It is advised to proceed with care when starting a business. For foreign entrepreneurs, it is crucial to understand the local laws and regulations. In this article, Dirk de Waard explains how to set up a company in the Netherlands.
Starting a business in the Netherlands
A well-founded business plan is the start of a successful company in the Netherlands. In addition, it is essential to determine which company type is best suited to this business. The Netherlands is regarded as one of the most economically attractive European countries for foreign investors. There are several factors for this, varying from national infrastructure to the fiscal climate. As a result, many foreign companies set up a sister company or subsidiary in the Netherlands. As per every national legal framework, the process of setting up a company has specific procedures.
The Netherlands has an excellent tax climate. There are several reasons for this. Firstly, The Netherlands has a competitive corporate tax rate compared to other countries. The corporate tax rate as of 2022 is 15% up to €395,000 and 25.8% above €395,000. Secondly, there is a fiscal unity regime that provides for fiscal consolidation for Dutch activities within a corporate group. Thirdly, companies benefit from the extensive body of bilateral tax treaties that the Netherlands is party to. Finally, the Netherlands has clear administrative procedures and makes use of effective digitalization to facilitate tax compliance for companies. In short, the Dutch tax system offers a number of fiscally attractive incentives for companies from abroad to establish themselves in the Netherlands or to set up a sister company,subsidiary or branch office.
Choosing the right legal structure for your business
In the Netherlands, you can choose different legal structures for your company. The most common legal structures can be divided into two different variants:
Unincorporated companies:
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Incorporated companies:
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The benefit of an unincorporated company is that the entrepreneur himself is, in principle, not liable. A private or limited company can therefore be equated with a limited liability company (LLC). Hence, the establishment of a private company or limited liability company to run a business is the most common legal form. In principle, there are no restrictions on being allowed to do business in the Netherlands.
The benefit of a Dutch limited liablity company (BV)
When setting up a company in the Netherlands, one must decide upon the type of legal entity. There are several entities one can choose from, but the private limited liability company, the “Besloten Vennootschap (or: BV)”, is most frequently chosen by international investors.
A BV always has at least one director and one shareholder. This can be the same (legal) person. The directors can act in the name of the BV, and are responsible for its policy. The shareholders are entitled to the profits. The liability of the BV is limited to the investments of the shareholders and therefore excludes, in principle, personal liability. Additionally, since the BV has no minimal capital requirement and can be effected remotely in a few days, the setup procedure is simple and cost-efficient. This is supported by a recent report of the World Bank, in which the Netherlands ranks high on the ranking that measures the ease of setting up a company.
Furthermore, a BV has flexibility in the arrangement of the organization of the company by means of the articles of association. The articles of association can for example limit the transferability of the company shares or differentiate between them with regard to voting rights.
Evidently, there are strict administrative obligations that a BV must comply with. For instance, it is legally required to report the annual financial statements to the Chamber of Commerce. The larger a company, the more financial information it has to disclose. Also, the BV is required to convene an annual General Meeting of the Shareholders, in accordance with the legal requirements.
Incorporating a BV
You cannot set up a BV yourself. There a legal requirements for setting up a BV, which entail essentially four elements:
- Drawing up the articles of association in a notarial deed: this is called incorporation;
- Making a deposit of €0.01 starting capital – cash or in kind;
- Registration in the KVK Commercial Register (Handelsregister) (you remain personally liable until the registration is complete);
- Registration at the Dutch Tax and Customs Administration (Belastingdienst).
Help with setting up a business in the Netherlands
There are several choices that must be made before starting a business in the Netherlands. VIOTTA is happy to help. We can provide you with advice and ensure that you make optimal use of Dutch legislation and regulations. It never happens that the costs exceed the benefits. That is why we always start with a quick scan, so that you will not be faced with unpleasant surprises afterwards.
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