The Netherlands is known worldwide as a very stable country economically, with a healthy fiscal and political climate. A few mentionable reasons that have led to this image are the fairly modest tax rates when compared to neighboring countries. Furthermore, clear and efficient administrative processes and the innovative use of IT and technology in order to facilitate tax compliance also contributed to this end. Compared to the rest or the European Union (EU), the Netherlands has a very competitive corporate income tax rate, which is 25% for yearly profits exceeding 245,000 euros and 15% for profits below that amount.

This year (2021) the corporate tax rates will be further reduced to and 15% instead of 16,5%. The tax system in the Netherlands has many attractive features and benefits, which especially attracts foreign companies and investors. Nonetheless, this doesn’t mean that nothing dubious ever happens. The country has experienced some difficulties in the area of tax avoidance, both by national as well as international companies, which is mainly due to the beneficial taxation system.

The Netherlands has a competitive fiscal climate

The Netherlands is a major hub for foreign multinationals, investors and entrepreneurs. This didn’t happen without a reason; the Dutch tax regulations and ruling practice have been around for more than 30 years and thus, provide international company owners with proper clarity when they decide to branch out to the Netherlands. The stable government also attracts many multinationals due to the stability it provides. The Dutch Tax Authorities are considered to be both cooperative and accessible, which makes foreign business owners feel safe and secure. Unfortunately, like with all good things, there are also investors and companies that use the profitable system to avoid certain financial obligations.

Fraud is still prevalent in all layers of society

Some people are not familiar with the extraordinarily large amount that is invested in the Netherlands by foreign companies and investors. During 2017, for example, the total amount of foreign investment totaled 4,3 trillion euros. The shocking fact is though, that the majority of this money wasn’t invested in the Dutch economy at all, only 688 billion euros of the original 4,3 trillion. That is only 16% of all total foreign investments. The other 84% went into subsidiaries or so-called shell companies, which are basically only set up to avoid paying taxes elsewhere.

Looking at these enormous amounts, it becomes clear immediately that this is not done by small players to hide some illegal profits from taxation. Only the largest multinationals and richest individuals in the global economy can pull such vast amounts off. This includes Dutch companies like Royal Dutch Shell, but also many foreign multinationals such as IBM and Google. These companies have established branch offices, headquarters or other operations in the Netherlands so the payable amount of tax in their country of origin is reduced. Some well known brands and companies are technically Dutch, as they established their headquarters in the country for the sole purpose of tax avoidance.

In order to visualize this, here is an example. The Netherlands is a very small country with a relatively small number of inhabitants, compared to the rest of the world. And yet, in 2016 16% of all foreign profits claimed by US companies were accountable to the Netherlands. This would seem as if the Dutch order a huge amount of goods and/or services from the US, but reality is a bit more shady. The companies in essence parked the money in their Dutch subsidiaries in order to avoid taxation, or they moved the money via so-called letterbox entities, which transfer the profits to other suitable tax havens. This way, they can funnel it to locations with a 0% corporate tax rate and avoid taxation altogether. It’s a clever trick that has been going on for quite some time, but the government is finally doing something about it.

The EU and the Dutch government are both taking action

The Dutch State Secretary of Finance has proposed to put forward a new tax policy agenda, which the government has agreed to adopt in order to put an end to such practices. The first priority of this agenda is thus tackling the evasion and avoidance of taxes. The other priorities are the reduction of the tax burden in the labor sector, the promotion of a competitive Dutch tax climate, making the tax system green and also more workable. This agenda is aimed towards a better and more resilient tax system, in which loopholes such as the current tax evasion are not possible to construct anymore. The Secretary aims for a simpler, more comprehensible, more workable and also fairer tax system.

A withholding tax to counter tax avoidance

During this year (2021) a new system of withholding taxes will be introduced, that focuses on interest and royalty flows to jurisdictions and countries with low or 0% tax rates. Suspicion of abusive tax arrangements is also included in this system. This is to prevent foreign investors and company owners from using the Netherlands as a funnel to other tax havens. Unfortunately, due to the evasion and avoidance of taxes this way the country has been in a somewhat negative spotlight recently. The Secretary wants to improve the situation by tacking tax evasion and avoidance head-on, in order to make a swift end to this negative image.

EU directives on tax avoidance

The Netherlands is not the only EU country that has been taking measures to eliminate tax fraud, as the EU adopted Directive 2016/1164 already during 2016. This directive lays down multiple rules against tax evasion and avoidance practices, which inevitably negatively affect the internal market. The rules are also accompanies by several measures to tackle tax avoidance. These measures are focused on interest deductibility, exit taxation, anti-abuse measures and Controlled Foreign Companies.

The Netherlands has chosen to implement both the first and the second EU anti-tax avoidance directives (ATAD1 and ATAD2), although the Dutch will implement even stricter standards than the standards required in the EU directives. Some examples include the absence of so-called grandfathering rules applying to existing loans, the lowering of the threshold from 3 to 1 million euros and the exclusion of the group exemption in the earnings stripping rule. Next to that, banks and insurance companies will be confronted with a minimum capital rule in order to ensure a more equal situation concerning debt and equity throughout all sectors. This will lead to a healthier economy and more stable companies.

The importance of transparency

One of the main factors that contribute to a healthy and viable tax system is transparency. This is particularly true when the need arises to tackle difficult problems such as tax evasion and avoidance. For example; fines that can be attributed to culpable negligence shall be made public, which in turn will also push accountants and tax advisors to execute their tasks with more diligence and honesty. If you want to establish a company or branch office in the Netherlands, we advise to choose a stable partner that knows all the necessary rules and regulations. Intercompany Solutions can assist you with the entire registration process, furthermore we can also help you along the way with accountancy services. You can contact us anytime for more information and friendly advice.

The most commonly chosen legal entity in the Netherlands is the BV company. The BV offers many interesting opportunities for business owners, especially if you expect to earn more than the 245,000 euros threshold. In this article we will explain in detail why the Dutch BV is a good choice as a legal entity, and we will also explain the history of the so-called flex BV. This will provide you with an ample amount of information in order to make a grounded decision regarding the legal entity to choose for your Dutch company or branch office.

The advantages of a Dutch BV Company

When you establish a Dutch business, you are required to choose a legal entity. Choosing the wrong or a not fitting legal entity in your situation can have unpleasant consequences for your business. Changing the legal form in a later stage is possible, but it is also expensive. In addition, it is basically a waste of money if you have to do this immediately after the company’s creation, because you have not sufficiently studied the possibilities beforehand.

In short, setting up a BV has the following advantages:

  1. The BV is a legal form with limited liability
  2. The compulsory starting capital is only 1 euro cent
  3. You only pay 15% or 25% tax on the profit of your BV
  4. You can divide your properties and financial risks between multiple BV’s via a holding company
  5. You can attract new investors through shares
  6. A BV emanates a professional impression

1.      Liability

A BV enjoys limited liability. This means that it is not the board of directors, but the BV itself that is liable for any debts. A director of a BV can only be held liable if there is evidence of improper administration. This applies when the accounts are not in order, or if the annual accounts have been submitted too late to the Dutch Chamber of Commerce.

2.      Low mandatory starting capital

This is one of the main benefits of a flex BV, which we will elaborate on later in this article. During the past, it was mandatory to invest a minimum starting capital of €18,000 when establishing up a BV. Nowadays, you can already set up a BV with a starting capital of only 1 cent. The threshold of high investment is therefore no longer applicable, which makes this legal entity much easier accessible to people who don’t own a large amount of starting capital.

3.      Low corporate taxes

When you own a sole proprietorship, you pay income tax on the profits. The highest tax bracket is currently 52%. The corporate tax rates that are calculated over your profits are substantially lower; currently only 15% or 25%. As stated above, this will drop even further this year. Please keep in mind that you will still need to pay income tax, when you choose to pay yourself a salary as director/shareholder. We can also assist you with our accounting services.

4.      Spreading risks via a holding company

If you choose to set up a BV, you will also be able to merge multiple BV’s into a so-called holding structure. By setting up a holding company, you indicate that several BV’s fall under one parent company. However, the holding structure is set up in such a way that these all remain separate BV’s. You therefore avoid the risk that all your companies will go bankrupt, if one of the BV’s goes down.

5.      New investors via shares

One of the main concerns of starting entrepreneurs and also already existing business owners is how to raise capital efficiently. If you own a BV, you can raise new capital fairly easily by issuing shares. Many investors prefer this way to invest their money, as being a shareholder means being at limited risk. All shareholders are only liable in a BV for the amount they have invested.

6.      A Dutch BV makes a professional impression

Setting up a BV includes much more work than setting up a sole trader company, for example. You will need to meet a certain number of requirements, and you have to have the deed of incorporation passed by a notary. This notary also has the duty to investigate the BV if he believes that something is not right. In addition, a BV must have its administration in order and an annual overview must be submitted to the Dutch Chamber of Commerce in the form of annual accounts. The chances that a BV has its business in order are therefore much greater, than in the case of a VOF or a sole proprietorship. The average Dutch person also knows this and thus, this contributes to the professional character of your company.

More information about the flex BV

Flex BV is a term used for all private companies that were established after 1 October 2012. On that date, new regulations regarding the BV were introduced. The requirements to be able to set up a BV were then relaxed, hence the term flex BV. A flex BV is a regular BV. The reason that two terms have entered circulation is due to a change in the law. The law on simplification and flexibility of existing BV law meets long-expressed demands in many areas. Because of the simplified rules and procedures surrounding the establishment of a BV, the BV was quickly renamed flex BV as a legal form.

Introduction of the Dutch flex BV

The flex BV was introduced by a bill that was passed by the Dutch Senate on June 12, 2012. The bill concerns the introduction of the flex BV and a change in governance and supervision. The law became legally binding on 1 October 2012, and the establishment of BV’s changed from that moment. Some things that haven’t changed are the notarial deed of incorporation of the flex BV, stating the name, registered office and purpose. The declaration of objection also does not have to be mentioned, after previous abolition. Furthermore, the contribution of a minimum (nominal) value of the shares in the flex BV, placed at the time of its formation, will not change either.

However, from 1 October 2012, it is sufficient that the notary receives knowledge by means of a bank statement, which share capital has been transferred to the BV from the private bank account of the founder. Before 1 October 2012, this procedure was a lot more complex. As a result, the process of setting up a Dutch BV is now much faster. In a number of situations, the auditor’s report has been abolished. This was necessary, if a transaction between the founder and the flex BV was carried out in the first two years after the first registration of the BV in the trade register.

Minimum capital to start a flex BV

One of the largest changes that has taken place concerns the capital of the flex BV. The previously required minimum capital of €18,000 has been completely abolished. However, the BV will have to continue to issue shares upon incorporation. The shares indicate to whom the profits and assets of the flex BV belong. This is especially important, when the flex BV has several shareholders. The new law states that the nominal value of the shares will be linked to the determinability of the share and therefore also to the relationship between the shareholders. The nominal value of the shares is determined during incorporation. A minimum amount of 1 euro cent will have to be paid, according to the explanatory memorandum. For pragmatic reasons, we always set the minimum share capital at 1 euro. You are no longer obliged to hold the euro as the currency for your share capital, however.

Profits of a flex BV

The goals and destination of the profits of the flex BV will be determined by the General Meeting of Shareholders. If the Meeting wishes to pay the profits to the shareholder(s), the board will first have to carry out a distribution test contrary to the situation before 2012. This test determines whether the benefits do not jeopardize the progress of the flex BV. If the board opposes the profit distribution, it will not be allowed to continue. If the profit distribution does take place, the board will be liable for any possible negative consequences of the profit distribution. In addition, the shareholder(s) who receive the dividend may be required to return the profits. This provided that the shareholder knew about the objections to the distribution of profits, or could have reasonably suspected that the BV would not be able to continue to pay its debts after the profit distribution. The distribution test will be applied to all forms of distribution, except for the distribution of profits in shares (stock).

What else has changed?

Next to the abovementioned test and the lowering of capital, other things have changed too. The organization of the articles of association has been simplified. You can increase the share capital now without the need for an amendment to the articles of association, that aims to increase the share capital. The indication of the share capital in the statutes is no longer mandatory. The ‘nachgründung’ has also been abolished. As a result, the restrictions that applied regarding the transactions (such as assets/liabilities transactions) between founders and the established BV expire within 2 years after the registration of the BV in the trade register transactions.

