Starting a company oversees can involve many important choices, such as choosing the most profitable location and country for establishment. The Netherlands has been holding top positions in many economic and financial listings, due to the stable nature of the Dutch economy. In this article we will outline some interesting facts about the economy in the Netherlands, trending topics and current developments. This will provide you with enough information to seriously consider the Netherlands to branch out your business, or establish an entirely new business.
The current Dutch economic situation in a nutshell
The Netherlands is the sixth-largest economic power in the eurozone and the fifth-largest exporter of goods. The Netherlands, as a trade and export nation, is very open and therefore vulnerable to fluctuations in the global economy. In recent years, the recovery in the European Union (EU) has enabled the Dutch economy to grow dynamically. However, the uncertainty of world trade, the Brexit process and, above all, the spread of the COVID-19 pandemic led to a decline in the Dutch economy. In addition, exports and imports decreased by 3.9% and 5.3% respectively in 2020 compared to the previous year.
Political developments in the Netherlands in 2021
This year, acting PM Mark Rutte won the election with his center-right 'Party for Freedom and Democracy'. It is his fourth consecutive election victory (2010, 2012, 2017, 2021). He has even gained a little more with 22% of the vote compared to 2017 and has a clear lead with 34 seats in the 150-seat parliament. The big surprise of the latest elections is Sigrid Kaag of the left-liberal Democrats 66 and currently acting Minister for Foreign Trade and EZA. It became the second-strongest political force with 14.9% of the vote and 24 seats.
In the past, the formation of a government in the Netherlands took an average of three months. In 2017, it took as much as 7 months. This time, all parties, especially the VVD, want a quick result in terms of the pandemic. Until a new government is appointed, Rutte will continue to do business with his current government. This means that no new trade agreements or restrictions currently apply, enabling foreign investors and company owners to steadily do business with the Netherlands.
Many interesting opportunities for foreign companies
Many foreign companies which have generally successfully gained a foothold in different countries through a healthy product and quality policy, also find opportunities in the Netherlands. There Is a wide plethora of sectors to do business in, such as the organic products sector in particular, which shows very good absorption potential. E-commerce and online businesses are also rapidly gaining in popularity, this is partly due to the effects of Covid as well. Many small entrepreneurs are selling unique goods online, which makes the Netherlands a perfect country to invest in if you have original or handmade products to sell.
Focus sectors within the Netherlands
There are many sectors within the Netherlands that offer potential for foreign entrepreneurs. These can vary from agriculture, technology to the food and beverage industry and clean energy. The Dutch always try to be at the forefront of innovation, providing efficient solutions for interdisciplinary problems. We will outline a few sectors that are particularly popular right now and, thus, provide a stable basis for investment.
Furniture and interior design
The Dutch furniture industry is located in the middle and upper price segment, where the market demands quality and luxury. About 150,000 people are employed in the furniture industry. The furniture industry in the Netherlands had 9,656 stores in 2017. The housing sector generated 7% of sales in the retail sector in 2017, with sales of EUR 7.9 billion. The housing industry faces major challenges in the coming years. House and apartment prices in 2018 (excluding new buildings) have risen by an average of 8.9% compared to 2017. In the future, consumers expect a business to be more accessible, meaning the opportunities will continue to extend to digital communication. If you have a talent within this sector, the Netherlands offers ample opportunities in the form of both small projects and large corporations.
The food and soft drinks industry
The Netherlands is one of the world's largest producers of cheese, dairy, meat, charcuterie, fruit and other consumer goods. The majority of the smaller supermarket companies have merged into the shopping cooperative Superunie, which is part of EMD. Supermarket chain Albert Heijn (Ahold) has the largest market share of 35.4%, followed by Superunie (29.1%). Sales of Dutch supermarkets amounted to 35.5 billion euros in 2017. The Dutch consumer is currently increasingly interested in business models in which a shop simultaneously functions as a supermarket, snack bar, traiteur and an electronics or clothing store. The boundaries between LEH, hospitality and lifestyle are rapidly blurring. This makes it an excellent possibility for foreign companies to profit from this interdisciplinary approach.
