Doing business in the Netherlands is a useful way to get a business foothold in Europe. Here we set out the main things you need to know about doing business in the Netherlands.
1. The Netherlands is one of the world’s most relaxed and liberal countries, and this culture transfers directly to the Dutch world of business.
2. The Netherlands’ central geographic location within Europe makes it an ideal jurisdiction for tapping into other major European consumer markets.
3. Foreign businesses and investors will find that the Netherlands welcomes them with open arms. The country is one of Europe’s most friendly when it comes to accepting foreign commerce. Roughly 50 percent of the nation’s GDP stems from outside investment, in fact.
4. Strong infrastructure and a legal system and tax regime that are all designed to support businesses, make setting up and operating an entity easier than in many other European jurisdictions. However, efficiencies can still be made by using a Global PEO solution, rather than opening up a separate entity.
Doing Business in the Netherlands: A Guide for Foreign Organisations
The Netherlands—often referred to as Holland—is widely regarded as one of the world’s most relaxed and liberal countries, with a laidback approach to, well, almost everything.
This applies to the business world, too; doing business in the Netherlands is an invariably straightforward and stress-free affair thanks to the Dutch people’s openness to and tolerance of commerce.
In addition to this, the country’s central geographical position within Europe, as well as excellent infrastructure and logistics services, attracts numerous European and American firms seeking to set up headquarters and regional offices each year. This trend is only growing, post-Brexit. There is also a growing trend among Asian firms who are doing the same. To date, more than 400 of the world’s 500 largest companies have operations in the Netherlands.
In this guide, we are going to give you an insight into the excellent business environment that exists in the Netherlands and give you some tips on how you can expand your own operations to Europe’s most liberal nation.
Why the Netherlands?
There are many reasons why organisations are increasingly doing business in the Netherlands: A pro-business climate, its strategic location within Europe, a stable legal system, a highly educated workforce, and a superior infrastructure are ones that immediately spring to mind.
It was ranked fourth in the world by IMD in their 2020 World Competitiveness Rankings, making it a truly world-class destination for any business that wishes to expand into Europe.
Foreign business activity is so rife in the Netherlands, in fact, that around 50 percent of the nation’s gross domestic product (GDP) is derived internationally. The Netherlands also has one of Europe’s most competitive economies according to the 2019 Competitive Report by the World Economic Forum (WEF), and it is one of the world’s leading countries for business investment. As for the COVID-19 situation, the WEF ranked the Netherlands fourth for general economic transformation readiness in its Global Competitiveness Report Special Edition 2020, which focused on COVID-19 recovery.
In terms of its geographical location, the Netherlands is the perfect launchpad for the European market. The country has one of Europe’s four major airports —Amsterdam Schiphol — and access to most major European consumer markets are within easy reach from there.
Add on a supportive legal and tax structure designed to support — not hinder — businesses: Superior infrastructure, world-class logistics, and a digitally savvy, mobile, and highly-educated populace all begin to explain why many organisations, from start-ups to Fortune 500 corporations, have chosen the Netherlands as their European base of operations.
Tips for Doing Business in the Netherlands
As we have stated, doing business with the Dutch is relatively straightforward. That said, there are a few tips that you should take note of as their culture does have some differences from other countries:
Opening a Business Entity in the Netherlands
There are several ways to open and operate a business in the Netherlands. One is to work with a PEO (we’ll discuss this below) and the other is to register and operate your own legal entity.
While there are distinctions between corporate entities (i.e., those with a legal personality) and non-corporate entities (i.e., those without), we are going to look at corporate entities as these are the types of entity typically most suited to foreign investors. Non-corporate entities are reserved for partnerships in the Netherlands.
Under Dutch law, two types of limited liability corporate entities exist: the ‘bv’ and the ‘nv’. Both the bv and nv are corporate entities with a capital divided in shares.
bv (naamloze vennootschap)
The bv is a private company that is comparable to the German ‘Gesellschaft mit beschränkter Haftung (GmbH) or the British ‘limited liability’ company (Ltd).
The legislation that applies to a bv makes it very flexible and thus the most popular entity choice, especially for holding companies in international group structures. The current bv characteristics and rules are:
nv (naamloze vennootschap)
The nv is a public company comparable to the ‘public limited company’ (plc.) in the United Kingdom.
In general, the nv is more strictly regulated and is commonly used to incorporate companies that are either i) very large or ii) will be listed on a stock exchange. The main characteristics and rules for the nv are:
Incorporating an Entity
Compared to other jurisdictions, incorporating an entity in the Netherlands is incredibly easy: A permit is not usually needed to start a business save for in regulated sectors such as legal or finance where licenses to operate must be obtained.
Incorporation does involve some paperwork in the form of a notarial deed of incorporation.
This can be executed on the basis of a power of attorney by a Dutch civil law notary to cut out unnecessary travel time or delays.
Very little initial capital outlay is needed, with no share capital required for the ‘bv’ private entity and only EUR 45,000 required for the ‘nv’ public entity. For any share capital that is included in incorporation of the ‘nv’ entity, a statement from a bank or auditor confirming that it has been paid up must be obtained prior to incorporation.
A bv or nv entity must be registered with the trade register of the Dutch Chamber of Commerce. While this can take some time, it is possible for companies to carry out business trade prior to the incorporation process being completed.
Why Not Begin with a Professional Employer Organization (PEO)?
Although it is incredibly easy to incorporate an entity in the Netherlands, there are other options for organisations that are in the early stages of exploring the possibility of an international expansion.
Working with a professional employer organization (PEO) is one of these options. By using a PEO’s employer of record and global payroll services, you can take advantage of having access to international employees without having to spend time setting up an entity and ensuring that you meet all the necessary legal and compliance requirements.
This has the obvious benefit of allowing you to take a ‘try before you buy’ approach of seeing if doing business in the Netherlands would work for your business in the long-term with much lower operational risk. By working with a Netherlands PEO, you also get access to a network of local experts who will be able to advise you on everything from international payroll and paying taxes to the best way to recruit local employees.
If this sounds like an arrangement that could work for your business, contact Horizons today for an initial consultation!