pay off any residual debt with interest. Feel free to contact us for more information about proper financing for your acquisition.

Complete the sale

Have you followed all the steps mentioned above, and also obtained enough capital to finance the company acquisition? Then it’s time to draw up an official purchase agreement, which is done by a notary. In the purchase agreement, all agreements from the previously drawn up LOI are incorporated. You will need to go to the notary and sign the purchase agreement, for the sale to become official. You should also take into account some additional costs for the transfer, that come on top of the agreed sale price. These are costs such as notary costs and the fee your advisor asks, but also costs for any due diligence investigations and, possibly, financing costs.

What happens after the sale?

When the business transfer is complete, you need to take care of extra arrangements and steps, such as registering with the Dutch Chamber of Commerce. When you become the new owner of a company, this means that you generally will receive a new Chamber of Commerce registration number. This is only unnecessary if the company continues to exist in exactly the same way as before. You will also acquire a Dutch VAT number, and you will have to open a bank account if you don’t already have one. Next to that, you will also have to inform all related parties about the sale, such as partners, customers and suppliers. We strongly advise introducing yourself to the company employees too, so they know who they will be dealing with from now on.

You also need to think about the future of the company, and all organizational aspects of the takeover. You should think about how you will fit both companies together in the best way possible. This raises questions, such as a possible change of the current corporate climate and the way you will involve employees in your new strategic vision. In essence, you can prevent a lot of issues and unrest within the company if you communicate your plans well and often. You should inform all involved employees about your future plans, and how you see them participating in those. In many cases, the seller will be happy to help you along the way. Just make sure that you have clear boundaries about your own responsibilities and that of the other employees, in order to prevent any unwanted interference.

Intercompany Solutions can advise you about company takeovers

If you are looking for a solid partner during the entire acquisition process, then Intercompany Solutions will gladly assist you every step of the way. We can inform you about all relevant aspects regarding the sale, such as the best acquisition method for your plan. We can also perform a due diligence investigation, perform a valuation of the company you need to buy and handle all administrative matters. We assist foreigners with starting and acquiring businesses in the Netherlands, which means we can also handle the entire registration process at the Dutch Chamber of Commerce. If you need financing, we can also point you in the right direction. With many years of professional experience within the field of business establishment, we can provide you with all the extra services you need to make a success out of the sale. Feel free to contact us anytime for personal advice, or a clear quote.

Sources:

https://www.ing.nl/zakelijk/bedrijfsovername-en-bedrijfsoverdracht/bedrijf-kopen/index.html

Whilst we have many clients whom aspire to start a  new company in the Netherlands, we also do business with already established companies. In many cases, it can be profitable to expand your business by either merging with another company or corporation, or acquiring an already existing successful business within your niche. If this business is in a different country than your own, you might be able to profit from several factors such as the resources and business network in this new country. Currently, the number of mergers is increasing rapidly in the Netherlands.

In 2021, 892 mergers and acquisitions were reported to the Social and Economic Council (SER). That is an increase of an astonishing 41% compared to 2020, when there were a total of  633 mergers. Never before have there been so many mergers and acquisitions as in 2021. Covid probably played a role in this. Mergers are an important survival strategy for struggling companies and a number of mergers that were previously put on hold came off last year.[1] It’s important to know about all the different types of mergers, in order to choose the best course of action for your business. What types of mergers can we distinguish and what are the various consequences? We will answer such questions in this article, plus provide you with all the information you need to make an informed decision.

What are mergers and acquisitions exactly?

Mergers and acquisitions is a generally known term, that effectively describes the consolidation of businesses and/or assets. This is realized via various types of financial transactions, such as  acquisitions, mergers, tender offers, consolidations, the purchase of assets, and also management acquisitions. The term mergers and acquisitions can also refer to the departments housed in financial institutions, which deal in related activities. Please be mindful about the fact that both terms are used interchangeably sometimes, nonetheless they both have a very different meaning. When we speak about a merger, then we mean that two or more companies are merging and thus, they form a new legal entity with only one name. When we talk about acquisitions, we speak about a company buying another company. Later in this article, we will discuss the differences in detail.

Why choose a Dutch company?