In the field of renewable energy the Netherlands amounts to almost 6% of the total usage nationwide. Although the use of solar energy has increased significantly since 2011, it still accounts for less than 5% of renewable energy sources(1). This has motivated the Dutch to invest in renewable energy solutions. EU Directive 2009/28/EC set a binding target of 20% share of renewable energy in energy consumption by 2020; in the case of fuels, the share of renewable energy sources should be 10%. These measures are expected to increase the share of renewable sources by 27% by 2030(2). Energy is one of the top nine sectors formulated by the Government to play a leading role internationally. The Netherlands is leading the way in the field of electro-mobility.
If you would like to become involved in the renewable and clean energy sector, the Netherlands can offer you all the tools and knowledge you need. Even though the Netherlands has a lot of catching up to do regarding renewable energy, there is an ample amount of funds being invested in new solutions and inventions. This creates opportunities for foreign companies in areas such as energy saving for new buildings, decentralized energy generation such as wind energy, smart grids and also infrastructure projects, innovative soil remediation and waste processing techniques and flood protection. The Netherlands also offers environmental subsidies for certain green technologies and investments.
Want to invest in the Dutch economy?
Next to these sectors, the Netherlands also provides opportunities in many other areas. If you are thinking about setting up a company in the Netherlands, Intercompany Solutions can assist you during the entire process. If you are not a citizen of an EU member state, we can also help you with the applications for necessary permits. Feel free to contact us for professional advice or a quote.
If you would like to set up a business in the Netherlands, you will need to take into account that this means you will also have to pay several business taxes. The exact amount and type(s) of tax(es) you will need to pay depend on the legal entity you choose, your business activities and several other formalities. To give you a head start, we have compiled basic information about Dutch business taxes and the implications this has for your possible business venture in the Netherlands. For personal advice on this matter, you can always contact Intercompany Solutions.
When is someone considered an entrepreneur for Dutch income tax purposes?
Not everyone who wants to be a Dutch entrepreneur actually is an entrepreneur for income tax purposes. If your activities take place in the economic sphere, and if you can expect a profit, you have a source of income and you may be an entrepreneur for income tax purposes. If your activities take place within the hobby or family sphere, you are not an entrepreneur for income tax purposes.
In order to qualify for income tax, there are 3 sources of income:
- Income from business
- Salary from employment
- Results from other activities such as investments and real estate
The source of your income depends on a number of factors. The law and case law set certain requirements that entrepreneurs must meet. After you have registered your company, we will assess whether you meet these requirements on the basis of your circumstances. The Dutch Tax authorities pay attention to several factors, which we have outlined below.
How independent is your company?
A business generally implies a certain measure of independence, as you don’t work for someone else but yourself. This means you should be the one that determines general management, daily activities and the goal of your business. If others determine how you should organize your company and how you carry out your activities, there is no solid basis for independence and thus; there is usually no independent company.
Are you making a profit? If so, how much?
Generally, the main goal of any business is generating profit, unless you want to establish a Dutch business in the non-profit or charity sector. If you only manage to make a very small profit or suffer structural losses that outweigh the profit, it is unlikely that you will make a real profit. In that case your activities won’t be marked as a business.
Do you own any capital?
Since the introduction of the Flex-BV, you don’t have to deposit an obligatory amount of capital anymore to start a Dutch business. Nonetheless, capital is necessary for many types of companies in several industries. You might have to invest in machines, advertising, hiring employees and insurance, just to name a few examples. Sufficient capital to start a business and running it for some time indicates that you might have a business as per Dutch law.
Who will be your clients?