It has also become easier to buy your own shares. The financial assistance ban has been abolished. As a result, it is no longer prohibited to provide security for the purpose of taking shares in the capital of the BV and to grant loans only to the extent permitted by the freely distributable reserves. In the event of a capital reduction, a creditor’s move is no longer possible.

Regarding the rights and obligations of shareholders

It is allowed to issue shares without voting rights and/or profit rights (dividend). For example, it might sometimes be easier to reward employees with shares. However, you must state in your articles of association whether or not meeting rights have been granted for this particular employee. The blocking rule is also no longer mandatory but optional. As a result, if you wish – if one of the shareholders leaves the BV– the shares no longer have to be offered to the other shareholders before they can be sold to someone else.

In order to enable you to act faster, decisions may henceforth be taken outside the general meeting. If the articles of association so provide, general meetings may also be held abroad. The notice period of shareholders and other shareholders for a general meeting is shortened from 15 to 8 days. As a result, the notice period in the articles of association is also automatically shortened to 8 days. This does not require a change in the articles of association. Articles of association can be changed more easily even if the BV has already been established. “Old BV’s” (meaning founded before 1 October 2012) are also covered by the Flex BV legislation, since a BV is essentially the same as a flex BV as we previously mentioned.

The transfer of shares for a certain period of time can be excluded from the articles of association. The shareholders may give instructions to the board, however the board is not obliged to follow them if this would be contrary to the interests of the company. Shareholders or shareholders who alone or jointly represent at least 1% of the subscribed capital may request the board (and supervisory board) to convene the general meeting. Shareholders may, under certain circumstances, be obliged to provide financing to the BV or to provide certain services/products to the BV if this is included in the articles of association. The articles of association may determine the voting ratio with regard to the taking of certain decisions and to what extent a shareholder can appoint, suspend or dismiss his own director or supervisory board member.

Regarding profit distributions (dividends)

Distributions can only be carried out, if the owned funds exceed any statutory and statutory reserves. Furthermore, benefits can only be made if the benefit test is met. The board’s approval for the distribution is required. Directors who knew or could reasonably have foreseen that the company would not be able to pay its due and payable debts afterwards are joint and severally liable for the amount paid out, unless proof to the contrary is provided. The shareholder or profit-holder is also obliged to repay the benefit he received, should the BV go bankrupt within one year of the payment.

Intercompany Solutions can inform you about all the benefits of a Dutch BV

You probably noticed that the creation of a flex BV has become much easier since the changes in the Dutch law system, which has made setting up a Dutch BV more attractive for many entrepreneurs. However, as far as liability is concerned, the legislator continues to strictly monitor any improper administration. If you want to know more about liability within a BV, how to set up a Dutch BV or how to branch out to the Netherlands, feel free to contact us for in-depth information and advice.

Once someone starts a business, they obviously expect to achieve success with their company and ideas. This doesn’t always turn out as expected unfortunately, since doing business inevitably comes with a certain amount of risks. The worst case scenario is bankruptcy, which will be followed by the closing of the BV company that was established. The following information is a guideline to help you understand the steps involved in closing a BV company. Be mindful that the articles of association (statutes) which were drawn up while forming the BV, may apply and provide further context to these steps. Also be aware of the fact that this guideline is not applicable when you change your legal structure, sell or transfer ownership, or file for bankruptcy.

Closing a Dutch BV company can be categorized by:

Dissolving the legal entity

A BV is a legal entity, this means you need to dissolve the legal entity before you can actually close the BV. This is done through an act of dissolution. The act of dissolution has to be approved during a general shareholders’ meeting. The minutes of this meeting need to contain at least:

You do not need a notarial deed to execute this. Your statutes may contain additional guidelines, such as a minimum attendance and minimum amount of votes. Once taken, an act of dissolution is final and cannot be reversed without the interference of a judge. After the decision for dissolution is taken the phrase “in liquidation” need to be added to the statutory name of the legal entity in all the documents, announcements and correspondence. This helps all relevant and related parties know that the BV will be dissolved. Finally, the act of dissolution needs to be deposited at the Dutch Chamber of Commerce. It is important that the liquidator is easily identifiable in this deposit for (possible) creditors.

Liquidating assets

After filing and depositing the necessary paperwork for dissolution, your BV does not automatically cease to exist. You first need to identify if the BV has benefits. If there are no benefits, the BV ceases to exist immediately after the act of dissolution. In this case you have to inform the Chamber of Commerce of the dissolution of the BV and the legal entity. If there are benefits, then you need to identify whether these are sufficient to cover all debts or not. If there is sufficient capital to cover all debts, the BV must continue to exist until all of its assets are liquidated. This can be done through either regular liquidation or turbo liquidation.

Regular liquidation

Regular liquidation applies if the BV still has assets, such as (but not limited to): real estate, inventory and liquid assets. These need to be liquidated before the BV can be closed by the person appointed as liquidator in the act of dissolution. Surpluses need to be split amongst shareholders by the liquidator. This needs to be documented by showing the size, composition and justification of the surplus. Additionally, a plan of distribution must be deposited at the Dutch Chamber of Commerce and to the person in charge of storing company papers. Furthermore, it is required to place an ad in the newspaper informing readers of the dissolution and where they can find the stored company papers for inspection.

Please note that creditors may come forward up to two months after filing for dissolution and object to the documentation through a petition to the court. In the case of an objection, the liquidator has to deposit the objection at the Dutch Chamber of Commerce and run another ad notifying the readers of the objection. The same applies once the court makes a decision on the objection. Liquidators are not allowed to make payments to shareholders and or beneficiaries without authorization from the court during the objection period. Payments to shareholders and beneficiaries can be made only if no objections are made within the objection period by following the proposed plan of distribution. Please be informed that there is a specific procedure, if you cannot identify all beneficiaries. It is advised to run an advertisement to inform the readers of the benefits to be paid. If the beneficiaries still have not been identified after six months, the balance can be paid on consignment under a statutory provision and preserved by the state.

The liquidation phase ends immediately, once there are no more benefits. This also needs to be reported to the Dutch Chamber of Commerce. The person appointed to store all documents and records must now do this for seven years and inform the chamber of commerce of this task within eight days, also providing them with their name and address. After this the Chamber of Commerce will close the file of your BV. In case of court involvement, you need to notify the judge within a month after the liquidation ends.

Turboliquidation

Turboliquidation is only possible if the BV has no benefits, debts and/or outstanding invoices. Additionally, the BV may not be a shareholder or owner of another BV and the shares may not have been certified and sold yet. In this case you can skip the liquidation phase as there are no assets to liquidate. You will also need an act of dissolution and deposit this, alongside other forms, including a closing balance at the Dutch Chamber of Commerce. After this is all done, the legal entity ceases to exist immediately. In 2020 the Dutch government made new rules regarding turboliquidation. Under these rules creditors gain more rights, if companies have been liquidated before they can file claims. Next to that, shareholders may be held accountable personally.

Insufficient benefits and bankruptcy

If you have insufficient benefits to pay off your debt, then you will have to file for bankruptcy. In this case you will usually sign a creditors’ agreement. This agreement generally encompasses that (some) claimants receive a percentage of their claim. If this step is neglected you may privately be held liable. If new or outstanding debts show up after the BV has already been closed, the liquidation process may be reopened by the liquidator. In this case the legal entity of the BV will come into existence only for settlement of the debt. The BV will still stay dissolved.  If you want to know more about this subject or are seeking professional assistance, Intercompany Solutions can help you during every step of the process. Feel free to contact us any time, also please know that your personal details will always be handled with discretion.

With Brexit being a main topic during the past years, it’s easy to overlook other countries and economies in relation to the Netherlands. Just like many British companies, there is a substantial amount of African business owners who have made the decision to move their companies to Holland or set up a subsidiary here. Due to the positive economic climate and many international trade opportunities, setting up a business in the Netherlands is seen as a lucrative expansion for many investors and entrepreneurs.

Intensification of trade between the Netherlands and Africa

During the last years, there has been a multitude of trade missions between Africa and the Netherlands. The Netherlands-African Business Council has hosted these in order to research and encourage international cooperation between the various countries, in order to facilitate the exchange of experience and assets between Dutch and African entrepreneurs.[1] The goal is to establish solid business relationships and open up possibilities for international trade and partnerships.

This approach offers many African business owners to get acquainted with the Dutch business climate, the many opportunities here and thus; possible expansion of their businesses. Next to already existing large corporations opening up branch offices, there is also a growth in small businesses being set up in Holland. Freelancers and online entrepreneurs can reap many benefits of owning a Dutch business and having access to the European Single Market.

Benefits of a branch office in the Netherlands

The Dutch offer many interesting opportunities and benefits when starting a company in the Netherlands, or when investing in an already existing enterprise. There are many sectors in which the Dutch excel, such as digital services and e-commerce, agriculture, the tech sector, healthcare, innovative concepts and many other sectors and business types. You will also find an extremely well-educated workforce that is almost entirely bilingual or trilingual even.

Due to the excellent infrastructure in the Netherlands, you have almost every other EU country at your disposal. Rotterdam houses one of the largest ports in Europe and the world, whilst Schiphol offers you opportunities for worldwide shipping. There are also many active freelancers in the Netherlands from all over the world, making it easy for you to find qualified personnel and assistance. Due to its international recognition as a very stable country economically, politically and culturally, you can greatly benefit from a branch office in the Netherlands. Especially when you are currently based outside the EU, such as in Africa.

Examples of successful African business ventures

During the past few years, multiple South African organizations and companies have decided to expand to the Netherlands. During an official ceremony in Cape Town, three companies have announced their business expanding to The Hague. The Hague has been known for many years as the international city of peace and justice, hence the expansion is also a bit symbolic. The companies (Hystead Limited, IoT.nxt, and NuvaLaw) were assisted by various Dutch governmental institutions such as the Municipality of The Hague, The Hague Business Agency, Netherlands Foreign Investment Agency (NFIA) and InnovationQuarter. These organizations are actively involved in attracting more African companies to the region, as this will benefit the diversity and eco-system of companies settled in the Netherlands. [2]

Foreign companies are seen as having a very beneficial impact on the economy in the Netherlands. When foreign entrepreneurs and investors put effort into opening branch offices in the country, trade becomes more diverse and often also more friendly for the environment. More and more trade agreements are being made with underdeveloped countries as well, in order to boost local economies and companies. During the past decades the number of foreign products in the Netherlands grew exponentially, mainly via initiatives like these. A branch office in the Netherlands might result in a substantial business growth for any entrepreneur, making it a solid move for expanding business activities all over the world due to Holland’s fantastic infrastructure.

How this will affect the South African companies

All three companies have expressed their enthusiasm regarding the expansion. The COO of Hystead Limited mentioned that the management offices in the Netherlands will have a positive influence on their growing shopping center portfolio. The CMO of IoT.nxt states that the office in The Hague will function as a base for serious international expansion. Next to that, the Strategy Director at NuvaLaw hopes to partner up with multiple insurance companies in the region as well as beyond. Having a branch office strategically placed in a city like The Hague can provide you with an ample amount of extra business opportunities, new clients, a highly skilled potential workforce and many options for networking and building a stable contactbase.[3]

How to set up a company in the Netherlands?

If you are currently an African citizen or your company is based in another non-EU country, then you will need to take some extra steps in order to establish a business in the Netherlands. As opposed to EU investors and citizens, you will need to obtain one or multiple permits in order to be able to start up or expand your business activities. For a lot of people this can be quite a complicated task, as there are many steps involved, and you will also need to prepare the necessary documentation.

In all these cases, Intercompany Solutions can assist you with every detail and step you need to take. We can tell you in detail which documents you will need to prepare, which information we need from you and where to send the paperwork. In simple cases we can perform all the steps in just a few business days, making it possible for you to immediately start your business activities. If you need to obtain certain permits, this might take a while longer. Please take a look at our general procedure for more information about starting a company or a branch office in the Netherlands. If you have questions or would like to receive a personal quote, never hesitate to contact us for advice and information.

