Tag: company formation netherlands - Page 3

If you are an owner of a Dutch business but at some point, you become unable to cover your company’s debts, you may petition for bankruptcy in front of the Dutch court. For this purpose, you need to fill out a form (in Dutch) either personally or on behalf of the company that you represent. The application can be submitted without hiring a lawyer.

Creditors filing for bankruptcy

If your company has more than two creditors, they may hire a lawyer to file documents for declaration of your bankruptcy. There are certain conditions which determine whether it is worthwhile to apply for bankruptcy, including the amount of money loaned and the particular claims of the creditors. The creditors may suggest mediation in order to agree on terms acceptable for all partiers, instead of requesting the court to declare you bankrupt.

Assets

When you are declared bankrupt, the court seizes your assets. Personal bankruptcy is also possible if the type of legal entity you chose for your business allows it.

Bankruptcy and liability of officers and directors

Directors and officers of private limited companies (BV) or public limited companies (NV) that have become unable to cover particular employee / retirement contributions or taxes (insolvency) are required to report the situation as soon as possible to the National Customs and Tax Administrations, the Dutch Agency for Employee Insurance (UWV) or the respective pension fund. Lack of reporting may lead to personal liability.

Further steps

If your company is declared bankrupt by the court, an authorized receiver will be appointed. The receiver has exclusive rights to administer the company after the declaration of bankruptcy. The receiver can divide proceeds among creditors and sell assets. They decide if you need to stop work immediately or after a certain time period. They are also able to grant permissions for activities that are allowed. These activities may include conclusion of contracts, selling, collecting and paying bills, etc.

Starting fresh

If you plan to start a new business as an entrepreneur, you still need to cover any outstanding debts or accounts to the creditors and the authorities (e.g. the Customs and Tax Administration).

Bankruptcy of customers

If a customer goes bankrupt while owing you money, the appointed receiver will notify you of the bankruptcy. In case you do not receive a written notification, then you should contact the receiver yourself. A meeting will be held with the receiver to discuss the outstanding debts and then you will have the opportunity to explain your claims.

Creditor ranking

When bankruptcy is declared, creditors are ranked in a particular order. The ranking is partially dependent on the nature of their claims. The receiver determines the ranking and prepares a (conclusive) distribution list.

Please note: We cannot assist with bankruptcy cases.

Characteristics of the Dutch Professional Partnership

In the context of the Dutch law, the “maatschap” or professional partnership is different from the other forms of partnership (general and limited) as it represents a cooperation of professionals, e.g. accountants, physicians, lawyers, dentists or accountants, and its main goal is not the joint performance of business activities. The partners in this form of cooperation are called “maten”. Each “maat” participates in the partnership by contributing personal assets, effort and/or capital. The aim of the cooperation is sharing both the earned income and the incurred expenses.

Establishing a Professional Partnership in the Netherlands

For the establishment of professional partnerships, the law does not require the conclusion of a contract between the partners. However, it is in the partners’ best interests to draft an agreement. The partnership agreement can include provisions related to:

the contributions made by each partner;
the profit distribution proportionally to the contributions (it is not possible to transfer all profits to a single partner);
the distribution of powers: all partners can act as managers unless agreed otherwise. Since July, 2008, professional partnerships need to be listed in the Commercial Registry. This requirement is not relevant to internally acting partnerships, e.g. where expenditures are pooled together.

Partnership liability

Authorized partners can sign contracts binding the whole partnership. Each of the partners may be held equally responsible. Generally, if a partner acts beyond his authority, the remaining partners are not liable for his actions. Only the responsible partner is held liable. Professional partnerships do not have a capital that is separate from the partners’ personal assets. Creditors with claims towards the partnership may seek recovery of a proportionate part from each partner; such creditors are not ranked above ones with claims on the personal assets of any partner. Married professional partners are in the same position as general partners in VOFs or CVs. It is in their interest to conclude pre- or postnuptial agreements. Read more on Dutch bankruptcy law.

Social security and tax

Each partner is liable for income tax with respect to his/her share of the profit. If a partner is considered an entrepreneur by the Tax Service, then he/she can receive allowances for entrepreneurship, investment and retirement with deferred taxes. With respect to social security payments the rules for partners – entrepreneurs are the same as the ones for owners of sole proprietorships.

In case you would like to read on the Dutch general partnership click here.

Franchising is a contractual mechanism through which an entity (franchisor) issues a paid license for use of its business practices and systems and/or its commercial name to another entity (franchisee).

