Set Up Business in the Netherlands

Netherlands Expansion Guide

Global Upside helps companies set up, hire, and operate in the Netherlands. Set up a legal entity quickly and easily with our solutions for branch, subsidiary, and rep office. Looking for an alternative to permanent establishment? Hire and pay employees in the Netherlands without a legal entity by using our PEO & employer of record services. Once your business is set up, our teams can support with recruitment and staffing, human resources, employee benefits, payroll, accounting, and tax.

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Constitutional Monarchy

Country Overview

The Netherlands, situated in Northwest Europe, has a population of 17.4 million. The country has a developed economy that provides a base for important regional and international trade. The Netherlands has emerged as a leading financial center, with the communications and IT, banking, energy manufacturing, and pharmaceutical industries all experiencing consistent growth.

  • The Netherlands is the world’s biggest exporter of flowers and the 2nd largest exporter of agricultural products.
  • The Netherlands is one of the largest producers and distributors of natural gas and oil.
  • The main imports are fuel, machinery, electronics, pharmaceuticals, and food.

Due to the business-friendly conditions of the legal system and tax environment, the process of incorporation in the Netherlands is generally smooth. In conformity with the Dutch law, options for entity set up include:

BV (Besloten Vennootschap) – Private Limited Liability Company

BV (Besloten Vennootschap) – a private limited liability company is a common business structure in the Netherlands in which the company owners assume all liability and risk. The stockholders are responsible for only their own investments. The minimum share capital required to establish a private limited liability company is €18,000.

NV (Naamloze Vennootschap) – Public Limited Company

NV (Naamloze Vennootschap) – a public limited company is a subsidiary of an overseas company that is owned by its shareholders. Company stock is traded in the share market. The minimum share capital required is €45,000.

CV (Commanditaire Vennootschap) – Limited Partnership

CV (Commanditaire Vennootschap) – a limited partnership requires a minimum of 2 partners: an active partner and a limited partner. The active partner is responsible for all third parties and individual properties. The limited partner is the financial supporter of the business.

Sole Trader (Eenmanszaak)

A sole trader (Eenmanszaak) is a type of setup in which the owner assumes full liability for the business.

Branch Office

A branch office is easier to establish than a subsidiary. It is not considered a distinct legal entity. The head office is usually accountable for most liabilities.

It takes at least three weeks to establish a legal entity set up in the Netherlands.

Employment law in the Netherlands is structured by the Collective Employment Agreement (CEA), which is a collection of labor laws and obligations. It is a mandatory requirement that the employer provides their staff with a statement that mentions all specific terms in an employment contract.

There are two kinds of employment contracts:

  1. Fixed-term contract
  2. Indefinite-term contract

According to Dutch employment law, detailed information is required on:

  • Remuneration
  • Working hours
  • Job title
  • Starting date and contract duration
  • Probationary period
  • Job location
  • Pension benefits
  • Information about the collective labor agreement (if applicable)

Dutch law does not require employers to give workers national or public holidays off or to pay them extra if they work on those days, so employer policies on holiday leave are established by collective bargaining agreements or employment contracts.

The Netherlands recognizes two national holidays:

  • the King’s birthday, April 27
  • Liberation Day, May 5, celebrating the end of World War II. Liberation Day is celebrated every five years; the next celebration will be held in 2020

Generally observed public holidays include:

  • New Year’s Day
  • Good Friday
  • Easter Monday
  • Ascension Day (the 40th day after Easter Sunday)
  • Whit Monday (the day after Pentecost, which is the seventh Sunday following Easter)
  • Dec. 25: Christmas Day
  • Dec. 26: Boxing Day

The payroll frequency in the Netherlands is once a month, usually at the end of the month. Employers must also provide payslips that detail the complete salary breakdown.

All local and international public businesses in the Netherlands must comply with the Generally Accepted Accounting Principles (GAAP). These accounting regulations are comprised of the International Financial Reporting Standards (IFRS) as implemented by the EU.

Tax Rate

The tax rate on income higher than €200,000 is 25%. The income tax rate on earnings up to €200,000 has been decreased from 19% to 16.5%.

Value Added Tax (VAT)

The common VAT rate is 21%. A reduced rate of 9% is placed on certain items such as food and medical devices.

The Dutch Data Protection Act (Wet bescherming persoonsgegevens, Wbp) has been replaced by the General Data Protection Regulation (GDPR), also known as Algemene Verordening Gegevensbescherming (AVG). According to the European GDPR, the guidelines concerning the automated processing of personal details are very strict.

Anti-Bribery & Anti-Corruption Law

As per the Dutch Criminal Code (DCC), there are two forms of bribery – active bribery and passive bribery. The former refers to the bribing of a public official and the latter deals with the officials being bribed. Article 177 DCC describes the penalty for active bribery, while Article 363 outlines the penalty for passive bribery.

Bribery of Public Officials

For Individuals:

  • Imprisonment of at least 6 years
  • Fine of €82,000
  • Prohibition from their work for a certain period of time
  • The relevant items of bribery will be seized

For Businesses:

  • Seizure of all items of bribery
  • Fine of 10% of annual revenue

Bribery of Private Individuals

For Individuals:

  • Imprisonment of at least 4 years
  • Fine of €82,000
  • Prohibition from their work for a certain period of time
  • The relevant items of bribery will be seized

For Businesses:

  • Seizure of all items of bribery
  • Fine of 10% of annual revenue