The Netherlands is a perfect country for start-ups, as well as already existing entrepreneurs. With a very vibrant and lively business market, excellent infrastructure and many interesting options for collaboration, you are sure to achieve success here if you are willing to work hard for it. There is also a very active market for mergers and acquisitions, which offers plenty of possibilities for both Dutch target companies and foreign target companies. The atmosphere in the Netherlands is particularly suitable for entrepreneurs and offers many possibilities for growth and expansion. Due to the fact that the holding regime in the Netherlands is so efficient and effective, Dutch holding companies are often involved in many large international mergers and acquisitions. Sometimes as buyers, sometimes as sellers, and in some cases even on both sides. This is also the reason many foreign entrepreneurs set up branch offices in the country, since it provides them with a stable and solid network to expand and grow their businesses.

Different types of mergers and acquisitions

If you want to value any type of business objectively before you invest time and money, you should always look at comparable corporations or companies within your specific industry using metrics. But before you value a company and its assets, you should familiarize yourself with the many ways you can acquire a company, or merge with one. It is therefore important for you to have insight into the different forms that are used when merging with a company, or acquiring one. You need to be able to distinguish between these forms, because the form influences factors such as the nature of the personnel consequences, like whether  the staff will have a new employer, and the way in which the decision-making takes place.

1.      Legal merger or division

A merger means that two or more entities will merge into one single new legal entity. Thus, when parties wish to continue together in a legal unit, they may decide to legally merge into a single legal entity. This is made possible, due to the fact that a new legal entity is established, into which the two merging parties merge. There are other possibilities, of course, such as merging into a receiving entity. This means that one company merges into an already existing other company. The consequence of a legal merger, is that all rights and obligations are transferred that rest on the legal entities. So, that also applies to employees of a company, since a merger might mean that they get an entirely new employer, including a new contract and different working conditions. The opposite of a legal merger is the legal division, in which one legal unit is divided into two or more new legal units.

2.      Administrative merger

When a company doesn’t own shares, such as a foundation or association, then it is not possible to transfer any kind of control with the sale of shares. Foundations, for example, don’t have shareholders. In such cases, you can opt for a legal merger as described above, but another option is an administrative merger. In this case, the Board of Directors of two or more foundations will need to consist of the same persons. Also, in some cases, the Supervisory Board of these foundations will also consist of the same persons. If you look at it legally, the foundations are still separate entities that also separately employ staff. Nonetheless, the board needs to strive to make decisions that are the same for all foundations involved. In many cases, after an administrative merger a legal merger also follows. In some cases, the work councils of the foundations involved also work together, but this is not a necessity. Sometimes the work council of a foundation wants to remain independent, in order to be able to represent the interests of the foundation adequately.

3.      Cooperation agreement

A slightly less regulated form of a merger is a cooperation agreement. When you want to combine expertise and knowledge, you can decide to carry out certain activities together with other entrepreneurs or businesses. The content of the cooperation agreement is decisive in order to clarify what the consequences of that cooperation may be for the companies concerned. It’s possible to operate under your own name, but you can also decide to set up a new company together in the long run. Or merge a company into another one. Often a cooperation agreement acts as a first step, which can later be followed by a more definite step based on one of the merger variants mentioned above.

4.      Selling the shares of a company

Many companies have placed their business activities in a private or public limited company, within a holding structure. This provides the advantage that, through the sale of the shares, the economic ownership of the company is transferred. This also goes for the legal ownership, and the control over the ownership. The simplest form of a corporate takeover is the scenario in which an owner, who owns 100 percent of the shares, negotiates with a buyer and as a result, a purchase agreement is entered into that sells the shares to the new owner. There are two special forms of share transfer, which we will outline below.

4.1  Via a public bid

This only applies to companies that are listed on the stock exchange. The stock exchange rules contain all kinds of special rules and regulations, that apply when a company wants to make a bid for the shares of a listed company. If you wish to take over another company, it is wise to inform yourself about these specific rules. It is assumed that, when it comes to a so-called 'friendly takeover', the works council of any corporation has an advisory right. A friendly takeover means that the offer is supported by the board of the company that is being taken over. In the event of a hostile takeover, where the offer is not supported by the management of the listed company, there is no intended rule or decision that dictates that the entrepreneur who is trying to take over the company must ask its works council for advice.

