Company registration in the Netherlands
Company registration in the Netherlands

The Netherlands is known to be the oldest and most renowned stock exchange markets in the world and remains currently as one of the most sought-after jurisdictions for international business, trademark registration and investment.   Its popularity is founded on economic stability, flexible taxation laws and incentives as well as prestigious status and high global rankings.   It has been rated as one of the top five countries in the world for business by Forbes Magazine and was included in the list of the top fifteen countries with the lowest corporate tax rates.  As part of the European Union, Dutch businesses can take advantage from free trade across all European countries and the local government is known to offer various incentives which allow multinational establishments to negotiate special tax agreements and additional tax benefits, deductions and credits to entrepreneurs from all over the world, especially for residents of the EU, EEA, and Swiss citizens.  

WHY NETHERLANDS?

WHY NOT?

  • 16.5% corporate tax rate on the first EUR 200,000 and 25% on taxable profits exceeding EUR 200,000
  • No withholding tax on interests, royalties, and technical service fees
  • No capital gains if the participation exemption applies
  • No capital gains tax on gains from the sale of a residence or other assets
  • No wealth/worth taxes
  • No foreign exchange controls
  • The balance of interest is deductible up to a maximum of 30% of the taxpayer’s EBITDA (earnings before interest, tax, depreciation, and amortization)
  • Tax treaties with more than 100 countries worldwide
  • Opportunity of filing corporate tax returns in a foreign currency
  • Companies can carry forward losses indefinitely
  • Exceptionally attractive tax incentives for companies dealing with Intellectual Property 
  • Easy access to the financial markets 
  • Relatively low incorporation costs and annual running costs
  • Highly advanced online-filing systems make annual requirement submissions easier and faster
  • Corruption in the country is almost non-existent
  • Fairly high VAT rate of 21% 
  • Inheritance tax rates of 10-40% 
  • Public Registry of beneficial owners and company officials
  • Strict substance requirements, that may significantly raise company running costs
  • All company documentation and annual submissions are in Dutch language
  • Minority shareholders holding more than 10% of the company shares have the right to request an investigation of any company transaction, file subpoenas, and even apply for transaction nullification by the court if they consider it as being carried out in an oppressive manner
  • Contract enforceability and Insolvency can be very lengthy and challenging procedures 
  • Labor is expensive in the Netherlands with the monthly minimum wage starting slightly over €1,600 and employee termination procedures can be expensive, time taking and difficult
  • High prices on property rentals 
  • 60% of the land in the Netherlands is prone to flooding, increasing risk of damages to invested property
  • Construction permits can take more than three months to be issued at a high cost of almost €20,000 per application
  • Dutch culture is very traditional and foreign entrepreneurs with new ideas of doing business may not be easily accepted by the local citizens and authorities

It is worth noting that the Netherlands enacts strict and defined physical substance requirements for Dutch companies wanting to benefit from the tax incentives that the jurisdiction offers.  Although, foreign companies, with no permanent establishment can still register with the tax and customs authorities to obtain tax residency certificates, evidence of local presence, expenditure and local management and control may be required in order to remain a tax resident of the Netherlands.  Furthermore, businesses in the country with a permanent establishment, i.e. a fixed place of business, require registration with the Netherlands Chamber of Commerce via the Commercial Register (Handelsregister).  

Company Formation in the Netherlands:

The Netherlands offers two types of legal business structures i.e. with a corporate entity or without a corporate entity.  There are several distinctions between the two types of business structures but the key difference is the personal liability of the shareholders.  In an unincorporated business structure (Rechtvormen zonder rechtspersoonlijkheid), there is no distinction between private and business assets, and the owners are personally liable for all the debts of the company with their own private capital and assets.  This entails that debtors are entitled to claim personal belongings and assets of the shareholders in the case that the company fails to pay out its liabilities in time.   In contrast, in an incorporated business structure, the shareholders liability is limited to the sum of the capital they invested in the company, adding invaluable protection from possible debts that may be incurred by the business.  