Dutch laws on franchise agreements

The Dutch legislation does not address franchise agreements specifically, so the general provisions of the law on contracts and competition applies. Franchising agreements are usually complex and are therefore concluded in writing. One should consider the following common principles when preparing a franchise agreement under the laws of the Netherlands:

1. Franchise contracts are not a subject to specific national regulations.

2. The general Dutch law on agreements stipulates the guiding principle of fairness and reasonableness (“billijkheid en redelijkheid” in Dutch).

3. The party from the Netherlands has to provide information about its business to the Trade Registry (also known as the Commercial Chamber of Commerce).

Obligations and rights of the franchisee / franchisor

The franchisor carries specific obligations of care under the agreement because of the peculiar nature of the franchising mechanism. These obligations include the provision of some assistance and advice to the franchisee. The Dutch legislation does not require mandatory disclosure of pre-contractual information. The principles of fairness and reasonableness, however, still apply. As a consequence, the parties are required to take all reasonable measures to prevent the other contracting party to conclude an agreement on the basis of misleading information.

Furthermore, the franchisor does not have to provide exploitation forecasts to the franchisee. Please, keep in mind, that once provided, any information is deemed truthful by the other party. Thus the provision of exploitation forecasts that are overly optimistic or not substantiated by a thorough research of the market may result in franchisor liability.

The law in the Netherlands does not include specific provisions with respect to franchise fees, royalties, clauses to prevent competition, advertising and reporting obligations, so the contracting parties have the freedom to determine the extent of the franchisee’s obligations.

Example case study: Franchise

Some very well known examples of famous franchise chains include big names, such as Starbucks, Mcdonalds, KFC, Subway and Hertz. The big names have been featured in many media, articles, movies and are famous succes stories.

However, how often do we hear about the smaller franchises? The ones that fail, or the ones that never really take off?

One such example is Taxexpertz. Which was a small franchise chain for tax preparation that started in 2014 in the United States. The cost for startup of one branch was around 50.000 USD. Taxpertz is not an active franchise anymore, and halted its operations.

To start a Taxexpertz is a fraction of the cost of opening a McDonalds, which is between 1.000.000 USD and 2.200.000 USD for the initial investment (2019). As well as a franchise fee of 45.000 USD per year, and a service fee of 4% of the sales turnover.

What is the difference between these two concepts? Why did McDonalds conquer the globe? Despite much higher investments?

Learning curve
The learning curve of managing a McDonald is arguably much lower than that of a Taxexpert. The relevant tax legislation in each state, country and year has to be known by the franchisees.

Quality management
Because of the specific knowledge required for each Taxexpertz branch, the managements task to create some uniform quality level, and build an expert name is much more difficult.

In the accounting and tax branch, we have seen that all multinationals in the big 4 are partnerships, not franchises.

Perhaps this indicates that it is much easier to work with a central structure in expert branches.

Brand name

With Mcdonalds, you are investing currently in a well known concept, a brand name that every household in (at least) the Western World knows. You are guaranteed to have a steady amount of customers. You profit from the collective marketing budget of McDonalds.

Succes rate
You can reliably predict beforehand how the franchise will perform. The franchise organisation will have market research statistics, branding, supply contracts and branding in place. Your succes with opening a Mcdonalds is nearly guaranteed before you even install the first grill.

Keep in mind before starting a franchise, what does the franchise bring to the table. And does it provide enough value for your business to succeed.

Agreement termination under the Dutch law

The contracting parties are free to determine the grounds on which agreement termination is allowed. If they have not drafted any rules for termination, fixed-term agreements cannot be cancelled unless unforeseen circumstances arise. Agreements concluded for indefinite periods can, in principle, be terminated with reasonable advanced notice. The period considered reasonable for advanced notification may vary depending on the particular circumstances.

Annulment is another way to terminate a contract. Art. 6:265 in the National Civil Code states that default by one of the parties gives the other the option to cancel the agreement if the nature of the default justifies annulment. Art. 6:228 of the same Code also gives the option to declare the contract void on the grounds of an error (“dwaling” in Dutch).

It should be noted that even when an agreement is legally terminated some losses may be considered outside of the margins of the franchisee’s acceptable business risk and may require compensation.

In case you have questions regarding franchise agreements under the law of the Netherlands, please, feel free to contact our Dutch law firm. We can assist you with company incorporation, tax preparation and drafting your franchise agreements.

