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Doing Business in The Netherlands

Why the Netherlands is the perfect base for your European operations

Why the Netherlands? This is a very often asked question. That’s not so surprising, given that the Netherlands is an attractive country for foreign entrepreneurs due to its strategic location and good infrastructure.

It is not for nothing that many non-European companies choose the Netherlands as their first choice of a European base. In the past, American companies often chose the UK as the starting point for their European operations. Now that the UK has left the EU, the Netherlands is a logical alternative.

The Netherlands as a European base



The Netherlands attracts many international companies as a European base. It is a country known for its open trade culture and its hospitality to foreign entrepreneurs. It lends itself as the perfect base for your European activities. It offers:

  • a tax treaty with more than 80 countries
  • an attractive tax environment for foreign companies
  • perfect IT infrastructure (fibre optic network)
  • local people who speak English to a good standard
  • a stable economy and stable public finances
  • a high level of education of residents
  • few labour disputes and strikes

Country and Government



The Netherlands has a total population of 17.5 million (June 2021). It is a parliamentary democracy with a monarch as head of state. Government ministers are the people’s representatives with respect to the actions of the government.

The monarch has no political power and cannot therefore be held politically accountable by parliament. The Netherlands is divided into 12 provinces, each with its own local authorities.

Tax environment



The Netherlands is known for its favourable tax climate for foreign companies. The participation exemption – a measure that prevents double taxation of company profits — can be included in the corporate income tax assessment. Whilst the law does impose a number of conditions, the application of the participation exemption is still a plus point for the Dutch business climate.

Corporate income tax is low with 15% over the first € 245 000 profit  and 25% over the additional profit. By splitting a concern into several limited companies the average tax rate can be reduced. There is also a VAT advantage for trading companies. A company established in the Netherlands can make use of the import licence referred to in Article 23 of the Dutch Turnover Tax Act. In concrete terms, this means no pre-financing of VAT when importing goods.

Expats



The Netherlands is also an attractive country for expats. The country’s second language is English. The Netherlands is also seen internationally as an open and tolerant country, so that employees and employers alike feel at home here. There are many complimentary reports from expats about the Netherlands posted on YouTube. (Search: ‘expats — living in the Netherlands’.)

Furthermore, expats benefit from the ‘30% ruling’. This helps compensate for the extra costs incurred by an expat working abroad, whereby 30% of their income is exempt from income tax. There are, of course, some conditions that must be met.

Structuring profit streams



When doing business internationally, it is often (fiscally) interesting to look at how the profit streams of the Dutch and international activities are arranged. This limits the risks to your business. Furthermore, you can take advantage of various tax schemes and benefits in the different countries where you operate. Of course, it is necessary to comply with the EU regulations on Base Erosion and Profit Shifting (BEPS).


An advantage of the Netherlands is the ease and openness of communications with the tax authorities. It is possible to consult on this subject in advance and reach agreements (APAs). In other EU countries, this is often not possible and there can be long periods of uncertainty about, for example, applied intercompany prices.

Employment



In the Netherlands, labour matters are regulated slightly differently than in other countries. In America, for example, Dutch labour law is regarded as being complex. Much has changed in recent years, although the complexity remains. However, the current system is good to work with and flexible if you manage it well.

The Netherlands now has a labour potential of more than one million self-employed workers. This makes flexible business easy.

The Netherlands as a distribution country


The port of Rotterdam is the largest port in Europe; Amsterdam Airport is one of the larger European hubs for goods and people. The Netherlands is a strategic choice geographically. 95% of Europe’s most lucrative markets are just 24 hours’ drive away from Amsterdam or Rotterdam.

The storage facilities for all kinds of goods are enormous. The Netherlands has few natural resources and is forced to earn its income by trading.

Some facts



The Netherlands is ranked as the most competitive economy in Europe and fourth in the world according to the World Economic Forum, the fourth most competitive nation in the 2020 IMD rankings; and fifth in the 2020 Global Innovations Index.

The EU Innovation Scoreboard 2020 ranked the Netherlands as the fourth-best nation for innovators. These are impressive figures for a small nation.


Founding your own business



The most common legal form is a private limited liability company (‘BV’). Incorporating a company is straightforward and can be done within one week if you have all the documents in place. Opening a bank account has become more difficult over the last few years, but this is a development occurring right across Europe.

Interested in the Netherlands?

For more information on doing business in The Netherlands, we have launched a new platform - Centuro Connect, that dives into blueprint specifics helping you do your research all in one place. It is the ultimate tool for understanding market entry options, HR, Immigration, Legal Requirements, Tax & Accounting, and much more.





Dates Oct 13, 2021

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