Unincorporated business structures (Rechtvormen zonder rechtspersoonlijkheid) include:

  • Eenmanszaak or ZZP: sole trader / Single person business
  • Vennootschap onder firma or VOF: General partnership
  • Maatschap: Commercial/professional partnership
  • Commanditaire vennootschap or CV: Limited partnership

Incorporated business structures include:

  • Besloten vennootschap (BV): Private limited liability company (Ltd. or Inc.)
  • Naamloze vennootschap (NV): Public limited liability company (plc or Corp.)
  • Coöperatie en onderlinge waarborgmaatschappij: Cooperatives and mutual insurance societies
  • Stichting: Foundation
  • Vereniging: Association 

It is worth highlighting that a Dutch Foundation (Stichting) can be an excellent and very affordable financial instrument for asset protection, wealth management, family estate planning and can add flexibility to tax planning and comprehensive business management.  Its charitable attributes also make it a distinguished holding vehicle for shariah-compliant investment structures.  Contact our specialists or visit our Company Formation in the United Arab Emirates page to get more information on how adding a UAE company to your business structure can benefit your enterprise.  

However, the most popular legal business entities in the Netherlands, like in most other jurisdictions, are the private limited liability company (BV) and the public limited liability company (NV).   The main difference between the BV and the NV is that the shares of a BV cannot be traded publicly, they are not admitted on the stock market and it is also possible to block the free trade of the shares.   The shares of a NV, on the other hand, can be traded publicly and are admitted on the stock exchange.   These too, can be linked with a Dutch foundation (Stichting) as a secure holding entity and in the Netherlands are treated as a specially defined structure referred to as a STAK (Stichting Administratiekantoor), which benefits from a number of tax incentives and administrational leniencies.   

Regardless of the entity type your business requires, our highly trained staff can guide you through the entire registration process, help you with opening a bank account, fulfilling crucial substance requirements, and handle the management and administration of your company.  We would also like to highlight that our firm specializes in the formation and administration of publicly traded companies and can assist you with the listing on the stock exchange as well as give you invaluable advice with choosing the right jurisdiction and entity for your particular business needs. 

Corporate Features of a Dutch Private (BV) and Public (NV) Limited Liability Company 

GENERAL

BV

NV

Incorporation Time

5 Business Days 

10 Business Days

Local Registered Agent Required

Yes

Yes

Local Registered Address Required

Yes

Yes

Migration of Domicile Permitted

Yes

Yes

SHARE CAPITAL

Minimum Share Capital

EUR 0,01

EUR 45,000

Minimum Paid Up

No Minimum

20%

Maximum Share Capital

No Maximum

No Maximum

Bearer Shares Allowed

No

No

SHAREHOLDERS

Minimum number

One

One

Maximum number

No Maximum

No Maximum

Publicly accessible records

Yes

Yes

Corporate shareholder allowed

Yes

Yes

Annual General Meeting Required

Yes

Yes

DIRECTORS

Minimum Number

One

Two

Maximum Number

No Maximum

    No Maximum

Local required

No but at least 50% of the board must be Dutch residents for the company to be considered a tax resident

No but at least 50% of the board must be Dutch residents for the company to be considered a tax resident

Publicly accessible records

Yes

Yes

Corporate directorship allowed

Yes

Yes

COMPANY OFFICIALS

Secretary Required

No

No

Local Secretary Required

No

No

Other Officials Required

No

No

COMPANY ACCOUNTS

Requirement to Prepare

Yes

Yes

Requirements to File Accounts

Yes

Yes

Audit Required

Yes, for companies that meet two of the following three criteria:  total assets exceeding EUR 20 million; net turnover exceeding EUR 40 million; more than 250 average employees per year  

OTHER ANNUAL REQUIREMENTS

Government Renewal Fee

No

No

Annual Return

Yes

Yes

Tax Return

Yes

Yes

Submission of Economic Substance Report

Yes

Yes

For more information on taxation and company registration in the Netherlands, please feel free to contact us at any time and our corporate team will address your queries the soonest possible.

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