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Starting a business in the Netherlands offers access to a thriving business environment distinguished by a favorable legislative framework, strategic location, and robust infrastructure. The country provides a variety of legal structures to cater to diverse business needs and aspirations. However, choosing the correct Dutch entity for your business is very vital.
These legal entities have unique advantages and requirements and it significantly affect the operation of your company in the long run. Therefore, one of the most important decisions when starting a business in the Netherlands is whether your company will have a corporate or non-corporate identity. We advise you to have a legal entitle. You will need it sooner or later. Now the question is; how do you go about this?
No worries, as this article will educate you on the different aspects of setting up businesses in the Netherlands, as well as the several legal entities that are accessible. Also, you will know the reasons why this European center is so appealing to large-scale enterprises. And if you plan to open a company in the Netherlands, read to the end to know the right Dutch entity for your business.
It is no news that incorporating your business in the Netherlands is a great spot for innovation and international success. Several benefits make the Netherlands an appealing choice for businesses of all sizes and industries. Here are seven compelling reasons to open a company in the Netherlands;
The Netherlands boasts a central European location, providing easy access to major markets and facilitating international trade. In addition to this; its well-developed transportation infrastructure, including ports and airports, makes it a logistical hub for international trade.
The country has an extensive tax treaty network, which can help minimize the risk of double taxation. Additionally, there are various tax incentives and favorable tax regimes for specific activities, such as research and development.
Starting a company in the Netherlands opens you up to advanced Infrastructure for successful and seamless business operations. Some of these infrastructures include a well-developed transportation network and high-speed internet connectivity.
The Netherlands has a vibrant innovation ecosystem, fostering collaboration between businesses, research institutions, and government bodies. This encourages technological advancements and facilitates growth, particularly in industries like tech and innovation.
Benefit from a skilled and multilingual workforce, as the Netherlands boasts a high level of education and proficiency in English, making it an ideal environment for global business operations.
The stable legal system and transparent regulatory environment of the Netherlands create a secure business foundation, instilling confidence in investors and entrepreneurs.
English is widely spoken in the Netherlands, both in business and daily life. This can simplify communication for international businesses and reduce language barriers, making it easier to conduct business transactions and negotiations.
If you plan to open a company in the Netherlands, understanding the different Dutch entities is crucial for making informed decisions. International and domestic companies can open the following types of Dutch companies:
The BV, or “Besloten Vennootschap,” is a popular choice for businesses of all sizes. It offers limited liability, separating personal assets from company debts. BVs can be tailored to various ownership conditions due to their adjustable share structures and capacity to issue multiple classes of shares. This Dutch company entity is well-suited for small to medium enterprises aiming for growth and stability.
A minimum capital deposit is no longer necessary for a Dutch BV due to revisions made by the Dutch company legislation. However, the liability of a Dutch BV is restricted to the capital invested, and it is required to have one resident director and one shareholder, regardless of nationality. Also, a notary deed may be used to transfer Dutch BV shares.
The NV, or “Naamloze Vennootschap,” provides a solid framework For larger-scale enterprises. NVs allow for the issuance of tradable shares on the stock exchange, attracting external capital. However, the regulatory requirements are more extensive than BVs, making this structure better suited for established companies with a broader scope.
The NV needs to have a €45,000 share capital. Businesses classified as public have some of their shares or stock traded for public sales on the Dutch stock market. In return for stock, they can invest money in the company. The NV corporation is not the same as the Dutch BV in that it does not require a notary deed, but its shares are easily tradeable. Do you understand?
Entrepreneurs looking for simplicity often opt for the Eenmanszaak, a sole proprietorship. This structure involves a single owner responsible for all aspects of the business. While it provides maximum control, it also means unlimited personal liability. This form is commonly chosen by freelancers, consultants, and small companies with a solo founder.
The individual business needs to submit taxes using the same forms as regular citizens. The business’s tax identification number is the owner’s social security number. Many entrepreneurs create a limited liability company to lower their business risk because the owner is personally liable for any debts the company incurs.
The CV, or “Commanditaire Vennootschap,” is a unique structure involving a partnership with both general and limited partners. General partners have unlimited liability, while limited partners enjoy liability limited to their investment. This hybrid model is often used in joint ventures and investment partnerships, balancing control and risk.
Foreign businesses looking to expand in the Netherlands may register both the subsidiary and the branch office as business forms. These Dutch companies differ primarily in their relationship with the parent company and the activities they can carry out in the Netherlands.
The subsidiary must register as a limited liability company with a higher independence level, whether private or public. It must pay the same taxes as a local business and adhere to its chosen business form’s exact share capital requirements. Regarding licensing, the subsidiary is free to engage in various activities and is not required to follow the parent company’s lead.
In contrast to the subsidiary, the branch office will function as a foreign company’s satellite office in the Netherlands. This kind of company can only engage in the parent company’s operations, and the parent will make all management choices about the Dutch branch’s running.
The main benefit of the branch office is its rapid establishment and cheap incorporation and operating costs. Typically, branch offices function within the Dutch financial industry.
To register either of these Dutch companies, the parent company must designate legal representatives for the companies and file information with the Dutch Companies Registrar. The following documents are needed to register a Dutch branch:
On the other hand, foreign businesses can register the liaison or representative office in the Netherlands as a non-corporate business structure. In the Netherlands, a structure of this kind is established for marketing and promotional purposes. Additionally, it is a structure that can be established before the foreign company enters the Dutch market.