[1] https://www.nabc.nl/the-netherlands-african-business-council/about-us

[2] The Hague Business Agency. (2017, 29 November). Three South African Companies Open offices in The Hague Region. Link: https://investinholland.com/news/three-south-african-companies-open-offices-hague-region/

[3] Idem

Starting a business abroad or expanding your current business to another country might be a very lucrative step for you in many cases. The Netherlands is currently in the top list of destinations to expand to, due to many contributing and beneficial factors such as a very stable economy, membership of the European Union, fantastic infrastructure and a wide variety of flourishing key sectors. The Netherlands is located in the northwest of Europe, neighboring the United Kingdom, Germany, Denmark and Belgium. Holland has a current population of over 17 million people, which is quite a lot considering its relatively small area coverage of 16.040 square miles.

Nonetheless, the Dutch economy is in the top 25 of the world at number 17 with a GDP of $907.05 billion during 2019.[1] For such a small country that is no small feat! The Netherlands also acquired the 4th position in the World Competitiveness Ranking 2020.[2] Next to that, the Dutch are considered one of the ten leading exporters in the world, due to its strategically positioned Rotterdam port and Schiphol airport. You can expand your business in almost any sector here, as innovation is one of the countries top priorities. In this article we would like to familiarize you with some very interesting key sectors in the Netherlands, as well as the benefits these might offer for your business or business idea.

1.     The Agriculture and Food Industry

One of the oldest and most innovative sectors in the Netherlands is agriculture. There are many contributing factors that play a role in the huge success of this sector, such as the mild climate in the Netherlands, mechanization of agriculture, the geographical location, innovative technology and the very fertile soil. This doesn’t just put the Dutch in the forefront of agricultural innovation And technology, but also one of the top exporters of food and other agricultural products worldwide. The Netherlands has held the 1st position in the entire EU when it comes to international agricultural export for a long time, but also ranks 2nd in the entire world with only the US preceding the Dutch.

Needless to say; if you have ambitions within this sector, the Netherlands is an excellent opportunity to expand or start your business. The sector also employs around 5% of the entire Dutch labor force, so it will be relatively easy for you to find good and qualified personnel. Some of the well-known products the Dutch export are fruits like tomatoes, apples and pears, vegetables like cucumbers and chilies and of course an extensive array of flowers and flower bulbs, next to plants.

2.     The IT and Technological Industry

Directly opposite farming and agriculture is the highly advanced Dutch IT and tech sector. Due to the large amount of citizens living on a small space of land, the Netherlands is the most wired country of the entire EU. This proves to be a fantastic environment for tech innovators and IT businesses due to it being an ideal testing ground for new ideas. But it’s not just the large amount of connected people that make the country an interesting option for your start-up or expansion. Since tech is a hot subject in the country, the entire workforce itself is tech-savvy and in almost every case bi- or even trilingual. Next to that, you can expect high quality digital infrastructure, a very innovative way of thinking and culture and many subsidies granted by the government and semi-governmental organizations.

Dutch consumers are digital pioneers and frontrunners in general; a large portion of all citizens enthusiastically embraces new technology and digital applications. If there is something that can be managed, done or analyzed by an app, the Dutch will find a way to make this happen. Due to its high-quality digital infrastructure, the Netherlands currently have the 2nd place worldwide regarding online connectivity. This is mainly because a staggering amount of 98% of all households have broadband internet. Furthermore, the Netherlands houses the Amsterdam Internet Exchange (AMS-IX). This is considered to be a worldwide leader in digital data distribution. Below we will elaborate more on some noteworthy current topics in the Dutch IT and tech industry.

Home to many existing tech and IT giants

The Netherlands is an extremely popular country for IT companies of all shapes and sizes; from start-ups and starting entrepreneurs to already existing multinationals. Did you know that Holland houses multiple branch offices and even headquarters of companies like Microsoft, Google, Oracle, IBM and NTT? This makes for a highly innovative blend of already existing knowledge and experience, next to new pioneers who can add value with inventive solutions and interesting concepts.

Cybersecurity in the Netherlands

With The Hague as International city of Peace and Justice, the Netherlands are considered pioneers in cybersecurity and thus; also leaders within this sector in the European Union. The National Cyber Security Centre (NCSC) is considered to be the center of expertise for cybersecurity in the Netherlands. This organization highly encourages an active cooperation between businesses within this sector and the government. This doesn’t only add to the safety of the network, but also to the digital resilience of the country as well.

Many international organizations such as the International Criminal Court, Europol, NATO and the International Criminal Tribunal for the former Yugoslavia chose to base their operations here for this exact reason. Next to these organizations, the Netherlands also houses the largest security cluster of Europe which is named The Hague Security Delta (HSD). The HSD is a national network that consists of more than 300 member organizations, from the public as well as the private sector. These companies and organizations work together to promote and accelerate new cybersecurity solutions, following the ever-changing digital market. If you are interested in cybersecurity, the Netherlands would be a perfect place to start your enterprise.

Artificial Intelligence is constantly evolving

During the past decade technology has become more and more advanced, ultimately resulting in the creation of AI. The Dutch are again pioneers within this field, as they recognize the massive opportunities big data driven AI can offer in the 21st century. Two years ago the Dutch launched the Strategic Action Plan for AI, which aims at integrating AI in several layers of society in order to reap maximum benefits. To this end three separate pillars were introduced:

  1. The capitalization on economic and societal opportunities for AI
  2. The advancement of AI knowledge through research & development and human capital
  3. The safeguarding of the public interest through the establishment of ethical AI guidelines[3]

Next to the action plan, the NL AI coalition exists in order to unite all partners such as the government, the entire AI and tech industry, civil society itself and a wide plethora of knowledge institutions such as universities. The unification is based on the purpose to accelerate developments in the field of AI in the Netherlands and internationally. This inherently attracted many international companies within this sector, such as Brain Corp, ABB and Wonderkind. The quickly growing sector and industry will provide interesting business opportunities for decades in the future.

Crossovers between the tech sector and other sectors

Since the tech and IT sector are so prevalent in the Netherlands, there are also many crossovers between this sector and many other sectors. Collaboration is a huge subject in the country, as it sets the base for constant evolution within the entire business sector. This can clearly be seen in several intersections between the tech industry and sectors such as smart farming, the Dutch gaming industry, the entire medical and health industry and the chemical and pharmaceutical sector. The aim is to build a sustainable, stable economy with maximum potential.

Accelerating digitalization even further

The Dutch government established the Dutch Digitalization Strategy in 2018, which is aimed at accelerating digitalization in various sectors. These include (but are not limited to) mobility, energy, healthcare, agrifood and also the laying of a firmer foundation of digitalization in sectors such as privacy, cybersecurity, fair competition and digital skills. The Dutch want to make it possible to become Europe’s digital leader, by basically equipping all Dutch citizens with proper digital skills. With a connection rate of 98% this is entirely possible.

3.     The Creative Industry

The Netherlands is the birthplace of some of the most influential artists of the last centuries. Historical artists like Rembrandt, Mondrian and Escher have obtained worldwide recognition for their priceless artworks. There is a very vibrant artistic and creative community up until this day in the Netherlands, with Dutch cities as creative hubs where all forms of art and design can flourish. The Dutch are also well-known for their originality and entrepreneurial spirit, often resulting in unique crossovers between art forms and business sectors.

The Netherlands is ranked in the global top 10 regarding trade, brands and jobs. The Dutch advertising industry influences all other sectors, nationally as well as internationally. The Netherlands houses more than 30 universities and other knowledge institutions that are solely focused on art and design, such as the Royal Academy of Art in The Hague. These institutions are rather prestigious and require a lot of effort in order to even be admitted. This leads to a large amount of highly schooled and skilled artists, designers and other creative professionals that can prove to be beneficial for your brand on all levels. Creativity is a welcome subject in the Netherlands, and due to the high demand for professionals it is quite easy to set up a business in the Netherlands for yourself in the creative sector.

The fashion industry and major brands

One of the sectors Dutch excel at is branding. Due to the strategical position of the country it is very easy to serve customers all over Europe, as well as globally. This makes the Netherlands an extremely attractive destination for many internationally well-known brands, such as Nike, Heineken and Adidas. You will find a vast array of potential big clients, if your work is good enough. Amsterdam in particular houses some of the most cutting-edge branding agencies known in the world such as Ridley Scott, Anomaly and 72andSunny. The crossover between creativity and business in the Netherlands is almost indistinguishable at times, due to the fact that these two have been seamlessly interwoven on the Dutch market.

Another trademark of Dutch inventiveness is the Dutch fashion industry. With a focused effort on sustainability and creativity, the Dutch have produced some unique designs in the world of fashion. This, in turn, attracted many internationally well-known existing brands such as Patagonia, Michael Kors and Tommy Hilfiger to the Netherlands. The before mentioned knowledge institutions bring forth some of the most exceptional talents in the field; from designers to marketeers and creative directors. If you are interested in setting up a company is the fashion industry, the Netherlands will offer you many opportunities to solidify your business.

Media and broadcasters

Another globally known industry from the Netherlands is the media. Some of the biggest companies in the industry have branch offices here, such as Netflix, Disney and Discovery. Both Amsterdam and Hilversum are considered hubs for media and entertainment companies. Did you know that the Netherlands is the third-largest seller and exporter of worldwide TV formats, such as The Voice and Big Brother? The whole sector is overseen by the Dutch Media Authority, which is involved in overseeing the distribution and content of more than 500 TV programs. If you always dreamed about a media company, the Netherlands might be an option for you.

4.     The Logistics Sector

The Netherlands is considered a world leader in the logistics sector, covering trade and industry. A hefty amount of the Dutch national income is earned abroad, due to consistent and sustainable economic growth in this sector and constant room for improvements. With the port of Rotterdam and Schiphol airport within a two hours drive from every location, the entire globe is at your disposal if you choose to establish a logistics company in the Netherlands. The EU is also perfectly accessible in any direction with regular means of transportation.

The logistics sector is mainly focused on providing the best products and services via innovation, attracting talent and a good positioning of sectors nationally and internationally. Due to ever-increasing digitalization the entire logistics process is constantly updated and improved, which makes trade and transport faster and more efficient than ever before. The Netherlands currently has nine sectors in which they are considered global leaders: the so-called top sectors. These are the top priority investment wise, which is accomplished by not only financial investments but also tax incentives, removal of certain obstacles for trade and guarantees.

Background and objectives

In 2010 the Dutch Cabinet initiated the top sector policy. The logistics sector is one of the nine sectors in which the Netherlands excels, which makes the country a global leader in this sector. With an added value of 53 billion euros per year and 646,000 jobs, logistics is of great economic importance to the country. These are not only companies that transport or export products, but also logistics and supply chain functions within shipping companies. The Top Sector Logistics supports companies from the other (top) sectors; their costs consist of 8-18% logistics. For these companies, good logistics are decisive for timeliness and delivery reliability, and thus for their market position.

The Top Sector Logistics wants to make a maximum contribution to strengthening the international competitive position of the Netherlands. The Logistics Top Team has drawn up an action program in which the ambition of the Top Sector is laid down: “In 2020, the Netherlands will have an international top position (1) in the handling of goods flows, (2) as a chain director of (inter) national logistics activities and (3) as a country with an attractive innovation and business climate for shipping and logistics businesses.”[4]

Needless to say, the logistics sector in the Netherlands will benefit your company one way or another. For example; if you plan on establishing a web shop to sell and distribute (your) products worldwide, the Netherlands may be one of your best options on the entire planet. Next to being a European Union member and thus, having access to the European Single Market, the Netherlands has many trade agreements with countries all over the globe. If you are active in the trade and transport sector yourself, you will find many interesting business opportunities in the Netherlands that might boost your company exponentially.

