Expanding Your Business to the Netherlands: A Step-by-Step Guide
Oct 16, 2023
The Netherlands is an excellent place to expand your business to. Why? The Netherlands has a business-friendly environment, strategic location with a major European airport in Amsterdam, and a major world port at Rotterdam. There’s also well-developed infrastructure throughout the country. It’s not for nothing that the Netherlands currently ranks 5th in the world in the list of most exporting countries. That’s by actual volume, so that says a lot about such a small country.
Dutch business folks tend to speak a number of foreign languages fluently, among which English is the first and foremost. The Dutch business climate is liberal and entrepreneurial. The Dutch like to get things done, thus structure and planning is often an important element within the business strategy. You will notice that hierarchy is only minimally present in most workplaces and Dutch employees are often expected to work independently and make business decisions of their own accord based on their own expertise. Everyone in the Netherlands has an opinion about everything, so you can expect a healthy dose of pushback and scrutiny doing business in the Netherlands.
Step 1: Market Research
Before you start doing business in the Netherlands, it is important to understand your Dutch market. For example, certain businesses require you to have local expertise, local infrastructure or a grasp of the Dutch language. If you are operating a consumer goods company, you need to make sure you understand who is your competition. Also make sure you are in touch with your Dutch target audience and their culture and language. If you are working in professional services or IT, this is less of a requirement. It’s also possible you will not focus on the Dutch market, but you will only use the Dutch company to focus on the entire European market. This is greatly helped by the fact that the Netherlands is part of the European VAT system and customs union.
Step 2: Choosing the Right Legal Structure
The Netherlands has a number of viable commercial legal structures available for foreign business in the Netherlands. On top of the list is the Dutch BV company. This is the Dutch equivalent of the Limited Liability Company, so it’s divided into shares and has a limitation of liability towards its shareholders. The BV company can be set up either stand-alone or as a subsidiary of an existing Dutch company, which leads to a holding company structure. It can also be set up as the subsidiary of a foreign company, in which case profits may be distributed to the foreign parent tax-free (for this, please check the applicable Double-Taxation treaty). In all cases the BV must have an appointed director to represent the company. For the incorporation of a Dutch B.V. a notary is required.
Another major company form is the N.V. This is the advanced version of the B.V., with the major difference being the N.V.’s shares are freely transferable. This makes the N.V. usable for public listing. The N.V. also has zero liability for its shareholders, which may arise in the case of the B.V. in some instances. The N.V. has a higher required starting capital of € 45,000, whereas the B.V. has no minimum starting capital. For the incorporation of a Dutch N.V. a notary is required.
Then there are the small company forms ZZP/Eenmanszaak and VoF, the VoF being the multi-person version of the ZZP/eenmanszaak. These company forms have no separation of capital or limitation of liability. This means that business liabilities can turn into personal liabilities once the business provides no recourse to creditors. These company forms have some interesting tax breaks for business owners up until profits of € 120,000 per year. For this company type, you just need to register at the Dutch Company Register. No notary is required.
Step 3: Securing Office Space:
If you want to set up a business in the Netherlands, you will need to find a place to register it. For this it is recommended to use an office space provider or co-working space. The office space for your Dutch business must be usable as an actual office space, which means virtual addresses and letterbox addresses are not allowed. If you see instances of this happening, this means the Chamber of Commerce is not paying attention, which at any time can be rectified by them.
It is possible to register your business at a home address, but only if this home address is owned or leased by either a shareholder or director. Although registering the business at a home address may save some initial costs, it is not recommended. This is because it lacks professional allure and it allows for the private address of the founder or director to be found via the public registers of the Chamber of Commerce. In any case the office address must be in the Netherlands.