In the Netherlands, foundations (stichtingen) are commonly used as legal entities for charitable and non-profit activities. Under Dutch law, there are two types of foundations; the ANBI(Algemeen Nut Beogende Instelling) and the SBBI(Sociaal Belang Behartigende Instelling).
The ANBI is frequently used for general-purpose charitable foundations and may be awarded to philanthropic foundations by the tax authorities, which could have a significant tax benefit for both the ANBI and the donors. The SBBI is a foundation whose mission is to unite members around a common objective, like creating an orchestra.
Choosing the perfect Dutch entity from the ones explained above is not only vital when starting a business in the Netherlands, but it will also determine how far and efficient you will operate in the long run. Here are some factors to consider when deciding on the best legal structure for your company.
Private Limited Companies (BV) and Public Limited Companies (NV) provide limited liability, shielding personal assets from business debts. This is a crucial safeguard for entrepreneurs. On the other hand, Sole Proprietorships (Eenmanszaak) expose the owner to unlimited personal liability, meaning personal assets could be used to settle business debts. Limited Partnerships (CV) offer a middle ground, with general partners having total liability and limited partners enjoying liability limited to their investment.
The legal structure also defines the internal governance mechanisms. BVs and NVs often have a more formal structure with a clear delineation of roles and decision-making processes. At the same time, sole proprietorship and CV may offer more flexibility but with different levels of control. With this, determine what you want.
The financial needs of a business play a crucial role in determining the appropriate Dutch entity. BVs and NVs are well-suited for businesses with significant capital requirements, as they can issue various shares and attract external investors. Sole Proprietorships are typically more suitable for companies with lower startup costs, as they rely on the owner’s resources. Limited Partnerships provide a balance, allowing for external investment without exposing all partners to unlimited liability.
BVs and NVs are subject to corporate income tax but offer various tax planning opportunities, such as favorable dividend tax treatment. Sole Proprietorships are taxed based on personal income, while Limited Partnerships pass profits and losses directly to partners for tax purposes.
Corporate Dutch company types are obligated to pay corporation tax on their profits, also called company income tax (vennootschapsbelasting). Foundations and organizations may only sometimes be required to file a corporate tax return.
Business owners prefer incorporated entities like BVs because corporation tax rates are substantially lower than income tax rates.
The administrative burden varies across legal entities. BVs and NVs typically have more rigorous reporting and compliance requirements, including the need for annual financial statements and shareholder meetings. Sole Proprietorships and Limited Partnerships generally have more straightforward administrative obligations. Entrepreneurs must weigh their capacity for administrative tasks against the benefits of each legal structure.
Starting a business in the Netherlands involves a structured process, from registration to finalizing the legal framework. Here are the essential steps:
At FirmNL, we understand that navigating the intricacies of company incorporation in a foreign country can be a challenging endeavor. Whether you’re an ambitious entrepreneur or an established business looking to expand into the dynamic Dutch market, our corporate services are tailored to simplify the process and set you on the path to success.
Our team at FirmNL boasts an in-depth knowledge of the Dutch corporate landscape. We stay abreast of the latest legal and regulatory changes, ensuring that your company incorporation in the Netherlands is not only seamless but also fully compliant with Dutch laws.
Incorporating a company in the Netherlands involves numerous steps, from choosing the right legal structure to navigating registration requirements. FirmNL provides expert guidance at every stage of the process, ensuring that you make informed decisions that align with your business goals.
We recognize that every business is unique. FirmNL takes a personalized approach to company incorporation, understanding your specific industry, objectives, and challenges. Our tailored solutions ensure that your company is set up to thrive in the competitive Dutch market.
Dealing with bureaucracy and paperwork can be time-consuming. FirmNL streamlines the registration process, handling the necessary documentation and interactions with relevant authorities. This allows you to focus on what matters most – building and growing your business.
Incorporating a company in the Netherlands has never been easier. FirmNL facilitates the entire registration process remotely, guiding you through the necessary steps, submitting documentation, and ensuring compliance – all without the need for you to be physically present.
So, what are you waiting for? Contact us today to get started!
The Netherlands offers a business-friendly environment, a strategic location in Europe, a favorable tax climate, and a well-developed infrastructure, making it an attractive destination for businesses.
Common legal entities include Private Limited Company (BV), Public Limited Company (NV), Limited Partnership (CV), General Partnership (VOF), and more. The choice depends on factors such as liability, capital requirements, and the nature of the business.
ANBI stands for “Algemeen Nut Beogende Instelling” or Public Benefit Organization. It provides tax benefits to charitable foundations, and donations to ANBIs may be tax-deductible. To qualify, a foundation must meet specific criteria and adhere to transparency requirements.
Ongoing compliance includes filing annual financial statements, adhering to tax obligations, and maintaining transparent corporate governance. Regular updates on legal changes and market insights are also crucial for strategic decision-making.
Incorporating a company remotely involves virtual consultations, digital document management, and collaboration with corporate service providers. Ensure the service provider is well-versed in remote processes and adheres to legal requirements. Since you are here, you are at the right place, as FirmNL, is your trusted corporate service provider in the Netherlands.
Discover the full range of services we can offer with a free quote.