Starting a Business in the Netherlands in 2023

Setting up a company in the Netherlands is one of the best choices for foreign investors. Why? It has an innovative ecosystem to accelerate business possibilities and co-create solutions for a better future. The country invites global companies from all sectors to take advantage of the stable legislation and international relations.

Forbes ranked the Netherlands in the top five among the best business countries in the world. Moreover, it provides access to 95% of Europe’s most lucrative consumer markets. A highly developed infrastructure and its position as the sixth-largest EU economy further make it a significant player in the market.

So, do you plan to set up a business in the Netherlands? Various government rules and other regulations are to be followed. This article will be your checklist to know the correct procedure for starting a business in the Netherlands as a foreigner. Keep reading to learn more!

Advantages of Starting a Business in the Netherlands

The Netherlands is known worldwide for its promising and rewarding environment for entrepreneurs. Many investors and business owners are exploring the benefits because 

1. Strategic Location

The Netherlands is strategically positioned in Europe and is a gateway to the European Union (EU) market.  You can reach approximately 170 million consumers within a 300-mile radius. Its excellent infrastructure, including modern ports and airports, creates a prime logistics and distribution hub. Businesses can benefit from easy access to consumers within the EU.

2. Large Talent Pool

The Netherlands is home to a highly educated and skilled workforce. Its education system consistently ranks among the best and produces a diverse talent pool. The multicultural and multilingual population makes it attractive for businesses seeking an international perspective. In addition, favorable labor laws and a strong work ethic contribute to a productive and innovative workforce.

Related Read: Benefits of Hiring a Global Workforce

3. Incentives and Government Support

The Netherlands offers an attractive environment for establishing and growing your business. While the country does not entice businesses with generic subsidy programs to enter its market, it provides subsidies and support in the following areas:

• Sustainability: Subsidies are available to businesses committed to sustainable practices and initiatives.
• Research and Development/Innovation: Companies engaged in research and development activities and promoting innovation receive WBSO status. It allows you to access tax benefits and incentives.

4. Competitive Tax Rates

Lastly, the Netherlands has competitive tax rates and attractive business policies to benefit business owners. Businesses with €395,000 taxable amount or less are taxed at 15%. Meanwhile, the tax rate for companies with more than €395,000 in taxable amounts is 25% and is scheduled to decline. The taxation policy favors foreign direct investments to stimulate innovation.

How to Start a Business in the Netherlands as a Foreigner?

Learning about setting up a company in the Netherlands is crucial to start right. You must follow a strategic procedure to ensure your business follows the necessary rules and meets compliance. Here is a step-by-step process to start a successful and legally compliant venture:

1. Determine the Corporate Structure

Selecting the legal form for your business can be challenging, especially when each accompanies perks and downsides. The first step to starting a business in the Netherlands is addressing the following:

• Asset Protection: Determine your preference for safeguarding company assets effectively.
• Shareholders/Investors: Consider the number of shareholders or investors involved in your company.
• Share Transfer Permissions: Decide whether each shareholder can freely sell shares to third parties or require prior permission.
• Tax Implications: Evaluate the tax consequences of dividend payments to shareholders.

2. Selecting the Name

Choose a name for your company. The Dutch government imposes restrictions on specific terms in your company name.

For instance, you must have the credentials to include terms like 'bank,' 'university,' or 'accountant' in your company name. Hence, ensuring your company name complies with the regulations is critical to the business setup process.

Further, take note of the unique character restrictions applicable to your company name. While certain special characters like '@,' '&,' '+,' and '-' are allowed, you can not use others such as '(),' '?' '!' '*,' '/,' and '#..'

3. Registered Address for the Business

You will require a registered agent and a registered office address for your business. This address will be the official location for getting legal documents on behalf of your company.

While having a registered office in the Netherlands is a prerequisite for starting a business, you can also secure a non-resident VAT registration number to associate authenticity with your company.

4. Opening a Bank Account

A new bank account is not mandatory when starting a business in the Netherlands. Using an overseas IBAN, such as one from your current overseas bank, until you establish a solid economic presence and track record in the Netherlands is ideal.

Dutch banks, like ING, offer the possibility of opening corporate bank accounts for brand-new companies. Alternatively, you can explore online banks, often known as Electronic Money Institutions (EMIs), for online banking services and debit card facilities.