4.2  Via an auction sale procedure

When you choose an auction sale procedure, then this means that you are trying to interest several parties in the company and have them bid on the company. This can take place in multiple rounds. First, a so-called 'longlist' is drawn up of interested parties who are allowed to make a non-binding offer. From this list, the entrepreneur chooses a number of parties who are allowed to view even more information and are then asked to make a binding offer: this is the shortlist. From these bids, one, or sometimes several parties, are then admitted to the final negotiations. Once these negotiations have been concluded, one buyer remains. The company then concludes a preliminary agreement or agreement under conditions with this buyer.

5.      Asset transaction

Unlike the sale of shares, in an asset transaction the company doesn’t sell its shares, but rather specific activities the company is known for. In this variant, the employees who transfer will have a new employer: the legal entity that was first their employer will not be transferred. Only the assets will be taken over by another legal entity, which will also become the new employer. Thus, a lot of attention will therefore have to be paid to the personnel consequences. It may also be that the company for which the works council has been set up ceases to exist, and the activities merge into the buyer's company. Do to the complexity of this type of takeover, the purchase agreement will also be a much more extensive document than a purchase agreement based on the sale of shares. This is due to the fact that it must describe exactly what is being transferred, down to every single asset in detail, for example the machines, the customer base, the orders and the stock amongst possible other things. It also needs to describe what rights and obligations are attached to the assets. Furthermore, the purchase agreement will have to describe which activities will pass and also which staff members will transfer to the new company.

6.      Tender procedure

In (semi-)public sectors, there is something that takes place which is named a tender procedure. This entails that some projects and work are outsourced to third parties. Interested parties can then register to carry out certain activities, for example certain services or care contracts. An interested party who wants to participate in a tender, makes a binding bid to carry out certain activities and must, prior to actually making a bid, seek advice from the works council of the organization about the bid. Conversely, an entrepreneur who currently carries out the activities to be tendered, but decides not to make a new bid, will also have to ask the works council for advice, because that actually means that those activities will need to be outsourced to someone else as soon as possible.

Because the concession then passes to another party during the tender, all kinds of consequences that directly impact the staff can occur. This is why such changes are extremely important for a works council and thus, they need to be informed about them. A variant on this scenario is the case in which an entrepreneur wants to outsource certain activities. This can be anything, ranging from catering services, human resources tasks to ICT activities. Therefore, this entrepreneur issues a tender, just like public organizations do. Interested companies can make an offer on the basis of the list of requirements, as drawn up by said entrepreneur. It may be important for the works council to be informed about this list of requirements at an early stage, and to be given the opportunity to propose changes to it.

7.      Privatization of a public company

A slightly more rigorous approach to the tender practice is the privatization of (part of) a public organization. This is a special form of transfer, that occurs when the government decides to transfer part of the tasks previously performed by a public legal entity to a private party. Public legal entities that perform such tasks are, for example, the State, a province or a municipality. Sometimes it can be cost-efficient, or simply more effective, to outsource certain tasks to a private legal entity. There is a rather large consequence when this happens for the employees, though. Because as a result of the privatization, civil servants will be given the status of employees. In the case of privatization, all kinds of different procedures need to be set up to achieve such a change. The reverse scenario, in which an activity passes from private hands to the government, is called deprivatization.

The role of the Dutch ACM

The Netherlands Authority for Consumers and Markets (ACM) is an organization that ensures fair competition between businesses, and protects consumer interests.[2] In the case of major mergers and acquisitions, meaning that large corporations are involved, these must be reported to the ACM. Does a merger or acquisition create a company that is so large and powerful that it affects the competition? Then you need to take into account that the ACM will probably not grant permission for a merger or takeover. Does your company want to merge or take over another company? Then you must report this to the ACM, if:

Does your company and the company you are interested in stay below the amounts mentioned above? Then you do not have to report the merger or acquisition to the ACM. When you and your company exceed these turnover thresholds, but you do not report a merger or acquisition to the ACM, then the ACM can impose a fine.[3]

The importance of due diligence

Due diligence is described as a legally binding process, in which you as a potential buyer evaluate the assets and liabilities of the company you are interested in. This ensures that you make a well-informed decision, as opposed to buying or merging with a company blindly. In short, due diligence is like an audit or investigation, which is carried out to confirm or reject details or facts regarding a matter under your consideration. In the financial world, before someone enters into a transaction with other parties, due diligence is the requirement to examine the financial records of this party in order to know what you are up against. When considering a merger or acquisition, always remember to perform a due diligence investigation. This entails you checking the financial, fiscal, legal and commercial aspects of the third parties involved. This way, you are able to create a very complete picture about the company you intend to buy or merge with.

