Many steps must be taken to start a business in the Netherlands. There are a lot of different entities, the most common entity to start doing business is a B.V. (‘BeslotenVennootschap’). There are differentforms of business, the most important ones will be described below.

  • BeslotenVennootschap (‘B.V.’)
    • corporate entity
    • limited liability
    • legal personality;
    • a capital divided into shares
    • cannot issue bearer shares
    • no minimum issues and paid-in capital is required, but at least one share has to be issued to a person or legal entity other than the B.V. or its subsidiaries
    • frequently used in international business
  • NaamlozeVennootschap (‘N.V.’)
    • corporate entity
    • limited liability
    • legal personality
    • a minimum issued and paid-in capital of € 45.000,- is required
    • can issue bearer shares
    • must have a minimum issued and paid
    • a capital divided into shares
  • Coöperatie (Corporate entity)
    • in the last decade, it has been reinvented as a holding company in international structures
    • flexible in a Dutch legal and tax perspective, no minimum capital
    • requirements and a less regulated governance structure
    • the legal requirements are limited
    • legal personality
    • there have to be at least two members (participants) to start a corporate entity
    • often used in international structuring
  • Vennootschaponder firma (‘vof’)
    • non-corporate entity
    • partners have unlimited liability
    • the legal requirements are limited, a partnership agreement is enough
    • joint and unlimited liability of the general associates
    • limited liability of the limited associated to the value of the subscribed capital
  • Commanditairevennootschap (‘cv’)
    • non-corporate entity
    • one or more partners have unlimited liability
    • the legal requirements are limited, a partnership agreement is enough
    • it is also possible that partners have limited liability
    • often used in international structuring for an optimal tax position

Setting up a company

After choosing a form, certain steps must be taken to set up a company. The steps are different for each entity. For a B.V. the following steps are to be taken into account.

  • No establishment permit is required. There are some exceptions, which are not mentioned here.
  • The articles of association have to be written in Dutch.
  • The founders must sign the articles of association with a notary.
  • The name of the company has to be unique. It can’t have the same name as another company.
  • The company must be registered. In the Dutch it is called the Dutch Chamber of Commerce (Kamer van Koophandel). This register is accessible to everyone, but not all of the information is publically available.
  • Before all requirements are fulfilled, the B.V. is ‘under formation’. It is allowed to assume obligations, but the obligations are for the risk of the founder.

The Dutch ruling practice

In The Netherlands it’s possible to discuss and negotiate about the tax treatment of operations or transactions in advance. There are a several possible ways to do so.

An Advance Pricing Agreement (APA) is an agreement specifying the way of pricing that the taxpayer will apply to its related-company transactions.

An Advance Tax Ruling (ATR) is an agreement with the Dutch Tax Authorities determining the tax rights and obligations in the taxpayer’s specific situation. This can be used to prevent or resolve any tax disputes.Both agreements are binding for the taxpayer.

Corporate income tax

Dutch companies are usuallysubject to corporate income tax (CIT) onits worldwide income. Certainincome can be exempted or excluded fromthe tax base. Non-resident entities havea limited tax liability. Only ‘Dutch sourceincome’ is included in the CIT base of non-residentcorporate taxpayers.

The VAT system

Value Added Tax is charged on the supply of goods and services in the Netherlands made by a taxable person in the course of exercising a business, except when the supplies are zero-rated or exempt. A VAT taxable person is anyone performing business activities in the Netherlands. If the business is liable for VAT on its transactions in the Netherlands, it will have to register for VAT. VAT is also charged  when importing goods into the Netherlands.

Currently, the standard VAT rate in the Netherlands is 21%. A lower VAT rate of 6% applies to certain essential goods and services (i.e. food and drink, passenger transport and certain labour-intensive repair and maintenance activities). For the export of goods a 0% VAT rate applies.

Tax incentives

The Netherlands is a very attractive placefor performing R&D work and for investment. The Dutchtax system features several tax incentivesto stimulate innovation and businessactivities.

For example, there is a reduction of wage tax due on the wages of employees engaged in R&D of technologically new products.

Investments in certain business assets may qualify for an additional deduction for tax base calculating purposes. This goes for a number of assets, not excluded by the government.

Labour law

In 2015 the Dutch government introduced a new legal system on this matter. Flexibility in contracting and a more clear system for the dismissal of employees (and the pricetag that comes along!) are incorporated in the Dutch civil code.

Active participation in the company in the form of employee participation entities is still an important factor to take into account when doing business in the Netherlands.

Publisher: Van Ewijk Attorneys Mediators