5. Drafting the Statutory Documents

Statutory documents are vital for setting up a company in the Netherlands. It outlines the legal structure, rules, and governance and ensures compliance with Dutch regulations. You must visit a specialized notary public to draft the documents.

The notary will work with you to create the necessary documents, including the Articles of Association and the Formation Deed, and tailor them to your business structure and specific needs. Having the documents in Dutch is crucial to complying with local regulations.

6. Registration with the Chamber of Commerce

Company registration at the Chamber of Commerce can be conducted online through a notary, but certain situations may warrant in-person registration. Factors like notary availability and time constraints, especially when planning a visit to the bank on the same day, influence this decision.

Once registered with the Chamber of Commerce, your company can engage in various activities without requiring additional business licenses.

7. Applying for Tax Numbers

The final step in initiating a business in the Netherlands involves securing the requisite tax numbers, including corporate income taxes (CIT) and value-added tax (VAT). There is no legal obligation to appoint a Company Administrator or Tax Representative in the Netherlands. 

However, engaging the services of a locally registered bookkeeping firm is customary for non-resident companies when applying for a VAT or wage tax number. It facilitates communication with tax authorities and ensures the filing of appropriate tax returns.

Business Types in the Netherlands

The Netherlands has various legal forms for businesses. You can categorize these structures into two groups:

1. Unincorporated Business Structures

An unincorporated business structure refers to entities without a legal form, such as a notarial deed. It implies you are liable for business debts, and your private assets are not protected. You can set up an unincorporated business directly at the Dutch Chamber of Commerce (KVK).

Common business structures in the Netherlands with no legal form include:

• Sole Trader

A sole trader, or Eenmanszaak, is a business owned and operated by a single individual. It offers simplicity but comes with unlimited personal liability. You bear full personal responsibility for operations, debts, and liabilities.

• General Partnership

A general partnership (VOF) is formed when two or more individuals or entities collaborate to manage a business. They share profits and losses, while each partner has joint and personal liability for the business obligations.

• Limited Partnership

CV or a limited partnership is comprised of general and limited partners responsible for managing the business. While general members face personal liability, limited partners who contribute capital have liability limited to their investment.

• Professional Partnership

Professionals like doctors, lawyers, and accountants form a professional partnership to share resources and collaborate in their respective fields. They have individual liability for their professional actions within the partnership.

2. Incorporated Business Structures

Such a business structure requires a legal form known as a corporate personality in the shape of a notarial deed. The legal entity protects the owners from potential company debts. You must visit a civil notary to draw up a contract and register your business at the Dutch Chamber of Commerce.

Here are the five incorporated business structures in the Netherlands:

• Private Limited Company

A Private Limited Company (BV) is a legal entity with limited liability for its shareholders. It requires a minimum share capital and is suitable for small to large businesses.

• Public Limited Company

A Public Limited Company, also known as NV, is a company that publicly trades shares on the stock exchange. It requires a higher minimum share capital and offers limited liability to shareholders.

• Foundation

A Stichting or foundation is a legal entity for non-profit or charitable purposes. It does not have shareholders but is comprised of a board of directors or trustees responsible for managing its assets and activities.

• Cooperative

Cooperatives, or Coöperatie, are business entities where members pool their resources and work together for benefit. It is commonly used in agriculture, retail, and other cooperative ventures where members share profits and decision-making.

• Association

An Association is an entity for social, cultural, or recreational purposes and does not focus on generating profit. The members bear limited liability and participate in its activities and governance.

The choice between unincorporated and incorporated business structures depends on various factors. The nature of the business, liability considerations, capital needs, and long-term goals can influence your decision.

Documents Required for Company Registration in the Netherlands

Registering a company in the Netherlands requires submitting several essential documents to comply with local regulations. These are the foundation for establishing your business entity and ensuring its legal and financial compliance. Here are some relevant documents you will need:

1. Business Plan

You must make a comprehensive document to help investors understand your business concept, strategy, and goals.

2. Bank Statement

Proof of sufficient funds or initial capital deposited in a Dutch bank account to show your financial capacity to start and operate the business.

3. Proof of Address

You must confirm the physical address of your business in the Netherlands.

4. Letter of Intent

A description to explain your intent to establish and operate a business in the Netherlands. It must include details about your business activities and goals.