Step 4: Business Registration
Expanding your business to the Netherlands almost always requires you to set up a Dutch BV company. Only under exceptional circumstances, another company type may be required. For this we recommend you discuss the situation with a business law expert. The Dutch process of BV incorporation is executed by a Dutch law notary and in many cases overseen by a business incorporation specialist such as Cardon & Company. In another article we have explained the process of registering your company from abroad in minute detail. In short, the process mainly revolves around identification of shareholders and directors. This means they are required to provide identification documents such as a copy of their passport, a utility bill (or similar document) that proves their current address, and a proof of their local Tax Identification Number(TIN). Each country has a different version of the TIN number. For example in the USA this is the Social Security Number. If the new Dutch company is a subsidiary of a foreign legal entity, additional documents are required pertaining to that foreign entity. Then the notary shares the draft deed of incorporation with the founders, along with an invitation to an identification. During this identification, the notary will ascertain whether the persons are in fact the same persons as described in the ID documents. Once the identification is complete and the draft deed has been accepted, the notary will proceed to execute the incorporation and register the company at the Dutch Chamber of Commerce.
Step 5: Setting Up a Dutch Bank Account
Your new Dutch business needs its own business bank account, separate from any personal bank accounts of any of the founders. Getting a business bank account at a Dutch bank can be hard for any foreign business, due to very strict KYC procedures. If you have a pre-existing banking connection from your country of origin, it’s worthwhile to ask if they can serve your new Dutch company. In another article we explain how to get a business bank account for your Dutch company. We recommend the use of tech-driven BUNQ bank in the Netherlands.Step 6: Tax registration Netherlands
Once your Dutch company is registered at the Chamber of Commerce, they will notify the Dutch Tax Authorities. The Tax Authorities will then start the tax registration process of your company. You will receive letters for the following taxes : VAT, VPB and Wage Taxes. In another article we provide a deeper understanding of corporate tax obligations in the Netherlands. For VPB you will receive the number automatically. For VAT, you will only receive the number automatically if the Dutch company has a local director or founder with a Dutch BSN number at the moment of registration. If this is not the case, you will receive a letter with a questionnaire about your business intentions in the Netherlands. This needs to be answered satisfactorily before you receive your VAT number. Dealing with the Dutch Tax Authorities is the only part in the entire process where you will not be addressed in fluent English by your counterpart. It is in fact a wall of Dutch speaking bureaucracy. For this reason it is plainly mandatory to enlist the services of a Dutch accountant to help guide you through this process. Because of this your VAT number will take at least 4-6 weeks to arrive after your incorporation.
Step 7: Hiring Local Staff
Your business of course needs boots on the ground, and for that you need to hire staff. The most important issue here is the visa requirement for your Dutch company. Due to EU regulations, you are at liberty to hire any person with an EU, EEA or Swiss passport. They can all just register at their Dutch municipality as a Union citizen. Employees who don’t meet this criterion need to obtain a separate work visa, such as the EU Blue Card or the HSM visa. Foreign employees have the unique option to apply for the 30% ruling, which is a very attractive income tax cut. The above also applies to directors of the Dutch company.
Dutch employment contracts are subdivided into fixed-term and indefinite-term contracts. Indefinite-term contracts are attractive for employees, but very hard to dissolve for employers. Termination of indefinite-term contracts can only be effectuated by court order, with approval from the national labour directorate (UWV) or with mutual consent. Fixed-term contracts are therefore an attractive option for employers, but beware these will automatically turn into indefinite-term contracts after 3 consecutive contracts in a period of 3 years. Tax treatment for fixed-term contracts is also less tax-favourable than indefinite-term contracts.
The Dutch labour market is currently tight, and many highly skilled employees are currently recruited from abroad. If you want to entice talent for your Dutch company, think ahead on what you are going to offer them.
Step 8: Obtaining Necessary Permits and Licenses
The Netherlands does not have a system of required permits and licences for businesses and practitioners to ply their craft, as is for example the case in the United States. A few very obvious exceptions apply such as civil law notaries, registered attorneys and medical doctors. Almost all Dutch businesses are exempt from such requirements. Of course there are professional services associations with which you may choose to register, but this is not mandatory.
Expanding your business to the Netherlands can be a welcoming experience if you plan ahead in a timely manner. The Netherlands has excellent professional service providers who can guide you through the entire process, and almost everywhere you will be assisted in fluent English. Make sure you look into the visa situation of your future employees (directors included). Make sure you hire a company incorporation service provider and a subsequent accountant. Think ahead for options for your company bank account. If you don’t have a local director, expect to wait a while before you get your Dutch VAT number. Think twice before you give employees an indefinite-term contract and don’t worry about licences and permits. They hardly exist in the Netherlands as they exist elsewhere.