5.     The Water Sector

The Dutch are surrounded by water. Did you know that half of the country is actually below sea level? Yet somehow this seems to work just fine due to multiple innovative solutions that prevent this area to flood. Due to many historical floods and periodical problems with heavy rainfall, the Netherlands became an expert in water technology and sustainable usage of water in general. The Water Top Sector focuses on several areas within the sector, such as energy technologies for the re-use of water, protection of land and smart and safe ships. It consists of three separate clusters which we will describe below, namely Water, Maritime and Delta technology. The knowledge of the Dutch regarding these subjects is considered to be among the best of the world. The Water Top Sector is essentially a collaboration of industry, government and a wide plethora of highly developed research institutions.[5]

Water Technology

The quality of the drinking water in the Netherlands is considered amongst the best in the world. This is mainly due to the efforts of the water technology cluster. The knowledge and technology that the Dutch posses on this subject is being used worldwide. This also goes for knowledge and expertise in the field of the purification and reusage of waste water. The international market in this area is very big, since water is needed due to its scarcity in many places in the world. The water technology cluster is founded on three general themes: smart water systems, resource efficiency and sustainable cities. If you are active in the water sector, collaboration might provide beneficial opportunities for your company,

Maritime Technology

Since the Netherlands is the maritime center of Europe, it also owns one of the most strong and complete maritime clusters worldwide. The Dutch are well known for their maritime skills for centuries, as they colonized part of the world before many other countries had such skills. Nowadays, the efforts are put into a diverse fleet of ships, versatility within the maritime industry and a sizable fleet as well as port. Rotterdam’s port also has the largest capacity in the world. The Netherlands also has a leading position in the offshore world, with large companies such as Heerema Marine Constructors. This cluster has four general themes, namely clean ships, effective infrastructure, winning at sea and smart and safe driving.

Delta Technology

The Delta Technology cluster focuses on living and surviving in low-lying deltas. As previously mentioned, part of the Netherlands is below sea level. Thus, the Dutch have become experts in the construction of solutions like the sand engine and the creation of extra land such as the Maasvlakte. Some internationally renowned solutions include a flood barrier constructed in St. Petersburg, assisting in making New Orleans livable and waterproof and also aiding New York after it was struck by hurricane ‘Sandy’. Such situations keep demanding sustainable solutions for managing water and flood protection. This can be applied everywhere in the world and is therefore an essential priority. This cluster has three general themes: flood protection, eco-design and water management.

6.     The Energy Industry

The energy industry is actually one of the main exports of the Netherlands and offers many interesting options regarding employment. Roughly 25% of the gas reserves of the entire European Union are located in this small country, since large natural gas deposits were discovered in 1959. The government has significantly reduced the production of natural gas though, after the extraction led to issues such as tremors and sinking grounds in the northern part of the Netherlands. Nonetheless, it remains an export product. Next to natural gas, the Netherlands also pioneers in area’s such as clean and sustainable energy, wind energy, greenhouse farming and biomass processing. If you have interesting ideas to innovate within this sector, you will have ample opportunities to do so.

7.     The Chemical Industry

One of the Netherlands’ leading economic industries is the chemical sector. This includes world leading Dutch chemical companies such as AkzoNobel, BASF and Royal Dutch Shell. Next to housing these multinationals, you will also find a vast array of research institutions, such as many universities and the Netherlands Organization for Applied Scientific Research (TNO). The Netherlands is considered one of the leading suppliers in the EU of chemical services and products. The solid infrastructure and transportation network makes access to all sorts of raw materials easily possible. The chemical industry in the Netherlands focuses on multiple areas, like energy, climate, healthcare, transport and food security. There are many crossovers between various sectors, as the chemical industry is linked to almost every other industry. If you are interested in creating new solutions and smarter materials, this sector will provide you with all the resources and contacts you need.

8.     The Metallurgy Industry

If you are active in the manufacturing sector, then the metallurgy industry will be of interest to your company. This entire industry consists of several components such as services, consumables, equipment but also software. The industry is focused on both excellent craftsmanship and more modern production and techniques. This creates the opportunity of creating high quality products in a small timeframe; making it possible to deliver both quality and quantity so to speak.

The Netherlands is also in the top 20 of the largest steel exporters worldwide. The Netherlands exports more than 10 million metric tons of steel on a yearly basis, which accounts for 2% of all global export in steel. The steel is exported to more than 160 countries in the world. There are many crossovers between the metallurgy sector and other industries, you can think in the lines of healthcare, automobile, energy and power, real estate, mining and ship building. The offshore industry also greatly benefits from this specific sector.

9.     Tourism

Even though the Netherlands is a relatively small country, you can visit tons of interesting places. For instance, the country is known globally for its beautiful flower fields in spring and the touristic attraction ‘the Keukenhof’ that offers spectacular displays yearly in spring. Next to the flowers there are bustling cities like Rotterdam, Amsterdam and The Hague, the latter even has its own seaside resort also known as Scheveningen, home to the Kurhaus. All in all the country is well known for its historical heritage and exceptional art, which you can find in many museums. The tourism sector might be small compared to other countries, but it still contributes to almost 10% of the total employment of the country and more than 5% of the GDP. You can also find seven UNESCO World Heritage sites in the Netherlands. It’s a fun sector that offers possibilities if you have a creative and businesslike mind.

How to benefit from these and other sectors?

If you have been thinking about expanding your business to the Netherlands, chances are large that you can collaborate or invest in at least one of the above mentioned sectors and industries. Due to the high amount of intersectoral collaboration in the Netherlands, there are many business possibilities for innovative and driven entrepreneurs. The world is changing rapidly, so it might be a good start to invest in some fresh ideas. Intercompany Solutions can assist you with establishing a branch office or new company in the country in just a few business days. Contact us directly if you would like to receive more information.

[1] https://www.investopedia.com/insights/worlds-top-economies/#17-netherlands

[2] https://tradingeconomics.com/ 

[3] https://investinholland.com/doing-business-here/industries/high-tech-systems/

[4] https://www.topsectorlogistiek.nl/wat-is-de-topsector-logistiek/

[5] https://www.dutchglory.com/markets/water-industry-in-the-netherlands/

A possibly very interesting and lucrative business idea would be to start up an online casino in the Netherlands in the near future. Until very recently, there were only 14 physical casinos in the Netherlands. These were all state-owned, meaning the private sector didn’t have any access to the casino sector. Since 2019 these conditions have changed, however. In this year the so-called Remote Gaming Act was passed by the Dutch Senate, which is mainly aimed at finally liberalizing this market. This, in turn, will but an end to the state monopoly on gambling, and it will also open up possibilities for online casino’s in the Netherlands.

The liberalization of Dutch casinos

First a bit of history about Dutch gambling. The National Foundation for the Exploitation of Games of Chance, founded in 1974, was the first to receive a casino license from the Dutch government on 17 December 1975. Until the present day, this is also the only casino license in the Netherlands. The company operates under the name Holland Casino and opened the first casino in Zandvoort on October 1, 1976. We are now much further down the road, yet Holland Casino is still a state-owned company. This is due to some scandals in the past regarding gambling and related problems.

According to official documentation, a main reason for the government not to issue more casino licenses, is the fact that Holland Casino is the only casino that knows how to implement correct measures against gambling addiction. The unofficial reason could be, that competition means that the state earns less due to competitors. This will inevitably drop the profits of Holland Casino and thus, the Dutch state. In any case it seemed that the prevention policy, both against gambling addiction and against money laundering, did not seem to work very well. Nonetheless, the Dutch government has adopted a new law, in which private ownership of a casino will be entirely possible.

A highly controversial sector at times

To state some examples; a director of a well-known automobile company once gambled 23 million euros away in Holland Casino. He nevertheless kept coming back to the casino and was even rewarded for this fact. There is also some controversy about ATM’s in the building that offer the possibility of withdrawing amounts as high as 2500 euros. This is not exactly considered responsible behavior, if one is to prevent gambling addiction and comparable problems. The casino is still open, but will now have to compete against new players. The same strict rules will apply, as well as newly established laws and regulations for the private sector.

The situation since 2020

Due to the rather controversial problems mentioned above, the Dutch cabinet (with Mark Rutte as Prime Minister) has decided that gambling and games of chance should no longer be part of official governments tasks. Thus, Holland Casino should be privatized, and other private sector companies should also attain the possibility of entering this market. The only exception is the Dutch State Lottery (Staatsloterij), which will still remain in the hands of the state. The lottery brings in high amounts of money on a yearly basis, though without the added hassle and problems of an actual casino.

Another factor that might have played a significant role, is the influence of the European Union (EU) on the decision of the Dutch state to privatize the casino sector. The EU considers games of chance and gambling a purely commercial business endeavor, even though the EU policy on games of chance itself is more liberal than national policy. The EU is influential and generally its incentives are followed by member states. Multiple nations have been frowned at, regarding their monopolistic rules and behavior in the gambling sector. In the Netherlands it is quite controversial that the government issues licenses, but only to government controlled institutions and not possible competitors. That will all change this year.

Casino laws in the Netherlands

As far as expectations go, the remote Gaming Act will be finally implemented during 2021. Interested entrepreneurs can apply for a license since last year. This license is a strict requirement to operate within this sector in the Netherlands. An interesting difference with previous laws, is that taxes will be imposed on the operators instead of the players under the new act. This means a 29% tax rate will be applied to every imaginable form of online gambling. The idea is that tax revenue will be increased, since prizes lower than 449 euro were exempt from tax until now.

Due to the increase in illegal (online) gambling the past few years, the Dutch government decided that gamblers need a certain amount of protection from shady corporations. Therefore, the act aims at providing fair environments for its gamblers and put a stop to fraud. This is the reason that the new casino laws are rather strict, in order to facilitate these goals. The operators are required to comply with these strict rules, otherwise they cannot do business. One of these measures is a necessary affiliation with the Central Exclusion Register for every operator, to ensure that certain blacklisted players cannot gamble. Another measure is close monitoring of risky behavior. Every operator is required to invest 200,000 euros yearly into the prevention of gambling addiction as well. Next to that, the operators need to run a control database that continually shares all activities on the website with the “Kansspelautoriteit” (KSA) which is the Dutch organization that monitors all gambling institutions.

More information about the licensing procedure

So before you can establish an online casino in the Netherlands, you will need to acquire the gambling license. To realize this, you will have to look at all requirements with an honest outlook and see for yourself, whether this is an achievable goal. The largest problem for most will be the investment necessary; including all costs, a license is quite a financial burden. If you are already a player in the industry, however, and you enjoy owning some healthy capital, it might be a very solid investment as the market is just about to break open. The most important factor is to stay in line with Dutch laws, otherwise you risk hefty fines at best and jail time including confiscation of profits in the worst case scenario. The licenses in the Netherlands have not yet been finalized, but it is already known that the application costs for a license will be around 50,000 euros at the Gaming Commission.

What are the approximate total costs of a casino license?

As stated above, the application to qualify for a gambling license is 50,000 euros and the only thing you get for this money, is that your application will be processed and judged. This does not give you any guarantee that you will obtain the permit whatsoever. In addition to these one-off costs, there are other required expenses listed below. Please note, that in some cases these are still estimates.

Expense                                                             Amount                                                             Frequency

Application                                                        € 50,000                                                             Once

Game systems inspection                           € 500,000                                                           Annually

Supervision KSA                                             € 150,000                                                           Annually

Automation costs (eg hosting and personnel costs) € 100,000                                Annually

Addiction Prevention                                   € 200,000                                                           Annually

Other costs (eg courses)                              € 100,000                                                           Annually

Extra security                                                   € 810,000                                                           One-off *

* When enforcing the rules.

How can customers pay in online casinos?

If you want to enter the Dutch casino market, you will not only need to express loyalty to the Dutch law system, but also to your consumers. This means you need to offer transparent services with safe payment methods. This entails direct deposits, but also major credit cards. In the online casino community a lot more options exist though, such as PaySafeCard, Trustly, Neteller and Skrill. Furthermore, there are many other casinos in the European Union such as in Malta. These casinos accept EUR, and we strongly advise you to also offer that option, as this is the national currency in the Netherlands as well. It will also relieve Dutch players from having to pay conversion fees.

Intercompany Solutions can set up your online casino business in just a few working days

If you want to invest in or compete with a completely new national gambling sector, then you should seriously consider investing in the Dutch casino market this year. There is still the option of acquiring a license, since the applications are not closed. In order to attain this license, you will need to meet certain criteria and also invest the application costs. If you would like to know more about legal issues and specific regulations concerning Dutch gambling and casinos, Intercompany Solutions can assist you. We can also take care of the entire company registration process, advise you on payment options for your casino, take care of your accounting and make sure that you always meet all legal requirements. If you would like to know more about our services, don’t hesitate to contact us for more information or a personal quote.

Sources:

https://ondernemersplein.kvk.nl/vergunning-online-kansspelen/

https://www.rijksoverheid.nl/onderwerpen/kansspelen/regels-kansspelen

 

Sometimes entrepreneurs set up a company, but later find out they chose the wrong sector, didn’t invest enough in certain projects, went down a wrong road or simply underestimated their capacity for success. There are other factors that can lead to the demise of a company, such as incorrect business practices or personal problems. In such cases it can be wise to consider selling a company, because there are many business owners out there who might have the right expertise and experience to make the company successful. This is why there are company takeovers; as they provide the seller with some capital to start up again and the buyer with a fresh new project. If you would like to invest in a new company, then you need to acquire knowledge of at least some basic topics about company acquisitions. In this article we have outlined these basics.

