Entering the Dutch Market

The Dutch Market

The Netherlands economic influence stretches well beyond the borders of what is a relatively small country. The Dutch economy is considered the most competitive in Europe, fourth most competitive in the world according to the World Economic Forum and 2020 IMD rankings, as well as fifth in the 2020 Global Innovations Index.

Geographically, the Netherlands is ideally placed with 95% of Europe’s most lucrative markets reached within 24 hours by road from Amsterdam or Rotterdam, plus an infrastructure of airports, railways, waterways, and ports that connects the country domestically and internationally.

The Netherlands has become a main gateway to European talent for companies expanding abroad and as a magnet for business ventures from the United States, Australia, China, and India.

Expansion into a developed economy such as the Netherlands involves huge challenges – from finding highly qualified staff to complying with strict employment laws and tax and payroll regulations.

There are speedier and more cost-effective alternatives, with Bradford Jacobs opening the door to a hassle-free route into the Netherlands.

Starting a Business in The Netherlands

The usual choice for foreign companies establishing a legal entity in the Netherlands is a private limited liability company, known as a Besloten vennootschap, BV. The subsidiary is a separate legal entity from its parent company, due to having its own capital and independent administration.

Set procedures include the following steps: 

• Apply to obtain a ‘certificate of non-objection’ from the Dutch Ministry of Justice in order to register a subsidiary.
• Check the business name is valid and unique and register with the Chamber of Commerce and the tax authorities.
• Open a corporate bank account to deposit any initial capital and receive certificate of deposit.
• Obtain the ‘declaration of non-objection’ from the Ministry of Justice.
• Have the Articles of Association and all relevant documents notarized by a Dutch lawyer and then submitted to the Chamber of Commerce.
• All documents are submitted to Chamber of Commerce with the certificate of bank deposit and declaration of non-objection.
• The subsidiary must register with tax and social insurance authorities.

Once the company has been cleared to operate, to employ and payroll staff other procedures must be followed, including:

• Registering with the tax authorities through the Dutch Tax and Customs Administration (Belastingdienst).
• Registering with the Social Security Bank (SVB) which coordinates the social insurance systems – national insurance for individuals legally living in the Netherlands and employee insurance for those working in the country.
• Registering with the Employee Insurance Agency (UWV), which operates under the Ministry of Social Affairs and Employment (SZW) and handles benefits covering such as unemployment and sickness.
• Obtaining the Citizen Service Number (BSN) for all employees so they can interact and liaise with national, regional and municipal authorities.

Expanding into The Netherlands

Foreign companies expanding into the Netherlands are entering one of Europe’s leading economies, in a prime geographical location for extending their reach into the continent’s massive consumer market numbering hundreds of millions. The World Bank ranks the Dutch economy as 17th largest in the world and fifth in the European Union with a Gross Domestic Product (GDP) expected to reach 1,012 billion US dollars by the end of 2021.

Leading sectors include agriculture and agri-food research, creative industries, chemicals, energy and high-tech systems and materials. The Netherlands is a popular target for global expansion with its internationally focused economy, strong financial sector, quality of life, a pro-business government and its geographical location as a gateway to the rest of mainland Europe and further east.

The Netherlands Business Facts

• Capital City – Amsterdam
• Population – 17 million
• Official language – Dutch, Frisian (spoken only in Friesland).
• Economy and world ranking – 2021 – €862 (US$1,012) billion; 17th-largest economy in world; 5th-largest in EU
• Leading sectors – Agriculture and agri-food research, creative industries, chemical industry, energy and high-tech systems and materials
• Main exports – includes machinery, transport equipment, refined and crude petroleum, broadcasting equipment, food, packaged medicaments, computers, office machine parts
• Main imports – includes electrical machinery and computers, mineral fuels and oil, food and live animals, vehicles, pharmaceuticals, optical, technical and medical apparatus
• Main trading partners – EU, UK, USA, China
• Government – The Hague. Constitutional monarchy – parliamentary democracy
• Currency – Euro

Advantages and Challenges of the Dutch Market

Advantages of expanding into Dutch market include:

• Logistics: Ranked second best globally for logistics by the World Bank
• Innovation: The Global Innovation Index ranked the Netherlands fifth-best in the world in 2020
• Workforce: Highly skilled and multi-lingual from an outstanding education system
• Location: Ideally placed for further expansion into the wider European market
• Trade: Over 90% of Europe’s most lucrative consumer markets are within 24 hours by road or rail
• Communications: More than 90% of households have high-speed broadband
• Taxation: Double taxation treaties with over 80 nations

Challenges of operating in the Dutch market:

• Property: If setting up a subsidiary requires registering a property, this involves a notary conducting a title search at the Land Registry, transferring the deed and notifying the tax authorities
• Taxation: Dealing with corporation taxes can take up to 10 payments annually
• Permits: Construction licenses involve 14 separate procedures and can take up to five months to obtain

Limited Company / Subsidiary or Branch in Netherlands?

International companies targeting Netherlands for expansion will generally choose a limited liability subsidiary (Besloten vennootschap, BV) as they have independent legal status from the parent company, which are generally free from responsibility for any debts or liabilities of the subsidiaries. 

The parent company has the advantage of exploring the potential of the Netherlands’ market. There is also the potential to move further afield across Europe and into Scandinavia. 

However, it is also important to see what other options are out there.