The best thing for any business is a stable client base. The more clients you have, the more you will be able to reduce payments and certain continuity risks. With a full client database you also don’t depend on just a few clients anymore, increasing your independence as a business owner and thus, making it more viable for your business to survive.
How much time will you put into your work?
The amount of time someone spends on business activities is also a deciding factor. If you spend a lot of time on an activity without yielding returns, you usually don't own a business on paper. This essentially means that you must spend enough time on your work to make it profitable. If this is the case, your business can be seen as valid. Also keep in mind that you may be eligible for certain types of entrepreneurial deduction. For some of these entrepreneurial deductions you must meet the Dutch “urencriterium”, which is loosely translated as hours criterion or the reduced hours criterion.
“Urencriterium” or hours criterion conditions
Someone usually meets the hours criterion if you meet the following 2 conditions:
- You spend at least 1,225 hours on your company during a calendar year. Did you interrupt your work as an entrepreneur due to pregnancy? In that case, the hours not worked over a total of 16 weeks still count as hours worked.
- You must spend more time on your business than any other activities (for example paid employment). If you haven’t been an entrepreneur in 1 of the 5 previous years, then you do not have to meet this condition.
How do you publicize your company?
You depend on clients for your company’s existence. In order to be an entrepreneur, you must make yourself sufficiently known, for example through advertising, an internet site, a sign or your own stationery. Your company needs to be distinguishable from other brands and competitors, next to being uniquely tailored to your goals and ambitions. The more people know about your company, the higher the chances of success.
Are you liable for your company's debts?
If you are liable for the debts of your company, then you may be an entrepreneur. This is a tricky subject, though, as some Dutch legal entities profit from a division between personal debt and corporate debt. If you are the owner of a Dutch BV, for example, you will not be personally liable for any corporate debts you make. This doesn’t mean you don’t have to pay those debts though; any debts you make with your company need to be paid in full.
Can you be affected by an 'entrepreneurial risk'?
An entrepreneurial risk involves certain factors that can be troublesome and unexpected with any business. Is there a chance that your clients will not pay? Do you use your good name for the performance of your work? Are you dependent on the demand for and supply of your products and services? If you run 'entrepreneurial risk', this generally means you probably have a business.
When are e-commerce activities considered being (part of) a business?
A lot of people are currently interested in setting up an e-commerce business, due to the flexibility and freedom of movement this option provides. The Netherlands is especially a stable and reliable country to set up an e-commerce business, since the country provides a very competitive and financially profitable market. Do you have an internet site which you regularly use to advertise on the internet for business purposes? Or do you earn money with your internet site, such as by selling goods or services online, or with activities as an affiliate? If the answer to these questions is 'yes', then you are probably an entrepreneur. But whether this is really the case depends on several factors. For example, there are differences between being an entrepreneur for income tax and being an entrepreneur for VAT.
When are you not considered as an online entrepreneur?
If you have an internet page or a website, this doesn’t automatically make you an e-commerce entrepreneur. Do you offer goods or services for free? Or only in the hobby or family atmosphere? Then you are not an entrepreneur according to Dutch law. This is due to the fact that you do not have to pay VAT, and, you also do not have to state anything in your income tax return.
E-commerce entrepreneur for Dutch income tax
Do you sell goods or services online? And can you realistically expect a profit from these goods and/or services? Then this is seen as income and you may be an entrepreneur for income tax purposes. Do you want to register your company in the Netherlands as an online entrepreneur? Then Intercompany Solutions can assess for you whether you meet the requirements for entrepreneurship on the basis of your circumstances. Often, entrepreneurship can only be assessed after the end of a business year for income tax purposes.
Not an entrepreneur, but receiving income?
Do you have income from your internet activities that cannot be considered a hobby? And do you lack any basis of paid employment, but you cannot be considered an entrepreneur either? For Dutch income tax purposes, this is qualified as 'results from other activities'. Your profit is calculated in the same way as with entrepreneurs. But you are not entitled to certain schemes for entrepreneurs, such as the self-employed deduction or the investment deduction. In such a case it would be wise to consider establishing a formal company and possibly benefit from deductions and premiums.
