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Business formation and entity choice in the Netherlands

What are the most common types of businesses that can be established in the Netherlands?

There are several ways to operate a business in the Netherlands via a legal entity. A distinction can be made between partnership (general partnership and limited partnership), limited liability company (private and public) and a branch office.

A partnership is a business run by more than one person, who may be individuals or legal entities. Partnership agreements will determine contributions, liability and entitlement and are the sufficient legal requirement to enter a partnership. In a general partnership, the profit is shared between the partners and there are no minimum share capital requirements. In a limited partnership, one managing partner has unlimited liability and the other partner has limited liability. Limited partners are not required to register with the Trade Register. For tax purposes, the partners are considered self-employed entrepreneurs and is required to pay income tax on their share of profits.

A private limited liability company (B.V.) is the most frequently corporate legal entity chosen by foreign investors. The main advantage of a B.V. is that it is an autonomous entity and no minimum share capital required. Any person owning at least 5% of shares has a substantial interest in the company and is liable for income taxes or dividends paid.

A public limited liability company (N.V.) is used to incorporate companies that are very large or will be listed on the stock exchange. It is strictly regulated and needs minimum share capital of 45,000 Euros.

A B.V. or N.V. must be registered with the trade register of the Dutch Chamber of Commerce (KvK), where publicly available information of the company is held.

Foreign companies can do business in the Netherlands through a Branch as an existing foreign legal entity without needing to convert to a Dutch legal entity. Operating a Branch does not require government approval. Branch and the Branch manager must register with the Dutch Chamber of Commerce with the trade register.

 Are there any laws or restrictions on business formation in the Netherlands?

In general, an establishment permit is not required to start a business in the Netherlands. This may be different for certain regulated sectors, such as the food sector where an environmental permit may be required, or the financial sector, where licences to operate is required.

How long does it take to establish a legal entity in the Netherlands?

The Netherlands is ranked 36th among 190 economies in the ease of doing business, according to the latest World Bank annual ratings. An entity will take five to seven days to put in place. The timeframe depends on the complexity of the shareholding structure and the prompt provision of papers by the investors. Filing fees for incorporation are very reasonable as long as the finances are good and timely. No minimal capital contribution is required. The minimum capital requirement for a Dutch BV has been abolished per 1 October 2012. The procedure is as follows:

  • Checking the company name for appropriateness and validity
  • Drafting and signing the company’s deed of incorporation that is executed by a civil law notary
  • Registering the company at the local Chamber of Commerce and obtaining a registration number
  • Registering with the local tax authorities and social security authorities

General requirements

The following principles generally apply:

  • Shareholders, directors and officers can be foreign citizens or residents. Based on the entity that has been chosen there is a chance that the director must visit the Netherlands at least twice a year
  • Corporations/ business entities require no registered agent
  • Corporations/ business entities require to file an annual report with the Dutch Tax Authorities (Belastingdienst). This is not public information and is highly confidential. The Netherlands does not have a specific law regulating franchises. In order to set up a franchise in the Netherlands, the franchisee is required to register a company or a sole proprietorship with the Trade Register, according to the Company Law following which the agreement with the franchisor can be concluded
  • Virtually every Dutch corporate entity has the obligation to prepare financial statements. This obligation follows from the law and is usually incorporated in the statutes of the entity. A foreign company which is obliged to file its annual accounts in its home country is also required to file a copy with the Trade Register of the Chamber of Commerce where the main Dutch office is located. In general, a branch is not required to prepare its own financial statements

Tax registration in the Netherlands

What are the tax filing requirements in The Netherlands?

Corporation Tax

Corporate taxpayers are required to file a tax return annually. If the fiscal year the same as the calendar year, companies have to file their return before 1 June of each year. The corporation tax rate depends on the taxable amount. The taxable amount is the taxable profit in a year less the deductible losses. For 2020, if the taxable amount is less than €200,000, the tax rate is 16.5% and if the taxable amount is €200,000 or higher, the tax rate is 25%. Companies can file their tax return by submitting it online through the Tax and Customs Administration website or by outsourcing your corporation tax return work to an intermediary.

VAT

Turnover tax returns can be filed either monthly, quarterly or annually. The most common frequency is quarterly. If you want to file your returns on a monthly or yearly basis, it is possible in certain conditions.

Income Tax

Everyone who receives a declaration letter from the Dutch-Tax and Customs Administration has to file an income tax return. Income tax must be filed online before May 1st.

Payroll Tax

As a foreign company in the Netherlands, you are obliged to register as an employer and deduct payroll tax from your employees' wages if:

  • The company has its registered office in the Netherlands
  • They have a permanent establishment in the Netherlands
  • The company post, hire out or second personnel in or to the Netherlands
  • The employee works on the Dutch continental shelf
  • The company`s employee falls under the national insurance schemes of the Netherlands

What is the tax authority in the Netherlands?

Belastingdienst: www.belastingdienst.nl

What is the process of applying for a tax identification number in the Netherlands and what is it called?

Upon registration with the Chamber of Commerce, all legal entities and associations are automatically given a Chamber of Commerce number and also an identification number for legal entities and associations (RSIN: Rechtspersonen en Samenwerkingsverbanden Informatienummer). This RSIN is used to exchange data with other government organisations, such as the Tax and Customs Administration. All new companies employing Dutch based employees must also register for employment/wage taxes.

Other registrations

Are there any other registrations required in the Netherlands?

Based on the information (company`s activities) which the Dutch Chamber of Commerce provides to the Tax authority, a VAT-number and wage tax registration will be issued. Next to that, if imports or exports occur an EORI number must be obtained after the RSIN is in.

Key contacts 

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Hans Van Loenen

Head FDI |Tax & Business Consulting Services
E: [email protected]