You can also check our article on use and protection of intellectual property in the Netherlands. In the article, you will find information on patents, trademarks, trade names and copyrights in the Netherlands.

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:

Advantages:

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;

Disadvantages:

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.

Background information on the Netherlands

The Netherlands is the country’s official name, while Holland includes only two western provinces (South and North Holland) with large cities like Rotterdam, Amsterdam and The Hague.

The form of government in Holland is constitutional monarchy where the sovereign is the Dutch king. The parliament is democratic: headed by a prime minister and composed of representatives of parties voted by the people. The capital, the popular city of Amsterdam, in fact, has only about 750 000 citizens. Rotterdam is the second largest city in the Netherlands. The Hague is where the government is located. It is also the third largest city in the country after the capital and Rotterdam. The Netherlands is famous for its windmills, tulips, wooden shoes and Gouda cheese, as well as for its open policy regarding cannabis and other matters.

The Netherlands is in the global top 10 of the most developed countries. It also ranks sixth in the Index of Human Development. The country is densely populated and has an extensive network of highways, railroads and roads. Its main port, Rotterdam, is among the largest worldwide and its airport, Schiphol, located near Amsterdam, is a major airline hub in Europe. The population of the Netherlands is about 16 500 000. The country shares borders with Germany (east) and Belgium (south). Football is considered the national sport, while field hockey and ice skating are also popular.

It is easy to start a Dutch business, but every entrepreneur has choices to make. First of all, one must choose the legal entity that will operate the business; this determines the taxes he or she will have to pay. The main question is whether to register a Dutch sole proprietorship (one-man company or Eenmanszaak in Dutch) or a BV (limited liability company or besloten vennootschap in Dutch). Which one is better?

To consider to open a Netherlands sole proprietorship, you would need to first be a tax resident in the Netherlands. It is not recommended for foreign residents. The Dutch BV can be opened by a foreign resident.

The difference between a Netherlands sole proprietorship and a BV

The best solution is the one that fits the aims of the business. The Dutch BV is a company with limited liability (LLC). This option is attractive, since, in theory, the responsibility of the company members is restricted. But is this really the case in practice? Is it possible to operate a business without carrying private responsibility for its outcomes? Not according to us. The general conditions with respect to liability insurance may actually even out the differences between the BV and the sole proprietorship.

Having registered as a BV, you show your clients and partners that you own a reliable business, even if you are still operating alone. The sole proprietorship in Netherlands is frequently associated with a business operated by a single person, but this perception is incorrect. The business’ capital is indeed owned by a single person, but the entity may have numerous employees.

The BV has a series of fiscal rules involving the shareholder(s) and managing director(s). They regulate the distribution of salaries, the use of funds and other matters that can reflect significantly on the final tax liabilities.

The sole proprietorship has few rules. The whole profit of the company is subject to tax, but significant credits are available. Therefore an entrepreneur can generate taxable profit of approximately 22 000 EUR per year and be exempt from income tax for the first 3 years after the company’s establishment. Subsequently, the threshold drops to 18 000 EUR. With BVs every earned euro is a subject to tax.

The BV offers more options than the Dutch sole proprietorship. for example, share transfer to another party if the business is sold. No tax on sales is due immediately for holding structures. Loan contracts can be concluded, internal pension obligations can be drafted and so on.

An entrepreneur can always switch from sole proprietorship to a BV in order to sell the company or take advantage of other opportunities.

Owners of businesses in the Netherlands, including non-residents and immigrants, have to open a Dutch bank account to manage their income and obtain access to different bank services.

Many Netherlands banks open corporate and personal accounts. Service packages can include the benefits of mobile and online banking, extra features and banking advice.

Opening a bank account in the Netherlands

Opening a corporate bank account is mandatory in order to set up a business in the Netherlands. The account is necessary for completing different business transfers and transactions. A bank reference with the history of transactions is also required for the annual financial statement.

Persons employed locally can also open accounts in Dutch banks to their benefit. Their salaries can be transferred directly to the accounts, payments are easier and international money transfers are possible.

The procedure for opening a bank account is simple, especially for personal accounts. Most banks can complete the first steps automatically with the help of an application form available online.

Foreign residents who face difficulties opening an account due to lack of knowledge of the Dutch language can contact our lawyers for assistance. Our teams are able to prepare a power of attorney allowing a particular person to open/manage an account on behalf of business owners who cannot be present in the Netherlands.