E-commerce entrepreneur for Dutch BTW (VAT)
If you are not an entrepreneur for income tax purposes, you can still be an entrepreneur for VAT purposes. This is mainly the case, when you carry out activities independently and earn income from these activities. In order to find out whether you are an entrepreneur for VAT, we can assess certain facts for you and help you find the best way to do business.
Business taxes in the Netherlands
Once you are officially considered to be an entrepreneur or company owner according to Dutch law, you will need to pay an assortment of various business taxes. Meaning you cannot escape the tax authorities, but this is generally the case in any other country. Not everyone pays the same type and/or amount of taxes. As a Dutch entrepreneur you are required to file a quarterly and yearly tax return, pay tax and sometimes you get something back as well. But what kinds of taxes will you face?
Dutch BTW or sales tax (VAT)
In the Netherlands you pay a certain amount of VAT over services and goods, so as a company owner you will have to charge your customers tax too. This is called Dutch BTW, which is the same as VAT. The abbreviation VAT means 'Value Added Tax'. It concerns the tax you pay on sales made. You charge VAT on your invoices. And vice versa; if you pay invoices, they also state the amount of VAT that you have to pay. The standard rate for VAT is 21%. In some cases special rates apply, these are 6% and 0%. Exemptions may also apply. You pay the VAT that you owe to the tax authorities per month, quarter or year. The Dutch Tax Authorities will let you know exactly how often you have to file a return. In most cases, entrepreneurs file a quarterly VAT return.
Dutch corporate tax
Dutch corporate income tax is a tax that is levied on the profits of companies, which are mostly qualified as a B.V. or N.V.. These companies and organizations must file an annual corporate tax return. Natural persons such as sole proprietorships pay tax on the profits through income tax. This is different for companies. Public companies, private companies and sometimes also foundations and associations pay corporate tax. In some cases, exemption from corporate tax is possible. Think, for example, of an association or foundation that mainly obtains its income through the efforts of volunteers or where the pursuit of profit is of additional importance.
Dutch dividend tax
If your company is a N.V. or B.V. and makes a profit, you can distribute part of that profit to the shareholders. This is usually done in the form of dividend. In that case, you pay dividend tax to the Dutch Tax Authorities. Does your company pay dividends to shareholders? In that case, you must withhold 15% dividend tax on the dividend you pay out. You must declare and pay within one month of the day on which the dividend is made available. In a number of cases you may be eligible for a (partial) exemption or refund of dividend tax.
Dutch income tax
You pay Dutch income tax on your taxable income if you have a sole proprietorship or partnership under firm. This is your income, minus all operating costs settled with any deductible items and tax arrangements. You must declare this to the Dutch Tax Authorities before the 1st of May every year. You only have taxable income if you make a profit with your business. This taxable income is the basis for your income tax. With your tax return, you can deduct deductible items and tax arrangements from your profit. This reduces the profit and therefore you pay less income tax. Examples of these deductible items and tax schemes are: the entrepreneur's deduction (consisting of the self-employed deduction and any starters deduction), general tax credit, investment deduction, SME profit exemptions and employed person's tax credit.
Dutch wage tax and national insurance contributions
If you employ staff, you inevitably need to pay your employees a salary. You need to deduct payroll tax from those salaries. These payroll taxes consist of the withholding of payroll tax and the payment of national insurance contributions. National insurance policies are legally required social insurance policies, that insure your employees against the financial consequences of old age, death, special medical expenses or having children.
The benefits of outsourcing accounting activities
Any entrepreneur establishing a business in the Netherlands can choose to their own administration, and therefore also their tax return. In such cases, it is desirable that you are well informed of any fiscal, financial and economic changes. The (partial) outsourcing of your administration and periodical declarations may initially seem expensive. But experience has shown, that an administration office or accountant actually earns you money.