5. Relevant Forms

You must submit the following forms depending on your business form for company registration in the Netherlands:

• Registration Non-Legal Entity Company

Form 6 is necessary if your business structure is not an incorporated legal entity, like a partnership. It registers your business with the Dutch authorities.

• Registration Official of a Legal Entity

Form 11 is required when you are setting up an incorporated entity. It registers the company and provides relevant details to the Dutch Chamber of Commerce.

• Registration Authorized Representative Business Agent

Form 13 registers the authority of the individual you appoint to act on behalf of the company.

6. Articles of Association

The legal document defines the internal regulations and governance structure in your company. It is necessary for incorporated entities like private and public limited companies.

7. Shareholder Register

A record of all company shareholders is required. It must include their personal information and shareholdings.

8. Permits

Foreign investors outside Europe must possess a residence permit (MVV) or work permit (TWV) to start a business in the Netherlands.

Timeline for Company Registration in the Netherlands

The timeline for setting up a business in the Netherlands can vary significantly based on the complexity of your chosen business entity. Generally, more superficial structures require fewer legal formalities and registrations. Hence, they can be set up relatively quickly than other business types. The necessity of drafting articles of association, obtaining approvals from regulatory authorities, and complying with various legal requirements can delay the process.

For example, a limited liability company requires about a week for incorporation. It takes less than one day to check the company name for validity to establish a business. Further, a civil law notary takes one day to draft and sign the Deed of Incorporation. However, it may demand more time, depending on the complexity.

You must register your company at the Chamber of Commerce and acquire a registration number. It can be done online or in person. While the online process takes several hours, registering in person requires one to five working days.

The last step to starting a business in the Netherlands is registering with local tax and social security authorities. You can file the form in a day, but the tax office will provide the required tax numbers in two to six weeks.

Setting up a Company vs. Partnering with an Employer of Record in the Netherlands

You have two choices when considering conducting business in the Netherlands. You can set up a legal entity or leverage an Employer of Record (EOR) service. Starting a business in the Netherlands grants you control and autonomy over the operations. It allows for direct ownership, potential tax benefits, and a more permanent presence.

It also means managing compliance, payroll, and administrative tasks independently. However, the process may become tricky owing to the complex Dutch employment laws. An Employer of Record offers a faster and more cost-effective option. It is suitable for businesses looking to build a presence in the Netherlands without the complexities of opening an entity.

The following table outlines the various aspects to help you decide between setting up a company and partnering with an EOR.

Both options offer distinct advantages. Hence, considering your expansion strategy and long-term goals is essential. Selecting one that aligns with your business objectives, timelines, and budget is ideal.

Related Read: The cost of hiring a new employee: A comprehensive guide

Hire Talent in the Netherlands Compliantly

Finding the right talent is essential for successful operations when you start a new business. However, hiring global talent while establishing a company in a foreign land can be overwhelming for newcomers. An Employer of Record (EOR) like Skuad can be a smart choice for companies expanding their operations into the Netherlands.

Skuad takes on the legal employer responsibilities and reduces your legal and financial liabilities. You can concentrate on your essential business operations, knowing that your workforce in the Netherlands is in capable hands, all while benefiting from cost-effective and compliant solutions.

Skuad offers a unified platform to hire, onboard, and pay international employees. You can effortlessly manage payroll, benefits, and HR functions to simplify operations and ensure your employees are well cared for.

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FAQs

Q1. Can a foreigner start a business in the Netherlands?

Yes. Anyone can begin a business in the Netherlands as a foreigner. Non-residents can also bring their business from abroad. However, they must fulfill certain conditions, including legal residence and seeking permission to work in the Netherlands.

Q2. How much does it cost to start a business in the Netherlands?

Several factors determine the precise costs of setting up a company in the Netherlands. The number of shareholders, the type of Formation Deed, and the business structure can influence the required fees. It can cost between €1,000 and €1,500 to form a company.

Q3. What are the advantages of starting a business in the Netherlands?

The Netherlands profits from being in a strategic location. It offers instant access to the entire international market. Further, a competitive corporate tax rate puts forward a supportive fiscal climate for foreign companies and international entrepreneurs.

Q4. What is the tax advantage in the Netherlands?

The 30% reimbursement ruling is a tax benefit for specific expat employees and high-skilled migrants in the Netherlands. It reduces the taxable amount of the gross Dutch salary from 100% to 70%. Hence, 30% of wages are tax-free for foreigners.