Documents needed for opening a Dutch bank account

If you want to open your account personally, you have to present a number of documents to the branch you plan to work with. A personal identification card/passport and a Dutch Citizen Service Number (BSN) (issued upon registration at the municipality) are among the required documents. A contract for employment and a personal or Dutch business address is required.

The papers required for opening a corporate bank account can vary. Documents such as the Business Registration Certificate of the company will also need to be presented.

If you have any questions with respect to corporate banking, please, contact our law firm in the Netherlands. Our team can offer you a wide range of solutions and consultancy with regard to working and living in the country.

The Netherlands is one of the main import/export locations in Europe. With its exceptional infrastructure and major ports, such as those in Rotterdam and Amsterdam, this country is a great place to set up a trading business. Those companies who engage in international trade will have easy access to Europe and the rest of the world because of the Netherlands’ particular geographical and infrastructural advantages.

Trading companies in the Netherlands

Trading companies engage in a wide variety of business activities, including but not limited to importing and exporting; wholesaling; buying and selling; the intermediary sale or purchase of goods; and assisting and counselling other companies in sourcing their supplies.

Dutch trading companies do not have to limit themselves to importing or exporting just one type of item. They can easily diversify their business to suit market conditions anywhere in the world. Trading companies can also specialize in a specific type of product if they desire. Anything from food products to health and beauty items can be traded from a base in the Netherlands.

Trading companies in the Netherlands can also set up their offices in whichever Dutch location they feel would be best for them. They can take advantage of the opportunities in larger cities, like Amsterdam or The Hague. Or, they can set up a shop in one the Netherlands’ smaller cities. All locations will benefit from the same transportation and communication infrastructure that make the Netherlands such a great place to do business.

Setting up a trading company in the Netherlands

An investor who wants to set up a Dutch trading company can either open a branch of an existing international company or create a new legal business entity based in the Netherlands. Opening a branch is easier, but it does not offer as much flexibility as creating a new entity. In terms of potential liability, forming a Netherlands company is also a better option.

Like many other types of businesses, trading companies must also acquire special permits and license in order to operate legally in the Netherlands. There are also rules and regulations regarding the import and export of controlled goods that have been imposed by the Dutch government and must be followed carefully. We can assist you in acquiring all necessary licenses and permits so that your trading company can operate legally. We can also advise you about laws that may affect the types of goods you wish to trade and distribute, and tell you what you must do to follow them.

Our agents in the Netherlands can walk you through the entire process of forming a Dutch trading company. We can assist you in choosing a company name, preparing the necessary documents to form a company, and registering the new business with the Dutch Company Register.

Please contact our Dutch agents to find out how to open a trading company in the Netherlands. We are also happy to discuss with you general details about investments in the Netherlands.

The Netherlands is a country that has always implemented eco-friendly laws and practices, largely due to the environmentally-conscious government. As an effect of the ‘green’ technologies that have been implemented in the country, statistics have shown that The Netherlands has experienced a great surge of financial success.

Our company formation specialists are able to give you more information on how to get your company to go green!

Green Growth vs Carbon Tax

The Organization for the Economic Co-operation and Development (OECD) defines green growth as a set of 6 environmental and economic factors. They are environmental efficiency, raw material efficiency, natural resources, environmental quality, green policy instruments, and economic opportunities.

The latest data presented by Statistics Netherlands showed that there have been significant improvements in these 6 factors from the period of 2000 to 2016.

A global carbon tax has been proposed for many years. Thus increasing the cost of pollution on the enviroment for big corporations. Will this actually lead to more energy concious decisions? Or will the combination of stimulation, and crafty tricks by big corporations mean this is yet another tax that can be avoided. A carbon tax will lead to big corporations ''buying and selling carbon certificates'' to compensate for carbon emissions.

The Carbontax organisation in UK promoted the idea of introducing a carbon tax. A carbon tax will not save our enviroment single-handedly. But it could price-in the enviromental effects and destruction of companies' doing.

Nowadays, big corporations can buy carbon certificates from companies that compensate their carbon impact by renewable or green projects. Which will look good on paper. But in reality, will it change anything?

Will the proceeds of these taxes actually be invested in renewable projects by the governments receiving these taxes? Or might it be used for other internal policies. If actions are taken on the European level, rules might be applied more effectively. And more difficult for corporations to avoid. In this way it is possible to avoid any single nation to have to sacrifice it's own economy or competitiveness.