When starting a business, you can include various scenarios in your business plan that include expectations of costs, including those of taxes. If you write a business plan, you can look at different financial scenarios together with the expert and see what influence the taxes have on the liquidity within your company. Intercompany Solutions can assist you during every step of this process; from the registration of your company to accountancy services. Please feel free to contact us for professional advice or a clear quote.
Read further: Company Formation Netherlands
If you decide to expand your business to the Netherlands or even start an entirely new business, there are many legal entities you can choose from. Most entrepreneurs choose the Dutch BV, since this business type by far outweighs many other legal entities in terms of financial and fiscal benefits. But some business activities are better suited with a more specialized legal entity, that tailors certain specifics uniquely to the business ideology and goals. A foundation, which is named ‘stichting’ in Dutch, is often your best option if you want to start an endeavor with a more idealistic goal. We will provide you with more information about this legal entity in this article.
What is a Dutch foundation company exactly?
A foundation is a type of Dutch legal form with its own legal personality. The main purpose of a foundation is to strive towards achieving a social endeavor or idealistic goal. This inevitably means, that a foundation should not aspire to generate profit. If any profit is made, it should be allocated to achieve the purpose for which the foundation was established. Foundations do not have to pay taxes unless they operate as a business. In this case a corporation tax has to be paid. Additionally, foundations that have more turnover than six million euros, for a duration of two years consecutively, have to file their annual accounts.
More information on the foundation company
Every foundation must at least have a board of directors, similar to the Dutch BV. A supervisory board which monitors the board of directors may be appointed within the statutes. A foundation does not have any members and is thus not required to hold a members meeting to make important decisions. Since foundations are a legal entity, the board of directors is usually not personally liable. This is also comparable to the Dutch BV. The exceptions to this are:
- When a foundation is not yet registered with the Dutch Chamber of Commerce
- When a foundation is not established through an official notary and the deed isn’t deposited at the Chamber of Commerce
- In case of mismanagement
- When a foundation is unable to pay their taxes and fails to report this to the Dutch Tax Authorities within two weeks
All board members of the foundation have signing authority. Specific rules may be established in the statutes, but only as long as these are amended by an official notary. Furthermore, others may also be granted singing authority through the power of attorney. Foundations may hire staff and are obligated to pay taxes and social security contributions for its staff. In case a foundation is to hire staff, they must also register as an employer with the Dutch tax authorities. Board members may be on the payroll of a foundation, except if the foundation has an ANBI status. We will explain this in more detail later.
Next to that, on the 27th of September 2020 a new law regarding foundations will go into effect. This rule will require anyone within the foundation deemed as: “ultimate beneficial owner(s)” or UBO, to be included in a so called UBO register. UBO’s are persons within the foundation that own more than 25% of the shares and voting rights, or who have the final say when taking company decisions. This act is a measure against fraud in an ongoing government effort regarding the Prevention of Money Laundering and Terrorism Financing Act, also known as the Wwft.
How to establish an NGO in the Netherlands?
A foundation may be started alone, with others and also with other legal entities. A foundation may even be started in your name, by someone else after your death (as long as this is clearly stated in your will). A foundation must be started by drafting a deed and amending it by an official notary. This deed will be deposited at the Dutch Chamber of Commerce. Some examples of what this deed should include are statutes, the name of the foundation including the “stichting” suffix and also its location. Intercompany Solutions can assist you during the entire registration process due to years of experience withing the field of setting up NGO’s.
What is the Dutch ANBI status?
ANBI is a Dutch abbreviation for: “Algemeen nut beogende instellingen”, which can be translated to institutions with a public benefit for the common good. ANBI’s usually are devoted entirely to serving a public benefit, such as a charity, cultural or scientific institution. The aim is not to generate profit, but to improve society as a whole or certain societal causes.