Due diligence basics you should know about

When choosing a company to merge with or buy, there are some basic factors you can take into consideration, in order to make a strategically smart move. Here are some specific things you should always remember when looking at other businesses:

Intercompany Solutions can assist you with due diligence, making it possible for you to invest your time and money in a company that meets all your expectations.

What can Intercompany Solutions do for your business?

Next to due diligence, we can assist and advise you on many other matters related to mergers and acquisitions and the general establishment of Dutch businesses. You can think about topics such as the following:

We have an experienced multidisciplinary team with people who have extensive backgrounds in the fields of law, accounting, tax and human resources. Feel free to contact us anytime for advice, or a clear quote.  


[1] Whilst we have many clients whom aspire to

[2] a  new company in the Netherlands, we also do business with already established companies. In many cases, it can be profitable to expand your

[3] https://www.rijksoverheid.nl/onderwerpen/mededinging/fusies-en-overnamesIf this business is in a different country than your own, you might be able to profit from several factors such as the resources

Many entrepreneurs start with a sole proprietorship, only to want to convert their business at a later stage to a Dutch BV. There are many reasons to convert your sole proprietorship to a private limited company, most of which we will discuss in this article. One main reason is the fact, that above a certain income level, a Dutch BV becomes interesting for taxation purposes. This means you can save quite some money on an annual basis. Probably every entrepreneur has therefore asked him- or herself  the question, whether it might not be more convenient to convert a sole proprietorship to a Dutch BV, or vice versa. In order to answer this question, several factors play a substantial role. We will discuss a number of advantages as well as disadvantages of changing the legal entity of your company to a Dutch BV, and we also inform you about the necessary steps you will need to take  to accomplish this.

What is a Dutch Private Limited Company (BV)?

One of the most chosen legal entities in the Netherlands is the Dutch BV, which is comparable to a private limited liability company. Book 2 of the Dutch Civil Code regulates the Dutch private company with limited liability. It is a company with legal personality with a share capital divided into shares, in which each of the shareholders participates for one or more shares. If you want to incorporate a Dutch BV, you will have to go to a notary to realize this in order to obtain a notarial deed of incorporation. Since the BV is a legal entity, this means that it is an independent entity with rights and obligations. This also means the BV is independently subject to corporation tax. The shares of any BV are only transferable in a limited circle, depending on the statutory regulations regarding this matter. For any transfer other than that which can freely take place pursuant to the articles of association or the law, the articles of association of the BV must contain a so-called blocking arrangement, or an approval or offer procedure.

Limited liability means that the shareholders are not personally liable for what is executed on behalf of the BV. Every Dutch BV has a general meeting of shareholders and a board of directors. Those who are shareholders are kept in the shareholders' register. The general meeting shall, within the limits set by law and the articles of association, have all the power that has not been granted to the board of directors or another person. The board is charged with managing the BV. And, thus,  represents the BV in and out of court. From the 1st of October 2012 it is possible to set up a Flex BV. This legislation applies to both new and existing BV's. The most important change that came with the implementation of the Flex BV is the abolition of the minimum capital of 18,000 euros one should invest. This was a very welcome change, since it allowed many start-ups a serious chance to compete, even without any starting capital. Nowadays, a Dutch BV can be established with any desired capital; even also a capital of 0.50 or 0.10 euro cents is sufficient. You also don’t need auditor's report anymore for the transfer of goods, and there is much more flexibility when it comes to the creation of your articles of association.

Advantages and disadvantages of owning a BV versus a sole proprietorship

Establishing a sole proprietorship is a very good way to start a small company, that you expect will grow during the first few years. You can benefit from several tax deductions, as well as relatively small start-up costs. For example, you don’t have to go to a notary to establish a sole proprietorship. If you are a freelancer, this type of business is also very suitable for you. Nonetheless, there are some disadvantages to a sole proprietorship. For starters, you are personally liable for anything you do with your company, including the creation of debts. If your company fails, you need to take into account that the creditors have a right to demand anything you owe from you personally. Also, as we have mentioned before, it is more profitable to establish a Dutch BV above a certain amount of yearly profits.