Different Dutch legal entities

There are a number of different legal business structures in the Netherlands. These structures can be categorized as structures with a legal personality, and structures without a legal personality. Owners of a structure without a legal personality are personally liable for any debt the company incurs. Structures with a legal personality have to be drawn up and amended by a civil law notary. These structures are not personally liable for the debt of the company, bar some exceptions. The sole proprietorship (eenmanszaak), general partnership (vennootschap onder firma or vof), professional partnership (maatschap) and limited partnership (commanditaire vennootschap or cv) are business structures without a legal personality.

The private limited company (besloten vennootschap or bv), public limited company (naamloze vennootschap or nv), cooperative (coöperatie), association (vereniging) and foundation (stichting) are business structures with a legal personality. The procedure for taking over a company in the Netherlands depends mostly on the current and desired legal structure. We will describe the different procedures for taking over a company based on the legal structure in the next paragraphs, and also provide some insights on how to find suitable companies. You can also giveexpects some tips regarding what to be mindful of.

Business structures without a legal personality

The sole proprietorship, general partnership, professional partnership and limited partnership share the same basis for takeovers: neither of these structures requires an amendment by a civil notary, unless realty/property is involved in the transaction. This section will first discuss the limitations of a sole proprietorship and the difference between the four types of partnerships. Furthermore, it will explain the steps between potential buyers and sellers first, followed by the official steps necessary at the chamber of commerce.

Please be aware that you are only allowed to have one sole proprietorship in the Netherlands. If you already have a sole proprietorship, then you are not allowed to register an additional one. Instead, you have to adjust the business activities as established within the business register (handelsregister) of the Dutch Chamber of Commerce (Kamer van Koophandel). These changes will need to reflect and include your new activities. Alternatively, you may choose to register an additional trade name instead. In the Netherlands, owners of many sole proprietorships are also ZZP’ers (Zelfstandigen zonder personeel), which can be translated as entrepreneurs without personnel.

A general partnership, professional partnership and limited partnership differs from a sole proprietorship in the sense that the first three may have multiple owners, whereas a sole proprietorship always belongs to one person only. The most important owners are called UBO’s (ultimate beneficial owners). When dealing with either of these, you will need to identify who the UBO’s are of the company you wish to take over and if they are correctly registered as such. Additionally, you may also need to register either yourself or possible business partners as UBO’s at the end of the takeover trajectory.

What to do if you find a suitable company?

Moving forward, this section will discuss the trajectory between buyers and sellers assuming that a suitable company has been found already. If you are looking for information on how to find suitable companies, you may read the tips and tricks for finding a company which are mentioned further in the guide. In order to take over a company, you will of course need to discuss a reasonable price. This price is presented within a sales memorandum, and is based on various aspects of the company such as supplies and the customer base for example. Patents and goodwill may also apply. Subsequently, the sales memorandum will also provide an explanation how pricing is established exactly. A nondisclosure agreement (NDA) may be signed to ensure private information stays confidential.

The negotiation phase

During the negotiation phase you will need to sign a letter of intent. A letter of intent encompasses the duration for which the letter and its contents will be valid, any exclusivity agreements, the valuation methods, applicable law, dispute settlements and more relevant information. Please be mindful, that any agreements within the letter of intent are binding. Be sure to discuss exactly which parts of the company you will take over and if any parts of the company are excluded. If so, you also need to specify exactly which parts these are. All buyers are required to perform a due diligence check. All provided information inside and outside the sales memorandum needs to be verified, based on the accuracy and completeness thereof.

It is advised to research if there is important information which may not be presented within the memorandum, such as liability cases, lawsuits, claims or debts. Once all information is verified, you will need to gauge if the takeover is financially feasible. Examples of financing are also mentioned below in the tips and tricks for finding a company. During the finalization, you will need to sign a takeover contract. The letter of intent serves as the basis for this contract. Once everything is agreed upon, you will need to make an appointment with the Dutch Chamber of Commerce. To this end, you will need to prepare and file a registration form specific to the legal structure you wish to take over during this appointment.

A sole proprietorship requires a different registration form, for example, than a professional partnership. The current company owner also has to confirm that he will discontinue his activities, and that the company will be continued by someone else. This can be done easily by filing a form. There is a separate form for a sole proprietorship and general, professional and limited partnerships. You are required to bring this form with you and submit it to the chamber of commerce during your appointment with them. Intercompany Solutions advises to hire a professional party to help you evaluate the sales memorandum, perform the due diligence and UBO check, prepare the relevant files for the chamber of commerce and advise you during negotiations and finalization of the takeover contract. Our professionals are eager to assist you during this trajectory.

Tips and tricks to find a suitable a company

Finding a suitable company to take over is no small feat. There is a surplus of companies varying by  type, size and industry. Luckily you can simplify this process, by narrowing down the scope of your search with a so-called search profile. This search profile helps you highlight key elements you are looking for in a company. A search profile may consist of, but is not limited to, the following elements:

Type of industry

You may look for a company within your own industry because of familiarity with the subject,  expertise and an already built up network. This is not necessary however; you can choose any industry or sector that you feel drawn to. When trying to establish the type of industry, ask yourself what your expertise and potential within different industries are and which industry you feel most comfortable with. Also make sure that you have at least some in-depth information about the specific industry, or make sure to hire professionals to assist you with certain decisions.

Region

When deciding upon a region you can consider a plethora of factors. Personal factors may be the time it takes you to travel to this location, the quality of the neighborhood and the accessibility of a possible office building. Likewise, some of these can also be applied to your customer base and business network. Other factors may also apply. Is the environment and surrounding area suitable for your industry? Will you need any special permits? Are you expecting a lot of international clients and, thus, prefer a location in close proximity to an airport and hotels? These and other questions are easily answered if you make a list of pros and cons regarding the region.

Type or size of the company

What kind of company are you looking for? An enterprise in the production sector, services or something else? Do you want to import or export goods? Do you want a company with personnel? If so, is there a maximum of employees you are willing to take over? Do you want to do business with consumers or other companies? As you can see, there are many different factors you can take into account. It is important to realize that all companies have strengths and weaknesses, and that there will never be just one company which is a perfect fit.

Stage of the company

Are you looking for a company which you will need to grow, or are you looking for a well-established company that has strong and steady margins already (which is also known by the somewhat undignified term ‘cash cow’)? Additionally, you may also look for a turn-around company. These companies are usually on the brink of collapse and in dire need of change. The price of these companies is usually much lower, but the risk involved is also greater. The effort you will need to put in to stabilize the company is also much more substantial.

Cost of takeover, cash flow and financing options

If you want to take over a company, you will need a source to finance this. The best way is always with existing capital of course, if you want to be safe. You need to think about your budget and what kind of earnings you expect in the future. Are you in need of financing, and if so, what type of financing should you use? Think of bank loans, crowdfunding or investors for example. There are even specialized forms of financing between sellers and buyers, such as seller loans and profit rights. Just make sure the risks don’t outweigh potential benefits. If you are rather new to acquisitions, we strongly advise to hire a professional partner such as Intercompany Solutions who can assist you during every step of the way.

Risks

As mentioned above, you need to think about the risks involved, and what the timeframe for the takeover should be. A common misconception is that turnover, costs and company value have a 100% carryover rate. This is incorrect, as customers may have a personal attachment to the previous owner. Thus, it is not guaranteed that these customers will stay if ownership changes. Additionally, any change you implement in the company may also directly impact performance numbers. It is advised to pay special attention to the operating budget and substantiate which parts will be profitable in your new situation. Since a sole proprietorship is essentially an agreement between the owner and the customer, you will also need permission from the customers to use their information. This is due to them factually entering a new agreement with you as a person, and not as a legal business personality.

Business plan

A business plan can help you identify the strengths and weaknesses of both you as an entrepreneur, the company you would like to acquire and if it’s a match. Concluding, it will need to answer the most important question: whether taking over and running the company is feasible. When taking over a sole proprietorship, you may not be charged any VAT. Consequently, you will start paying income tax based on the profits of the company. Intercompany solutions can provide you with a database of companies for sale and help you create an optimized search profile. We can also identify whether you are eligible for tax breaks, such as self-employment and starters deductions and advise which type of financing is most beneficial for your situation.

The acquisition procedure

Every corporate takeover starts with a merger proposal. This proposal must be deposited within the commercial register (handelsregister) and stay there for a minimum duration of six months. The merger proposal should contain information about the legal structure of the companies, their name and location and what the new management formation will look like. A notary may amend the merger proposal, if certain complaints or objections have been filed within six months after depositing the proposal within the commercial register.

Large companies are subject to an additional set of rules and require permission (concentratiemelding) from the Authority for Consumers & Markets (Autoriteit Consument & Markt, ACM), if they wish to take over another company. The cost of requesting this permission from the ACM is around 17.450 euros. The ACM may deny permission, if the company takeover may influence the competition negatively. Companies may then offer a proposal how to minimize negative effects related to the takeover. If this proposal is denied, companies may apply for a permit application (vergunningsaanvraag). The costs for this permit application are an additional 34.900 euros.  Companies will need to request permission from the ACM, if:

Additionally, healthcare providers are subject to even stricter rules in order to keep these facilities accessible for everyone. Takeovers within the health care sector must request permission from the ACM, if:

Finally, pension funds are also subject to different rules. Pension funds must request permission for takeover from the ACM, if:

There are a number of different ways in which a takeover can take place. These are, but are not limited to: shares, assets and mergers.

Shares

Takeovers by shares consist of a full offer, partial offer, tender offer and mandatory offer. A full offer is the most common type of public offer within the Netherlands. Within this offer, the acquisition encompasses all issued and outstanding shares. A partial offer is aimed at only acquiring a part of the issued and outstanding shares, with a maximum of 30% minus one voting right in the general shareholders meeting. These offers are often used to disrupt public offers of competitors.

Tender offers will ask shareholders to sell their shares at the price and amount asked by the buyer. This amount may not exceed 30% including a minus one vote. The highest price accepted by the buyer will be paid to all shareholders who wish to sell their shares in this fashion. A mandatory offer is issued by the EU/EEA, when a person or legal entity obtains more than 30% of the voting rights in a company. Shares will be sold for a price based on the highest price paid one year before the announcement of the mandatory offer, or directly before the offer is completed.

Assets

Assets and liabilities may also be sold to the buyer. In this example, shareholders are paid for the distribution of the company’s assets. In general, this type of sale has to be approved by a majority of the general shareholders meeting. This option is interesting if there are tax or legal barriers involved with public offers, or if the buyer only wants to buy specific parts of the company.

Mergers

Companies can only merge if they have the same legal structure. A merger can result in the shares of either company disappearing into the other and being reissued or in the formation of a new legal entity altogether. Usually these kinds of mergers require an absolute majority of the general shareholders meeting, or at least two third of the votes.

Intercompany Solutions can assist you with professional advice and experience

Taking over a company requires a stable and realistic outlook, plus you will also need to be very familiar with various Dutch laws and regulations regarding company acquisitions. If you are interested in the possibilities for you or your existing company, feel free to contact us anytime. We can assist you during every step of the process and are happy to answer any question you might have.

Intercompany Solutions can also assist with the accounting requirements and due diligence for corporate takeovers.

Also take a look at our complete guide for starting a business in The Netherlands.

Sources:

https://www.kvk.nl/advies-en-informatie/bedrijf-starten/een-bedrijf-overnemen/een-bedrijf-overnemen-in-6-stappen/

https://business.gov.nl/regulation/mergers-takeovers/

 

If you are a foreign company with a Dutch office or subsidiary, this entails you also fall under the Dutch VAT regulations. The Dutch word for VAT is BTW; meaning the turnover tax you charge to your clients. All Dutch companies have unique VAT identification numbers, which changed for sole proprietorships on the 1st of January in 2020. If you do business in the European Union, you need to pay and charge VAT for nearly all services and goods, apart from a strict list of exemptions.