ANBI’s may enjoy a variety of tax benefits. Some examples of these advantages include not paying inheritance or gift tax (when used for the public benefit), a (partial) refund of energy tax and more. Additionally, donors may also enjoy certain benefits such as subtracting the financial donations from their taxes. The ANBI status has to be requested through the Dutch Tax Authorities and is subject to strict conditions.
In order to be eligible for ANBI status, an organization has to meet all conditions and criteria set by the Dutch Tax Authorities. These conditions are as follows:
- 90% of all business activities need to serve the public benefit
- ANBI’s may not pursue to generate any profit except for funding the public benefit
- All members and personnel have to meet strict integrity requirements (a statement of good conduct may be requested). ANBI status may be revoked if any person of importance within the ANBI is convicted or has been during the past four years
- No one may manage ANBI funds as if it were their own, additionally no single person may have a majority voice in the management of ANBI funds
- The ANBI may not possess more funds than reasonably required for performing its needed activities
- Board members may only receive (non-excessive) travel and attendance compensation
- An up to date policy plan has to be in place (this plan encompasses the way in which an ANBI wishes to achieve its goals)
- The balance between management costs and expenditures has to be reasonable
- Any funds that are left after dissolution of the ANBI have to be spent on an ANBI of a similar type
- The ANBI must comply with all of its administrative obligations
- The ANBI must publish specific information (such as name, contact details, global policy plan, remuneration policy and more) on either their own or on a publicly owned website
ANBI’s may lose their status, if they no longer comply with conditions and requirements as set by the Dutch tax authorities. This can have serious consequences for the continuity of your business, so if you want to acquire the ANBI status, it is advisable that you are absolutely sure you can comply with all the legally necessary requirements.
What is a Dutch SSBI?
SSBI is the Dutch abbreviation for “Sociaal belang behartigende instellingen”, which can be translated as social interest promoting institutions. SSBIs are usually organizations which serve the interest of their members, or a small target group. Additionally, SSBI’s may also have a social benefit. Some examples of SSBI’s consist of (but are not limited to) choirs, dance groups, sports organizations, hobby clubs, petting zoos, playgrounds, associations for staff, elderly and the neighborhood.
SSBI’s are not required to pay gift or inheritance taxes, as long as they apply for exemptions thereof by filing their gift taxes. If you own an SSBI, you also do not have to pay any profit tax.
In order to be eligible for SSBI status an organization has to meet all conditions as set by the Dutch tax authorities. These conditions are as follows:
- Pursuing a social interest, this needs to be evident from the statutes or regulations of the organization
- Actual activities are in line with the pursuit of the social interest as per statutes and regulations
- The organization does not pay profit tax or is exempt from this
- Board members only receive (non-excessive) travel and attendance compensation
- The organization has to be located in the European Union, BES Island, Aruba, Curaçao or Sint Maarten
- Any donations or inheritances received are used in pursuit of the social interest of the organization
Intercompany Solutions can set up your Dutch foundation in just a few business days
Intercompany solutions can identify which legal form is best fitted for your interests and arrange all legal formalities needed for starting your own NGO. We can also help you with any questions you might have in this regard. If you require more information or would like some personal advice, you can contact us to discuss your options.
In a country such as the Netherlands, with an enormous amount of skilled personnel, the recruitment business is almost always booming. This might offer some interesting opportunities for people who have a talent for finding the right people for the right job. If you are interested in the possibilities of opening a recruitment company in the Netherlands, please read on for more information about the benefits, the procedure of registering as an employer and some extra information about Dutch wage and payroll taxes.
Necessary skills and experience to open a recruitment company
The recruitment business, especially in the Netherlands, is incredibly competitive. Since there are so many qualified, highly educated and generally bilingual people in the country, including expats, there is always a high level of supply and demand within this sector. This means that any new recruitment company will have to stand out from the crowd, in order to make a real shot at success. The best way to do this is by either specializing in a very specific sector, or be highly skilled in connecting potential candidates and businesses. A combination is preferable, but either way you will need to put some work into the company if you want it to flourish.