Advantages of owning a Dutch BV

As already explained above, one of the main benefits of owning a Dutch BV is the reduction of risks for you personally. This is due to the fact that the private assets of the director or the major shareholder are separated from the assets of the BV. Next to that, you also enjoy certain tax benefits. The annual profit of a Dutch BV up to € 200,000 is taxed with a percentage of 19% and above this amount with 25,8% corporate income tax. The income tax on profits distributed by the BV, the so-called AB levy, is 26,9%. As a result, the combined taxation of high profits distributed by the B.V. amounts to 45.75%. (25,8% VPB + 74.2% x 26,9% IB). Which means a rate advantage of 6.25% compared to the top income tax rate (52%). For distributed profits up to € 200,000, the rate benefit of the BV is much higher: (15% VPB + 85% x 26.9% IB) = 37,87%. If you subtract this from the 52% rate, this equals an advantage of 14,13%.

If the profit is not distributed directly by the BV, there is also a liquidity advantage in the BV of respectively 26,2% and 37% (the difference between 52% income tax and 25,8% and 15% corporation tax). If you own a company and  need the cash flow for the growth of your company, then the BV is a very interesting option for you. The same goes for occasions in which you need to repay a loan or investor. In terms of loss relief, the carry back term of the BV is 1 year, whilst for a sole proprietorship this is a 3 year-period. In order to be able to settle losses carry forward, a period of 9 years applies to the BV and to the sole proprietorship.  Normally, carry back requires a loss relief decision. However, a provisional loss relief of 80% can already take place by means of the corporate income tax return. 

Furthermore, a director of a BV can build up pension rights at the expense of the profits of the BV. The extent of these rights depends on his years of service with the BV, as well as the salary the director pays himself. The owner of a sole proprietorship, who is entitled to self-employed deductions, can form an old-age provision via the Dutch fiscal old-age reserve (FOR). The annual allocation amounts to 9,44% of the company’s profits, with a maximum of € 9,632 in 2022. With higher salaries, a pension commitment by the BV often gives a better old-age reserve than the actual Dutch old-age reserve. Moreover, the size of the pension allowance is not, like the size of the old-age reserve allocation, assessed against the size of the company's tax assets. On top of that, business succession and cooperation as well as participation by employees or third parties can often be simpler and more advantageous for tax purposes with a BV, than with the sole proprietorship. The company must then be housed in a holding structure.

The disadvantages of a BV compared to a sole proprietorship

One of the disadvantages of the Dutch BV are the structurally higher administrative and advisory costs, when compared to a sole proprietorship. Nonetheless, if your profits start to rise, this becomes more of a small nuisance. Also; the Dutch BV has additional legal obligations. For example, publication of your yearly numbers in the Dutch trade register is compulsory, next to the fact that you need to pay yourself a minimum salary on a yearly basis. So you need to be sure that you can make a sufficient amount of money, in order for a BV to be profitable in your case.

Other reasons that might influence your decision

There are also reasons to choose a Dutch BV over any other legal entity, that aren’t tax-related. Many entrepreneurs choose a Dutch BV due to the professional image this legal entity automatically emits to the outside world. People who own a Dutch BV are seen as stable, sustainable and professional. A BV also offers a very clear and concise organizational structure, making it easy for you to hire appropriate staff and create separate departments. The evasion of personal liability also plays a huge role, since the director and/or shareholder is in principle not liable for any debts the BV makes. He or she only runs the risk that the paid-up capital and any loans granted will be cancelled out by losses.

You need to take into account, however, that banks often ask shareholders to guarantee loans to the BV. If the BV cannot meet its obligations in the future, the shareholder will be held liable as a guarantor. In addition, a director is liable for debts of the BV if it can be proved that there is improper management. For example, in the event of inability to pay taxes, a timely notification must be sent to the Dutch Tax Authorities under penalty of liability. With the introduction of the flex-BV legislation, the role of the director in dividend payments has become even more important. Under penalty of liability, the director must check whether the position of the company allows the dividend to be paid. In simpler words; if it can be proven that you could have avoided certain negative situations, and yet you chose to go through with risky behavior, you can be held liable for any problems or debts related to the Dutch BV.

How do you choose what is best for you?

The answer to the question whether to choose a BV or sole proprietorship depends on many factors. In each individual case, it must be considered whether the advantages outweigh the disadvantages. You should ask yourself questions such as:

If you are unsure about which legal entity is best for you, feel free to contact Intercompany Solutions anytime. Our specialized team can assist you with making the best choice for you specifically, ensuring you choose the right type of legal form for your Dutch company.