In this article we will provide you with a basic overview of Dutch VAT. For example the current rates, which services and goods fall under these rates and a list of exemptions. Please also keep in mind, that from July 1, 2021, new VAT rules for e-commerce will apply. So if you are thinking about starting a Dutch e-commerce company, you can find more information about these new rules here. You can also find some interesting information about starting an e-commerce business in the Netherlands in this article.

The Dutch VAT rates

In the Netherlands there are three distinguishable VAT rates: 0%, 9% and 21%. The highest rate of 21% is basically the standard rate for all products and services, which is why this is considered the general VAT rate. The 9% rate applies to certain products and also services. Amongst others these are food products, books, artistic works and medicines. You can find an extensive list below. The 0% VAT rate applies when your Dutch based company does business with companies based in other countries.

The three VAT tariffs explained

21% tariff

The 21% tariff is in essence the most commonly used tariff in the Netherlands. Most services and products fall under this category, unless there are reasons for exemptions. Another reason why a product or service might have a different tariff, is the reverse-charge mechanism when doing business with companies and people in other EU Member States. If none of these exemptions apply and your product or service does not fall under the 9% or 0% category, you always pay and/or charge 21% VAT.

9% tariff

The 9% tariff is also named the low tariff. This tariff applies to a wide variety of goods and services that are used daily or on a regular basis, such as:

The 9% rate only applies if the eBook is similar to the physical edition to which the 9% rate applies.

The 9% rate does not apply if this news website consists mainly of advertising, video content or listenable music; in that case the 21% rate applies.

The 9% rate also applies to a number of services closely linked to goods covered by the 9% rate:

The 21% rate includes the lending or rental of works of art by others, such as art lending institutions.

0% tariff

The 0% tariff applies to all company owners and entrepreneurs, who do business with foreign countries. It doesn’t matter whether the company owner is a foreigner or not; if the business is executed from an established branch office in the Netherlands, all its activities fall under the Dutch tax regulations. The 0% tariff mostly applies to the supply and shipping of goods from the Netherlands to other EU countries, but can also apply to certain services that are provided from the Netherlands.

These can also be services that are related to cross-border transactions, for example transportation of goods internationally or work on goods that will be exported. This tariff also applies to all international transport of travelers and passengers. An interesting note: if you apply the 0% VAT tariff, you still have the right to deduct VAT on your quarterly statement to the Dutch Tax Authorities.

Exemption from VAT: how does this work?

Next to the three distinct VAT rates, there are also certain businesses and business activities as well as sectors that are completely exempt from VAT. This means (in simple terms) that the customers of such companies and organizations do not have to pay any VAT. These businesses, activities and sectors are as follows:

This comprehensive list can also be found on the website of the Dutch Tax Authorities.

More special exemptions

Next to the standard exemptions mentioned above, there are also a number of extra exemptions which lead to a 0% VAT rate. The most relevant are all mentioned below. If you have a business idea in any of these sectors, chances are high you don’t have to charge VAT to your customers and clients.

The healthcare sector

All medical professions and consultations that solely focus on healthcare are exempted from VAT. This exemption applies to all professions that can be categorized under the Health Care Professions Act (BIG). So this exemption applies to professions such as paramedics, therapists, doctors, surgeons, general practitioners, care homes, orthodontists and dentists.

However, please keep in mind that the exemption only applies if the services offered are within the area of expertise of the professional. So a dentist cannot use the 0% rate if he or she, for example, offers psychology sessions without the proper academic degree and professional experience. This rule also stretches to third parties, as temping agencies that provide health care professionals have to charge the regular rate of 21%. The latter also applies to personnel registered in the BIG register.

Digital and online services

If you own a company that supplies digital services such as telecommunications and broadcasting, or online e-services, then the place from where you supply these determines which VAT rate applies and where it needs to be paid:

Tax-free shopping

You might know this situation from various national and international airports: tax-free shopping. This situation applies, when you sell goods to non-EU residents: in that case you do not charge VAT to your customers. In order to prove this on future declarations, you can use a copy of the sales invoice stating your customer’s credentials. A cheque with the customer’s name or a copy of his or her passport is also considered proof, in the case of the latter you will need to cover the citizen service number and the customer’s photo due to privacy legislation.

Fund-raising activities

Some fund-raising activities are also exempt from VAT, this is the case if the activities are initiated for:

Keep in mind there is a limit to the exact amount you can raise for such organizations. If you exceed this limit, other VAT rates may apply.

Vocational education

If you consider working in the Netherlands as an independent teacher or for a private school, there might be a possibility your services are exempt from VAT. Your services need to be within the field of vocational training, and you also need to be registered in the Central Register of Short Professional Training Courses (Centraal Register Kort Beroepsonderwijs, CRKBO).

Sports clubs

Most services that are offered by non-profit sports clubs and organizations are exempt from VAT too. The services need to be closely related to physical exercise and/or the actual practice of sports.

You can look on the website of the Dutch Tax Authorities for an extensive list of tax (VAT) exemptions.

Intercompany Solutions can help you with all financial matters

If you plan to establish a company in the Netherlands, you will have to go through a lot of paperwork and separate actions in order to realize this. Our experienced team can help you during this process, as we can handle the entire procedure in only a few business days. We are also always available to assist you with any financial questions and matters. Please contact us for more in-depth information about our services.

If you are planning to establish a branch office in the Netherlands or are otherwise interested in starting a Dutch company, you will need to follow some standard steps in order to realize this goal. One of these steps entails registering your company or branch office with the national tax authorities. This will enable you to send invoices to customers, pay and receive VAT and all other financial activities that are tied to owning a business. You can find some interesting facts about the Dutch Tax Authorities in this article, as well as practical information about the registration procedure and Dutch taxes.

The Dutch tax system

The Netherlands is well known for being a country with a very competitive tax system, that actively stimulates (foreign) entrepreneurship and investors. Especially globally trading multinationals, since the Dutch tax regime allows for a smooth transition into doing business with the entire European Union. Even though the tax rates and obligations concur with the standards of the EU, the Dutch are nevertheless known as competitive innovators that always try to facilitate healthy business opportunities. Thus, the corporate tax rates are relatively low compared to many neighboring countries.

Next to the national tax regime, the Netherlands is also part of a very large tax treaty network. The country has bilateral tax treaties with a staggering amount of more than 90 different countries. This provides Dutch tax residents with an extensive amount of benefits, since it makes it much easier to do business internationally and especially within the European Union. Due to the fact that the Netherlands is an EU Member State, you enjoy the perks of free trade and movement within all Member States.

Benefits and features of the Dutch tax system

The Dutch tax system offers several positive features for your business abroad, such as:

Which taxes do you have to pay in the Netherlands?

If you plan to set up a business in the Netherlands, you will have to pay taxes just like in any other country. In Holland you pay tax on income, assets and wealth. In the Dutch tax system the different types of income are divided into three separate boxes with their own specific rates:

  1. The taxable income from profits, employment and owning real-estate, such as wages, pensions, social benefits and the ‘WOZ’ value of your home
  2. The taxable income from substantial interest
  3. The taxable income from savings and investments

If you happen to be a non-resident taxpayer, then you might be eligible to claim a basic allowance in Box 3 when you determine the benefits from certain investments and savings that are based in the Netherlands. This might lower the tax rate in specific situations. In the Netherlands, taxes are withheld every month from the salaries of all employees. Once a year ends, tax returns are filed in order to declare the exact amount of income and assets. Any discrepancies are then cleared up, and you receive a final tax notice with the amount you either have to pay or receive. Often the amount that was withheld during the previous year is mostly correct.

Various federal taxes in the Netherlands

In the Netherlands, the national tax legislation is in the hands of the Ministry of Finance. The Dutch Tax Authorities levies and collects all obligated taxes. This includes income tax, corporate tax, inheritance tax, gift tax and transfer tax. Next to charging individuals directly, the Dutch government charges various indirect taxes too:

Dutch VAT (BTW)

BTW (which means Belasting Toegevoegde Waarde) is the Dutch equivalent of value-added-tax (VAT). This sales tax always applies when you sell or buy services or goods. The Dutch VAT system has three preset tariffs:

Who needs to pay taxes in the Netherlands?

In general, all Dutch residents are obligated to pay taxes. This includes employees, company owners and investors. Your personal circumstances can tell you whether you qualify as a Dutch resident or not, so you will need to define your position in the Netherlands if you want to know the exact amount of taxes you need to pay. This can include whether you are residing in the country or not, where you work and where your home and family is situated. There are roughly four categories you can fall under, which we will describe below.

1.      Resident taxpayers

If you can be considered as a resident taxpayer in Holland, then you will have to pay taxes on your entire worldwide income. Hence, it doesn’t really matter where your income comes from in this case; all taxes should be paid to the Dutch Tax Authorities. All varieties of income (such as employment, business income and investments) are seen as taxable.

2.      Non-resident taxpayers

If you are not a resident taxpayer, you will not have to pay taxes on all income, just the income that can actually be levied in the Netherlands. This can include income from employment, if your employer is a Dutch company. But also business profits, certain benefits, being part of a shareholding and also income from owning Dutch real estate. In some cases, income that you earned outside the country may also be taxable.

3.      Qualifying non-resident taxpayers

You fall under this category if you don’t live in the Netherlands, but pay taxes on most of your annual income. This generally applies if you are a resident of an EU country, an EEA member state, one of the oversees municipalities of the Netherlands or Switzerland. In this case you are obligated to pay Dutch taxes on more than 90% of your total worldwide income. The beneficial part is that this also allows you to enjoy benefits such as tax deductions and tax-free allowances.

4.      Partial non-resident taxpayers

You can be considered a partial non-resident taxpayer if you come to live and work in the Netherlands and are also eligible for the 30% ruling benefit for incoming employees. In this case the Dutch Tax Authorities will see you as a non-resident taxpayer regarding income tax. If you choose this option, you will have to pay less taxes in the Netherlands. This will exclude you from certain benefits though. To be 100% sure about your situation, we advise to ask a specialist about the best option for you. Intercompany Solutions can tell you everything you need to know.

Corporate tax rates in the Netherlands

All companies established in the Netherlands are subject to Dutch corporate tax. Since 2021 a rate of 15% applies if the yearly taxable amount is 245.000 euros or less. If you make more profit than 245.000 euros, a corporate tax rate of 25% applies. In some cases, you can apply for an exemption in order to be able to access lower tax rates. Non-resident companies have a limited tax liability regarding income from Dutch sources. If you also supply goods or services from the Netherlands, you will have to charge VAT as well. You will have to declare the VAT charged four times per year (quarterly) whereas the corporate tax declaration is sent once per year.

Import and export of goods in the Netherlands

If you choose to establish a company or subsidiary in the Netherlands that imports and exports goods from all over the world, you will need to take into account that you will have to pay both import duties as well as VAT. This is especially so when you are importing goods from outside the EU. In special cases, you might also have to pay several other levies such as consumption tax and excise duty.

Import duties are taxes that are levied on goods that are imported into the Netherlands. The Dutch Tax Authorities collect this duty and the transfer the collected sums to the EU. The Member States can also retain a part of the import duties, in order to cover the costs for collection. If you import goods from a Member State, then you don’t have to pay import duties. You will still have to pay VAT though. The VAT rate in this case will be the same as the Dutch VAT rate that applies for the specific services or goods.

If you choose to import or export excise goods, then you will have to pay excise duty. Excise goods are products such as tobacco and alcoholic beverages. If you import non-alcoholic beverages, you will have to pay consumption tax. There are some other extra levies that prevent certain products coming on the European market for very low prices, this entails (amongst others) levies on certain industrial and agricultural products.

Tax liability in the Netherlands

If you own a corporate entity that is established in the Netherlands and also resides there, you will basically always be subject to Dutch corporate income tax. If you own a branch office in the Netherlands of an otherwise foreign company, then you will also be subject to corporate income tax as your company has an establishment in the country. Non-resident corporations that have branches in the Netherlands don’t fall under any special rules, nor is there any special tax assigned to these. There is however no Dutch tax imposed on the remittance of profits by the branch office to its head office in the country of origin.

The tax liability is limited to profits made by a branch office that qualifies as a permanent establishment. This means, that activities of a more supporting or auxiliary nature are exempt from the definition of a permanent establishment. Thus, these are not subject to Dutch corporate income tax. Therefore, Dutch branch offices and subsidiaries are inherently treated the same as any other Dutch owned company. Your Dutch branch office will be subject to all taxes on your worldwide profits and other capital gains, if it is either incorporated in the Netherlands or controlled from the Netherlands.