Some standard skills that owners of recruitment companies often share are commercial instinct, an extrovert personality, having a high amount of ambition and socializing skills, determination and a positive attitude. If you want to focus on a specialist sector or one with highly qualified personnel, then it is also advisable that you have finished a university degree yourself. This makes it much easier to match and acquire projects.
Benefits of owning a Dutch recruitment company
Since the digitalization of society, it has become much easier to work from a remote location. Almost every sector benefits from a more digitalized approach, this goes for recruitment companies as well. There is not an immediate need anymore to own a physical office in the Netherlands, since you can execute the entire recruitment process from your own current location. Interviews can nowadays be done via platforms like Skype and Zoom, next to that the entire documentation process can be digitalized. The only important factor is ownership of a Dutch company with a registration address. This is mainly due to the taxes you will have to pay when you hire personnel, next to corporate and income taxes.
Registration as an employer in the Netherlands
If you want to start a company in the recruitment business, you will need to register as a Dutch employer. This obligation basically starts the moment work is being performed by employees, because that moment the obligation to pay Dutch income tax and social security premiums starts as well. If an employer has a taxable presence in the Netherlands, officially registering as an employer and maintenance of a payroll is obligatory. A taxable presence means the company either has a permanent establishment or a representative in the Netherlands.
Dutch payroll taxes
If you are going to pay salaries, then there will also be Dutch payroll taxes involved. The Dutch payroll tax is named “Loonheffing” in Dutch and is collected monthly as a withholding tax. This means, that you pay the required percentage every month to the Dutch Tax Authorities and other applicable institutions. During the next year, the employee will have to send in their income tax declaration. At that point, the tax authorities will do a calculation and either pay the employee overpaid funds back, or collect a possible deficit. In any case, this tax consist of several components:
- Dutch wage tax
- National social insurance contributions
- Employee insurance contributions
- A Care Insurance Act contribution that is income dependent
Dutch wage tax
The Dutch wage tax is essentially a tax payment that is paid in advance for the Dutch income tax. The tax withholding system in the Netherlands has been instated as a safeguard for taxpayers, in order for them not having to pay a very large amount of taxes once per year. Instead, wage tax and social security contributions are levied every month, by being subtracted from an employees monthly salary. This way of dealing with tax also provides the Dutch Tax Authorities with substantially more certainty that income tax will indeed be paid and reported by taxpayers.
The wage tax is calculated with multiple withholding tables as a basis. That take into account several distinct factors such as:
- The age of the employee
- The current progression of the Dutch income tax rates
- Standard tax deductions and allowances
If an employee has non-periodical salary components such as bonuses or a severance payment, then specific withholding tables may have to be applied. In most standard cases, meaning the only income a certain employer has is the income from his or her employment and the employee is not entitled to certain special forms of tax deductions or allowances, the wage tax that is withheld every month will essentially be equal to the Dutch income tax. Due to this fact, a lot of people don’t even receive an invitation to file the annual tax return. In many cases employees and business owners still choose to do so, often because they can benefit from other tax deductions such as the interest on a mortgage or money invested in education.
Tax payment obligations in the Netherlands
According to Dutch law, wage tax returns need to be filed within a month after the last payment with the Dutch tax authorities. This applies to the payments too of course. So if you, for example, pay your personnel the 20th of each month, you will have to file this information before the last day of the next month. There is an exemption to this rule, namely the period when an employee starts to work at a company, but the Dutch Tax Authorities haven’t granted a wage tax number yet. Once this number is granted, the Dutch tax authorities then confirm all the filing and payment deadlines of historical wage tax returns.