Conversion of a sole proprietorship into a B.V.

Once you have made a decision about a possible conversion to a Dutch BV, you need to inform yourself about the ways in which this can be realized. In general, the conversion of a sole proprietorship into a Dutch BV can be done in 2 different ways:

We will discuss both options below, so you can decide for yourself which option is most efficient for your company.,

The silent conversion explained

It is possible to bring a sole proprietorship into a BV or NV, without the entrepreneur having to pay tax: this is named a silent conversion. We speak about a silent conversion if, in essence, the entire company is transferred to the BV at book value. In that case, it is assumed for tax purposes that the company has not ceased its activities. There are of course conditions attached to such a silent input. In general, the conversion of a sole proprietorship into a BV leads to a tax strike of the company. And this leads to tax settlement: the hidden reserves and tax reserves are taxed. However, the Dutch law offers entrepreneurs the possibility to transfer their company to a BV without it coming to a tax settlement.

Standard conditions for a silent conversion

If you want to change your sole proprietorship or cooperation into a Dutch BV, you need to submit a written request to the Dutch Tax Authorities. If your request is granted, this is done so by means of a decision, that is also open to objection. This means that if you don’t agree with the decision, you can make this known. In this decision, the Dutch Tax and Customs Administration will also impose any additional conditions on the silent conversion next to the standard terms and conditions. These include (but are not limited to) the following examples:

Which reserves aren’t silently inflowable?

Certain reserves cannot be silently transferred to a BV. Even with a silent conversion, the entrepreneur must therefore settle these reserves. These include:

Other important information regarding the silent conversion

With the silent conversion, it is very important that what the entrepreneur brings in actually qualifies as a material enterprise. It may happen that an entrepreneur divests certain activities before the contribution of his company. If the remaining activities no longer constitute a material enterprise, they cannot be silently transferred to a BV.  This essentially means, that you need to own a company before you can convert it, which is the case if you already own a sole proprietorship. Levying income tax on the release can usually be prevented by applying the strike deduction, the SME exemption and the strike annuity.

Commercially, the transfer does take place at real value. In principle, the value of the entire company is converted into share capital. For tax purposes, this so-called commercial revaluation (high share capital) has not been recognized since 2001. This means that the silently transferred capital gains of the sole proprietorship will be subject to an IB claim of 25%. If the entrepreneur registers the silent letter of intent with the tax authorities before 1 October of a certain year, the conversion can take place retroactively for tax purposes as of 1 January of that year.

The taxed conversion explained

A taxed conversion is realized, when the original company is transferred to the BV at its actual value. By transferring to the BV, the sole proprietorship ceases to exist immediately. Tax must then be levied on the thereby released silent and fiscal reserves, goodwill and the possible release of fiscal old-age reserves, as well as divestments. If the strike profit exceeds the amount of the maximum applicable strike deduction, the SME exemption and the strike annuity, are taxed. The BV places the acquired assets and liabilities of the sole proprietorship on its opening balance sheet for the actual values. When the entrepreneur registers the letter of intent with the tax authorities, the conversion can take place with a retroactive effect of up to 3 months. Practically, this means that a registration before the 1st of April means that the company can be driven for tax purposes from the 1st of January of that year, at the expense and risk of the newly established BV.

Which method is best for your company?

Of course, you are wondering which method might suit your needs as a company owner best. The answer to the question whether a silent or taxed conversion method will be more advantageous in your case varies. In general, if there is a (very) high strike profit, the silent method is preferred. In that case, only through this method can the levying of income tax on the strike profit be postponed in its entirety. Intercompany Solutions has many years of experience within the field of company establishment and registration in the Netherlands. We can assist you with every aspect of company formation, continuity and taxation. On the basis of the above, we can conclude that the legal form you choose for your business is very important.

In a lot of cases, company owners are not very well acquainted with Dutch business and tax regulations. This means that you might possibly miss out on tax deductions, and in general options to save money with your business. If you have any questions as a result of reading our article about company conversion, please feel free to contact us for a free consultation and helpful advice. We have developed many standard procedures that determine the consequences for you, if you switch from sole proprietorship to a BV by considering several variables.


[1] https://www.taxence.nl/nieuws/aan-geruisloze-inbreng-in-bv-kleven-voorwaarden/

[2] Idem

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

Member Of

menuchevron-downcross-circle