As a foreigner, it can be quite complicated to simply dive into all the tax rules and regulations in the Netherlands. It is always best to seek help from a professional in order to know exactly where you stand and what your obligations are. If you don’t pay taxes, file incorrect declarations or withhold information, this can result in very hefty fines for you and your company. We therefore always advise to seek professional assistance when you are planning on establishing a Dutch company, subsidiary or branch office. Intercompany Solutions can help you during every step in the entire process.

Read here for more information about accounting requirements in The Netherlands.

Intercompany Solutions can register your company in the Netherlands

If you want to register your company with the Dutch Tax Authorities, you will first need to register your company at the Dutch Chamber of Commerce. We follow a fixed procedure for every new company, you can find more information about the way we work in this article. Once your company has a Chamber of Commerce number, you will automatically be registered with the Dutch Tax Authorities as well. If you have any questions or would like to receive more information, please don’t hesitate to contact us.

Many established foreign businesses in the Netherlands are focused on trade. This is no coincidence, since the Netherlands is a European Union (EU) Member State and thus, has full access to the European Single Market. That’s not the sole reason though, since the country also has many international trade agreements that facilitate swift import and export options to all corners of the world. Add the excellent infrastructure and a highly developed logistics sector, and you have a perfect base for your import & export business in the Netherlands. We will cover various topics in this guide, such as establishing a Dutch business, more information about the import and export sector and all the relevant applicable laws and regulations.

Why choose a business in trade?

Why choose the import & export business? Often the market in certain countries is limited. Not all countries benefit from good access to trade, lack solid means of transportation and/or infrastructure, or are otherwise shut out from certain markets such as the United Kingdom after Brexit. But it is fairly straightforward to jump into this market via a different country like the Netherlands, because exporting is easier than you think. During the past few decades plenty of options have become available, such as drop shipping in all countries and holding oversees stock, for example. You can start your entire company from oversees, as you can literally arrange everything from a distance nowadays.

We have outlined in this article what you should consider, when taking your first entrepreneurial steps across the border. From export restrictions to customs regulations. To ensure that your business border crossing does not turn sour, we can advise you on your export and import projects. The internationalization of society offers many different possibilities nowadays, including several national and international support programs for market entry, market processing and a new business abroad.

Import & export from abroad

In the past centuries it would have been entirely impossible to establish a trade business from afar. Nowadays, almost everything is possible via long-distance. It doesn’t really matter where you live this moment; if you have internet access you can establish a trade company in the Netherlands, because that is everything you need. Next to being able to trade withing the Netherlands, you will also have access to the entire European Single Market and plentiful possibilities to trade worldwide.

Both import and export have been substantially simplified in the EU, as all goods and services can cross any border within the EU free of charge. This doesn’t only imply that you don’t pay any customs fees, but you also save time due to the fact that your shipments don’t have to be accompanied by a large array of documents. Doing business with non-EU countries also offers many opportunities, as the Netherlands has made beneficial trade agreements all over the globe. The Netherlands holds a very strategical position in the world of trade and logistics. If you want to start a business in this sector, you can benefit from all its resources.

Distributors

If you want to compete with other similar entrepreneurs, you must constantly ensure that you buy the necessary precursors in the necessary quality from reliable suppliers at the best possible prices. If you would like some assistance in that regard, we can help identify solid suppliers and check their creditworthiness and performance. We can also advise you with large procurement transactions and their corresponding tax settlements. Due to the very large amount of distributors and drop shipping agencies, it can be tricky to distinguish between sensible and shady companies. It’s advisable to find an associate to help you with such practicalities.

Market analysis

An overview of sales and the competitive situation in a target market is at the top of the toolbox of an exporter and an exporter. You will need stay informed at all times, because prices, rules and laws in this sector change constantly. Every delivery of goods or services across each border is recorded statistically worldwide. We know how for example how many kilos of cheese the Netherlands has exported, how many drills Brazil imports or where Belgium supplies its baby food. You will need to focus on various subjects and take important factors into consideration, such as:

We will discuss all these subjects briefly below, so you have an idea what you are up against. This will also provide you with some insight regarding your possible potential within this sector and its worldwide market, plus; whether you have anything beneficial or original to add. It’s a highly competitive market that involves a lot of persistence and up-to-date knowledge in order to succeed.

Import regulations

The international trade of goods and services is subject to the import rules of the EU. Capital imports are not subject to foreign exchange restrictions; foreign equity investments in domestic companies are therefore fully possible. Please keep in mind that there are of course certain exemptions, such as soft drugs and other specific products and services. In the Netherlands, the sale and consumption of so-called 'soft drugs' is known to be tolerated. Under EU law, these fall into the category of medicinal products and narcotics and are excluded from the free movement of goods in the European Union. The import of medicinal products and narcotics into the individual Member States is only possible through competent authorities.

Customs regulations

The Netherlands is a Member State of the EU. This means that the provisions of intra-Community trade in goods or products from other EU Member States have been in force since the country became a member. Transactions between companies that are entitled to deduct VAT and have a UID number are made with a VAT rate of 0%, since the acquisition is subject to the import VAT of the receiving State. In other words; you don’t pay any VAT at all within the entire EU. Sometimes you might need to pay special tax though, such as excise duty.

Other import duties

If you want to import special like as alcoholic beverages, you need to take into consideration that certain goods are subject to import tax such as excise duty. These need to be paid by the company that imports these goods, or a fiscal representative of this company. The payment of these taxes (“accijns”) also needs to be reported to the Dutch Tax authorities on a periodical basis.

Packaging regulations & designation of origin

The packaging and labelling requirements for food and beverages, as well as for other products, such as washing powder, children's toys, wallpaper, paper, mattress fillings, preservatives, dyes and other additives are generally contained in the Dutch Trade Law and the related special regulations. There are also some EU-wide rules on packaging and product labelling.  In the Netherlands, the ‘Nederlandse Voedsel- en Warenautoriteit’ authority monitors compliance with legal regulations and standards in various areas. Its control area includes food, consumer products, energy certificates, as well as plant and animal welfare and non-smoker protection.

Accompanying documents

If you trade within the borders of the EU, then the amount of necessary shipping documentation will be limited to standard items such as a packing slip and accompanying invoice. For special goods or materials you might need safety documentation and other necessary material for safe and legal transportation. If you want to start an import and export company in specialty goods, we strongly advise you to inform yourself about specific regulations covering these items. This to make sure you comply to all the laws and regulations.

Species conservation

The Netherlands is part of CITES (the name for the Convention on International Trade in Endangered Species of Wild Fauna and Flora), also known as the Washington Convention. Imports or exports of endangered species and plant species listed in the Convention to and from the European Union, are subject to strict customs controls. Many species or products from these animals require identification and/or import documents. Not only live animals and plants are categorized, but also preparations and products from these animals, such as their eggs, jewelry and souvenirs made of ivory, leather bags (crocodile), claws, teeth, skins, turtle shells, snake skins and related items of natural origin. Given the sometimes difficult classification for laymen as to whether a species or a product is subject to documents, it is certainly best – to protect endangered species and avoid seizures and possibly large fines on importation – to refrain from buying such souvenirs.

Otherwise, precise information on the necessary accompanying documents (CITES papers) should be obtained before departure. If a seller or buyer states that the offered flora or fauna is either not subject to the rules laid out in the Convention on the Protection of Species, or that the accompanying documents submitted by the dealers are sufficient, should never be relied upon, even in good faith. Tax and customs law issues require precise clarification.

Financing export activities

You need to take into consideration that a trade business takes a lot of time and effort to sustain. Unless you are able to hire qualified personnel who will handle daily business activities, we suggest you map out potential risks involved. Especially when doing business across the border, upfront costs and risks should not be underestimated. National banks, export funds, control banks, AWS and private export insurers have many answers to questions about financing, hedging of export transactions and direct investment.

Start-up aid for exporters & export subsidies

If you are just at the beginning of starting a company, our experts can take a close look at your idea and check if you might have access to any subsidies or tax benefits. We can also check whether you are sufficiently prepared for your project, help in assessing chances of success and define target groups and test markets with you. The goal is to transform your business idea into a strategy with minimum risks involved. We have an overview of all support measures and can help you make sure that you can benefit from all possible options.

Intercompany Solutions can assist you in setting up a trade company

If you are contemplating a starting a business in the Dutch import and export sector, we can assist you during various steps in the process, such as:

We can also help you with other general issues, such as company registration, acquiring a VAT number and opening a bank account. Please feel free to contact us anytime with your questions, or if you would like to receive a personalized quote.

If you want your Dutch e-commerce company to do business in the entire European Union, you will have to deal with different VAT rules than those that apply if you only deliver to customers in the Netherlands. A number of basic rules apply to VAT in the EU. This includes certain threshold amounts for the levying of VAT if you sell to consumers in other Member States as well as VAT registration abroad. From July 1, 2021, however, new VAT rules for e-commerce will apply. This article will explain the most important VAT rules for Dutch companies in e-commerce, such as web shops and platforms that supply to foreign consumers in the EU. This also includes dropshipping.

Basic rules that apply in the entire EU

VAT is levied in all countries within the EU. EU countries themselves determine the level of VAT rates on products. Which country is allowed to charge VAT is determined by:

For sales and deliveries where goods are shipped from the Netherlands to consumers in other EU countries, Dutch VAT is payable as a basis as long as you stay below a certain threshold amount. This means that you will charge your foreign customer Dutch VAT until your turnover in the relevant country reaches the applicable threshold amount.

Threshold amounts for foreign sales

Within the EU, threshold amounts have been agreed upon for the levying of VAT on sales to consumers in other Member States. This is also known as distance sales. If your turnover in another EU country exceeds the threshold amount within a year, you calculate the VAT rate for that country. You then pay the VAT there and submit a VAT return. The distance selling threshold varies by country. The Dutch Tax Authorities have more in-depth information about this.

The threshold amounts do not apply to the supply of excise goods, such as alcoholic drinks and cigarettes. The threshold amounts also don’t apply to new or almost new means of transport such as cars. Deliveries of these types of goods do not count towards the threshold amounts. With every delivery, regardless of the amount, you calculate the VAT of the country where these goods are shipped.

If you sell goods that fall under the so-called margin scheme, these deliveries do not count towards the threshold amounts. If you apply the margin scheme, you owe Dutch VAT to the Dutch Tax Authorities on the profit margin of the goods. You do not charge VAT to the customer and do not state this on the invoice, since the VAT is already included in your sales price.

Information about VAT registration

You can only calculate foreign VAT with a VAT registration in the relevant country. You will receive a VAT number from the foreign tax authorities and submit a local VAT return. Furthermore, you can also hire a tax advisor who takes care of your foreign VAT registration and declaration, ICS is always happy to assist with such tasks. Ensure timely VAT registration in the country where you owe VAT to avoid hefty fines. Even if you first paid VAT in the Netherlands, the foreign tax authorities are still entitled to the VAT owed there. You still need to pay these abroad before you reclaim the Dutch VAT.

When to use a foreign VAT rate?

When you deliver to customers in another EU country who do not submit a VAT return, such as consumers, you can always use the foreign VAT rate and file a local return. This is possible even if you stay below the threshold amount. You must submit a written request for this to the Dutch Tax Authorities.

1st of July 2021: new EU VAT directive for e-commerce

From 1 July 2021, the new EU VAT directive for e-commerce will apply. The new rules apply when you achieve an annual turnover of 10,000 euros or more with your Dutch web shop or e-commerce business from sales to consumers in EU countries outside the Netherlands. If your turnover in other EU countries remains below 10,000 euros per year, you may continue to charge Dutch VAT. With the new VAT Directive, the European Commission wants to modernize and simplify VAT taxation, create a "level playing field" for entrepreneurs within and outside the EU and combat VAT fraud on small-value parcels.

Changes that might impact your company

Implementation of the new bill has direct consequences for your business operations due to the following 3 changes:

1.      No more separate threshold amounts

As of 1 July 2021, the threshold amounts for intra-EU distance sales per individual EU country will be cancelled. There will be 1 joint threshold amount of 10,000 euros. This threshold applies to all intra-EU distance sales of goods, together with sales of digital services to consumers in the EU. If your total amount of foreign sales in EU countries remains below 10,000 euros per year, as a Dutch e-commerce business you may continue to charge Dutch VAT. Just keep in mind that the transport of the shipment needs to be initiated in the Netherlands and that you need to own a branch office in an EU country.