If only one nation takes action, multinationals in that nation could simply move their headquarters a few hundred kilometers, to the nearest border if this avoids high costs. Or they may negotiate a deal with that country, to get favourable treatment.

Green growth in the Netherlands

The Dutch economy has increased as an effect of the environmentally friendly laws and regulations of the country. The Netherlands is still dependent on fossil fuel as the main energy provider, but through the use of green resources, the country has been able to decrease greenhouse emissions as well as carbon dioxide emissions.

The Green Growth report as issued by Statistics Netherlands also shows that the ecological footprint of the Dutch population is decreasing. This shows that biodiversity in the country is definitely improving.

The Dutch Central bank is expecting the impact on the Dutch economy from Carbon Tax to be relatively modest. And might be used to improve the ecological footprint by using the earnings to stimulate alternative energy needs.

Furthermore, the reports show that the Netherlands is using its raw materials in a cost-effective way because recycling is encouraged in both personal and corporate capacities.

Our company formation agents can answer all your questions about the environmental laws of the Netherlands and the process of establishing a green business in the country. You can also read our article on how to open a company in the Netherlands.

In the recent Global Competitiveness Index, it was published that the Netherlands reached the fourth position on an international level. The index issued by the World Economic Forum showed that the country excelled in education, primary health, infrastructure and business etiquette.

The country has fared well in recent years and managed to retain the same position as last year. It continues to perform well in maintaining a stable profile for competitiveness, as well as in other fields of business. Education and training are still two of the most important fields that the Dutch continue to invest in, and it is due to this that the workforce remains highly qualified. The report also showed that the country ranked 9^th in terms of technology, which is growing at a rapid rate in the state.

Strong points of the Netherlands

The Dutch are known for their innovative thinking and developments, and this reflects on their business sector as well as their ability to keep up with global trends. One of the strongest aspects of the Netherlands is their transportation infrastructure that is only surpassed by Germany in this regard.

The top ten countries in the Global Competitive Index were as follows: at first position was Switzerland, followed by Singapore, USA, Finland, Germany, Japan, Hong Kong, the Netherlands, the UK, and lastly, Sweden. It was comprised out of 144 countries from all over the world.

If you would like to receive information on opening a company in the Netherlands or the Dutch legislation regarding foreign investors, you can contact us today.

In the wake of the Brexit referendum, entrepreneurs are taking steps to safeguard their businesses.

Although Article 50 has not been invoked yet, many entrepreneurs are already planning how to secure the future of their business.

Many United Kingdom based businesses have to cope with the economic uncertainties after the outcome of the Brexit referendum; to separate from the European Union. There is no saying whether the Brexit will be beneficial or highly unfavourable for UK-based companies.

Entrepreneurs are now choosing for stability and security by incorporating a Netherlands-based company or subsidiary.

Why should you consider moving to the Netherlands?

Even though most of the population voted ‘’out’’, there are many international UK-based businesses that are ultimately dissatisfied with the decision. Many corporations, from trading companies to large financial institutions have considered the opportunity to move their business to the Netherlands or are in process of doing so. The decision to establish a business in the Netherlands could turn out to be essential. As the Netherlands is located in close proximity to London, it seems like a practical and efficient move to relocate your company there. The Netherlands is considered a stable location in terms of its position in Western Europe and its accessibility to the Eurozone, both in economic and logistical terms.

As the Netherlands is located in close proximity to London, it seems like a practical and efficient move to relocate your company there. The Netherlands is considered a stable location in terms of its position in Western Europe and its accessibility to the Eurozone, both in economic and logistical terms.

Opening a subsidiary

Some companies like the idea of relocating to the Netherlands, however, they do not want to move their business entirely. These companies have the option to transfer just a part of their organisational operations to the Netherlands.

Foreign companies are able to open a branch or a subsidiary in the Netherlands and test the traits of the market by forming a virtual representative office for their company.

The process of moving a company from the United Kingdom to the Netherlands is easily manageable with the right help from an experienced party. Foreign investors in The Netherlands will need a Dutch legal entity to conduct their business. The most popular type of business is a private limited liability company. There are several options for legal entities in the Netherlands. If you want to relocate and open a firm in The Netherlands you will need to know what kind of legal entities can be used and which are recommended.

Moving to the Netherlands in light of the Brexit vote can ultimately improve and change your business and life, providing more stability and security for your business.