The Difference Between a Dutch Branch and Subsidiary

When registering a Dutch company investors have the option to set up either a branch or a subsidiary.

The particular circumstances regarding the interests of the international firm may definitely determine the final choice of legal entity. However certain aspects have to be considered when choosing between a Dutch subsidiary and a Dutch branch.

The general characteristics of Dutch subsidiaries and branches are listed below.

Dutch branches

Branches are permanent establishments forming single entities with the international companies that register them.

This option brings advantages and drawbacks.

Advantages of opening a branch:

– it is fairly easy to incorporate and the involved costs are generally lower;

– remitted earnings are not subject to withholding tax;

– no requirement for publication of the branch’s financial statements (there are exceptions);

– losses of the branch in the Netherlands can be compensated by profits/taxes of the main office;

– no tax for capital registration.

Disadvantages of opening a branch:

– the branch does not have a Dutch identity and functions as an international company;

– the establishing company carries full liability with respect to the obligations and debts of its branch in the Netherlands;

– it may be more difficult to gain the acceptance of the locals due to the branch’s international identity;

– permanent branch establishment may lead to double taxation problems.

Dutch subsidiaries

The most important advantage of opening a subsidiary in the Netherlands is that the liability of the shareholder(s) is limited. However other aspects should also be considered. Below is a list of some pros and cons with respect to establishing a subsidiary:


– the liability of the shareholders is limited to their actual contributions to the capital;

– the mother company does not carry liability for its subsidiary in the Netherlands unless specified otherwise;

– the amortization of any intangible asset can be allocated for tax purposes in the Netherlands;

– nationals are likely to prefer conducting business with subsidiaries rather than branches;


– more costly and complicated procedure for establishment;

– remitted earnings are subject to withholding tax;

– large and medium companies are required to publish financial results;

– the law requires the company to appoint a director.

International entrepreneurs are advised to consider the main pros and cons listed above before deciding whether to open a Dutch branch or subsidiary. In case you require further information or support to decide which option is best for you, please, get in touch with our lawyers in the Netherlands.

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