From the moment you exceed the threshold amount of 10,000 euros, you charge the VAT rate of the EU country where your customer is located. You can arrange your foreign VAT return in 2 ways. Either you submit a local VAT return for each individual EU country to which you have sold and shipped goods, or you register your company for the 'Union Regulation' within the new one-stop-shop system of the Dutch Tax Authorities.

2.      VAT exemption for imports up to 22 euros expires

When goods are imported into the EU, there exists a VAT exemption for import VAT on shipments with a value up to and including 22 euros. This exemption will expire on 1 July 2021. The EU aims to create a "level playing field" for all sellers within and outside the EU. From 1 July 2021, import VAT will be due on the import of goods into the EU, regardless of the value of the shipment. Shipments with a value up to and including 150 euros will remain exempt from import duties though.

When you sell products from outside the EU to customers who do not submit a VAT return, you must declare the VAT from 1 July 2021 in the EU country where the goods arrive. For example, when you deliver products from Taiwan through your web shop directly to consumers in Belgium, You must pay Belgian VAT on this delivery.

3.      Platforms pay VAT when taking on an active role

An entrepreneur is responsible for the VAT payment on products that he or she sells to consumers via a platform. In the new VAT rules, the platforms are responsible for this VAT payment if the platform plays an "active role". But an active role is more than just bringing together supply and demand digitally. For example: facilitating orders and payments for products. The platform supports the purchase and delivery of products to private customers and is therefore due VAT in the country where the customer lives.

Furthermore, the following applies:

If the value of the shipment is above 150 euros, the platform is also liable for VAT when it facilitates the delivery to a consumer by a non-EU-based entrepreneur and the goods go from one EU Member State to a consumer in another Member State. If you own a platform and have goods shipped directly by professional sellers from outside the EU to customers in other EU countries, you need to investigate together with your tax advisor whether you will be faced with a greater VAT obligation and liability after the introduction of the new rules.

The new ‘One stop shop’-system

Following the changes of the law, the current MOSS scheme for suppliers of digital services in the EU will be merged into the new One Stop Shop (OSS) system. As a user of the current MOSS scheme, you declare your VAT from 1 July 2021 via the new one-stop shop. You can also declare distance sales via the new portal. If you exceed the threshold amount of 10,000 euros with both deliveries, digital services and goods, you can submit your declaration via this portal. As an entrepreneur you can declare the VAT payable in other EU countries via the OSS portal of the Dutch Tax Authorities. You do this by registering for the 'Union Regulation'. You do not need a VAT registration in other EU countries.

Service providers will soon also be allowed to declare VAT via the 'Union Regulation' in the OSS portal. When you opt for the new system, you will first need to de-register his other EU VAT numbers. If you need these other VAT numbers for other sales tax-related matters, for example for the deduction of input tax, you can also choose to keep the number. You will not be able to reclaim VAT paid in these countries via the one-stop shop though. To do this, you must submit a separate request for a refund to the Dutch tax authorities. In this case a local declaration is more convenient, which will also save you extra administrative actions.

The before mentioned companies and platforms that sell products from outside the EU to consumers in EU countries and have them delivered directly can use the OSS portal. This is possible with the "Import regulation" within the portal. The Dutch Tax Authorities arranges that the VAT declared via the OSS portal is sent to the correct EU country. When you store goods for your web shop in a warehouse in another EU country, you need a VAT number from that EU country. The goods delivered by you from the foreign warehouse are taxed with local VAT. They are delivered from that country, and you cannot declare your VAT via the Dutch OSS portal. You file a VAT return in the relevant EU country.

Special information regarding the small business regulation (KOR)

The small business regulation (KOR) is a specific exemption from VAT. You can use the KOR if you are located in the Netherlands and have no more than € 20,000 in turnover during 1 calendar year. The KOR is for natural persons (sole proprietorships), combinations of natural persons (for example a general partnership) and for legal entities (for example foundations, associations and private limited companies). If you, however, exceed the threshold of 10,000 euros in turnover in EU member states other than the Netherlands with your web shop, you become liable for VAT in the relevant EU member states. At that point the VAT rules of the EU member state of your consumer apply and thus, the Dutch KOR is then no longer applicable.

You must declare this turnover in the Netherlands. You can register for the Union Regulation within the one-stop shop, or you can register locally for VAT and file a local tax return. For example, if you also purchase in the relevant country with local VAT, this might prove to be cheaper. You can then deduct the VAT paid directly in your tax return. The turnover on which you file a declaration locally in another EU country does not count towards the KOR. You can continue to apply the KOR until you reach a turnover of 20,000 euros in the Netherlands. If your annual foreign turnover in the EU remains below 10,000 euros and this turnover, together with your Dutch turnover, does not exceed 20,000 euros, you may continue to work under the KOR. In that case, you do not calculate VAT and also do not declare VAT.

Customs legislation for e-commerce shipments

In addition to the VAT rules, customs legislation for e-commerce shipments will also change from 1 July 2021. An electronic import declaration is required for all shipments with a value up to 150 euros. In addition, new regulations will be added for these small shipments that are currently being further elaborated. Suppliers who directly deliver goods from countries outside the EU can, under certain conditions, use the 'Import regulation' within the OSS portal. With this Import Regulation, a supplier submits a VAT return in 1 EU country. This arrangement only applies to shipments with a value of up to 150 euros. Instead of import VAT, the supplier directly pays the VAT applicable in the country of destination via the one-stop shop.

Customs agents, transport and postal companies will have a different regulation if companies do not use the Import regulation. In this case, customs at the EU border will estimate the value of the shipment. Companies collect the VAT due directly from the consumer. They report the import VAT owed on a monthly basis and pay this via an electronic declaration. This also only applies to shipments with a value up to 150 euros. Read more on E-commerce in The Netherlands.

Implementation of these new rules

The One Stop Shop, or OSS, consists of 3 voluntary regulations:

  1. The "Union Regulation" for EU-based companies with at least 1 branch office or subsidiary in an EU country. This regulation applies to intra-EU distance sales and services.
  2. The "non-Union Regulation" for companies established outside the EU without an establishment within the EU. This regulation applies to services.
  3. The "Import regulation" for distance sales of non-EU goods with a maximum value of 150 euros.

The Dutch Tax Authorities will support the one stop shop system from 1 July 2021. The organization has set up an "emergency track" for this purpose. This means that you can use the above regulations, subject to some restrictions:

Manual processing can result in incomplete exchange of information with other EU countries. The tax authorities indicate that any delays caused by the system have no consequences for the VAT payment to the other EU country. For example, a delay will not result in a fine from the other EU country. A declaration via your software package, also called system-to-system, is not possible within the emergency track.

Using the one-stop shop

Your declaration and registration for the aforementioned regulations is done via My Tax and Customs Administration, tab EU VAT one-stop shop. For your registration and declaration you need ‘eRecognition’ (eHerkenning). If you have a sole proprietorship, you can use DigiD. You can register for the Union Regulation and Import Scheme from 1 April 2021.

If you do not yet have eHerkenning for your company, apply for it in time. When you purchase an eH3 login tool for your registration for the new OSS portal, you may be able to claim the "Compensation scheme eHerkenning Belastingdienst". If you are entitled to the scheme, the compensation amounts to 24.20 euros including VAT per year.

Make sure you are prepared for the coming changes

The new threshold amount of 10,000 euros is much lower than the current threshold amounts per country. As a result, you are more likely to owe VAT in another EU country than right now. The new entry rules have consequences for your business operations. You will need to map out in which countries your customers live, how much turnover you achieve in which EU country and which VAT rate applies. EU countries have different VAT rates. This has consequences for your product price per country. Make adjustments to your ERP system for correct administration and invoicing. Also check how you display the different product prices in your web shop. When visiting your web shop, your customer wants to see a correct price including VAT. Consult with your accountant or supplier of the system what options you have for this. Consider whether you use one of the voluntary schemes or opt for a local VAT registration in the individual EU countries. Make sure you have your registration and systems in order before 1 July 2021.

Intercompany Solutions can assist you with any needed changes

If you need to make new calculations, or find out if these changes will affect your company, we can aid you in retrieving the necessary information and personal advice for your Dutch company. We can also assist you with company accounting and VAT registration, the entire financial aspect of your company or branch office in the Netherlands and any other specific questions you might have.

Sources:
1. https://ec.europa.eu/taxation_customs/business/vat/modernising-vat-cross-border-ecommerce_en
2. https://home.kpmg/us/en/home/insights/2021/04/tnf-eu-vat-rules-affecting-e-commerce-sellers-marketplaces.html
3. https://www.bakertilly.nl/

With worldwide lockdowns and infrastructural restrictions, it proved to be very tough for many companies and entrepreneurs to keep operating on a normal scale. In the UK specifically, Brexit also makes business as usual very difficult. Due to Brexit, companies in the UK can no longer profit from the free movement of services and goods that is inherent to the European Union. Instead, they now have to comply to almost 30 different VAT rules that differ per European country.

This has already led to an increase of companies looking to settle in the Netherlands in the past few years and that amount keeps rising. Even during Corona times, the Dutch offer a stable economic climate and unrestricted access to all the benefits of being a member state of the EU. If you are currently having difficulties keeping your company afloat due to Brexit restrictions, it might be an excellent idea for you to consider opening up a branch office in the Netherlands, or move your company entirely.

Companies afflicted by Brexit and Corona

During the past year a lot has changed. Next to the UK finally exiting the EU, Corona hit the world which resulted in several strict measures in various countries. Especially for UK companies this coincidence of events resulted in companies and entrepreneurs failing to meet deadlines, provide services or ship goods over the border. The EU and UK came to a trade agreement, but the freedom of movement that accompanied being a member state of the EU is sorely missed. 

The amount of paperwork most businesses have to fill out just to ship goods is substantially higher, leading to shipping delays and problems at the border. The UK government has therefore advised many company owners to open subsidiary offices in EU member states, such as Ireland and the Netherlands. A lot of companies already made this decision and thus, now operate within the borders of the EU again.

Benefits of a branch office in the Netherlands

If you need a safe haven to be able to run your business activities as usual, the Netherlands is a perfect fit for companies originally based in the UK. Next to being close in proximity, the Dutch offer a wide array of possibilities and benefits for entrepreneurs. The economic climate in the Netherlands is still very stable. There are hundreds of companies already making the move according to the NFIA, mostly because Holland is strategically perfectly placed for internationally oriented businesses, 

The Dutch have made a very positive name for themselves, being open and welcoming to foreign companies and investors since centuries. The Netherlands offers innovation and groundbreaking work in many fields, such as public healthcare, technology, IT infrastructure, agriculture and also in more artistic fields such as design and marketing. If you are into technology and gadgets, your company will flourish with many interesting cooperation possibilities and a wealth of acquirable knowledge and information.

If you want to open a branch office and hire personnel, you will find high-quality employees easily. The Dutch are in general bilingual, sometimes even trilingual and also very computer savvy. There are also plenty of expats residing in the Netherlands, if you prefer someone who speaks native English or has a certain professional affinity with your services or products. 

How can you open a subsidiary office in the Netherlands?

Many entrepreneurs worry that the whole process of establishing a subsidiary company or a branch office in the Netherlands is a tedious and difficult task. If you plan to do it alone, it can be indeed tricky. You will need to obtain a vast array of documents and take the right steps to register your company correctly, in order to also obtain a VAT number and a bank account. You will also have to get the necessary permits, since the UK is no longer considered a part of the EU and this complicates registration a bit. 

Then there is also the question of the preferable legal entity you want to choose, which depends on several factors. You will need to know the (expected) amount of profits in the foreseeable future, how many people you plan to employ and the amount of directors or partners involved. If you want to know a bit more about legal entities, you can find some in-depth information on this page.

Intercompany Solutions can register a subsidiary office for you in just a few days

If you really want the job well done, we always advice to hire a professional company to fill out the forms and do the work for you. Intercompany Solutions has many years of experience in establishing and registering foreign companies in the Netherlands, meaning we can take care of the entire process from A to Z. You can contact us for more information, or look at our website for more information about the process.

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

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