Set up your new recruitment company in the Netherlands in just a few business days
If you are interested in the recruitment business, there is a good chance that the Netherlands will offer you the necessary possibilities of achieving success. The highly skilled workforce together with an excellent fiscal and economic climate, provide excellent conditions for this specific sector. In order to register your company with the Dutch Tax Authorities, you will first need to register your company in the Chamber of Commerce. Once that is settled, you can start your business activities. If you would like to receive more information on the subject, Intercompany Solutions can assist you with professional advice and practical information.
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:
- The BV is a legal form with limited liability
- The compulsory starting capital is only 1 euro cent
- You only pay 15% or 25% tax on the profit of your BV
- You can divide your properties and financial risks between multiple BV’s via a holding company
- You can attract new investors through shares
- A BV emanates a professional impression
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
- Liquidating assets
- Informing the Dutch Chamber of Commerce (KVK)
- The last tax declaration (We can assist with filing the final company accounts.)
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:
- The general provisions about the meeting
- The date of dissolution (this cannot be in the past)
- The liquidator
- The person in charge of storing company papers
- Where these papers are stored
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.
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 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 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. 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. 
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.
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.
 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/
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. For such a small country that is no small feat! The Netherlands also acquired the 4th position in the World Competitiveness Ranking 2020. 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:
- The capitalization on economic and societal opportunities for AI
- The advancement of AI knowledge through research & development and human capital
- The safeguarding of the public interest through the establishment of ethical AI guidelines
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.”
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.
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,
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.
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.
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.
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.
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
- Type or size of the company
- Stage of the company
- Cost of takeover, cash flow and financing options
- Time frame
- Business plan
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.
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.
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.
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:
- The combined global annual revenue exceeds 150 million euros, and
- At least two of the companies have an annual revenue of at least 30 million euros or more within the Netherlands
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:
- The combined global annual revenue exceeds 55 million euros, and
- At least two of the companies have an annual revenue of at least 10 million euros or more within the Netherlands
Finally, pension funds are also subject to different rules. Pension funds must request permission for takeover from the ACM, if:
- The total gross worth of written premiums in the previous year exceeds 500 million euros, and
- of this amount at least two of the companies have received a minimum of 100 million euros from Dutch residents
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.
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 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.
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.
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
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.
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:
- repairing bicycles
- repairing shoes and leather goods
- repairing clothing and household linen
- hairdressing services
- work on dwellings
- offering camp parking
- offering accommodation
- granting access to cultural and recreational events and facilities
- performance by performers
- opportunity for sports and bathing, including swimming pools and saunas
- passenger transport
- supplying or lending e-books
The 9% rate only applies if the eBook is similar to the physical edition to which the 9% rate applies.
- granting access to news websites (such as newspapers, weekly newspapers and magazines)
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:
- yielding goods, such as cultivation of plants and breeding of animals
- selling food in the hospitality industry
- renting, repairing, maintaining, adapting, fitting and preparing (medical) devices
- lending books and periodicals
- lending or renting out works of art by the artist himself
The 21% rate includes the lending or rental of works of art by others, such as art lending institutions.
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:
- investment gold
- collective advocacy
- composers, writers, cartoonists and journalists
- financial services and insurance
- fundraising activities
- health care
- youth work
- supply of movable assets
- lectures, excursions and guided tours
- real estate
- postal services
- radio and television
- partnerships (umbrella exemption)
- sociocultural institutions
- sports organizations and sports clubs
- funeral directors
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:
- If it’s a Dutch customer, the appropriate VAT rate applies.
- If your customer is a company in an EU member country, then your customer will pay VAT in their own country, and you charge 0% VAT.
- If your customer is a consumer living in an EU member country, then you will be charged VAT in accordance with the regulations in the country of the consumer
- If you have a customer in a country outside the EU, you do not pay or charge VAT
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.
Some fund-raising activities are also exempt from VAT, this is the case if the activities are initiated for:
- Care organizations
- Youth organizations
- Educational organizations
- Collective interest organizations such as charities
- Sports organizations
- Social and cultural institutions
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.
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).
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.