Business entities in Netherlands in 2023
The Netherlands has favorable conditions for the incorporation of a company, due to its taxation environment, legal framework and business flexibility. The private company with limited liability (BV) is the most common way of doing business in the Netherlands, however foreign companies can also decide upon incorporating from the following main types of companies in the Netherlands i) public limited company; ii) a holding company; iii) an IP holding; iv) a cooperative; v) a branch or vi) a representative office. Due to its extensive expertise, Healy Consultants Group PLC can advise our Clients on selecting the optimum legal business structure for their specific situation.
The Netherlands Limited Liability Company (BV)
- Setting up a private limited company in the Netherlands is the most common option, and since the introduction of the ‘Flex-BV’ rules in 2012, it has become more flexible and efficient to better cater to the needs of the investors. For example, with these new changes the requirement of € 18,000 issued share capital was dropped, and now there is no minimum capital requirement for a Dutch limited liability company;
- Annual audited financial statements and tax returns must be submitted to the Dutch Tax Authority after the LLC company is set up. A Dutch LLC is considered resident for tax purpose, so corporation tax on all its net profits amounts to 25%, and 19% for profits below €200,000.
The Netherlands Public Limited Company (NV)
- The PLC is recommended when the investor aims to list the company on a stock exchange (for example Euronext Amsterdam), which is not possible with a BV;
- The process of incorporating a PLC in the Netherlands takes 3 weeks and requires a minimum issued share capital of €45,000. The company must be registered with the Dutch Chamber of Commerce and must submit annual audited financial statements.
The Netherlands Large enterprise (SV)
- Public limited companies, limited liability companies, or cooperatives are subject to the large companies regime, if they fulfill the following criteria for three consecutive years i) they have at least 100 employees in the Netherlands and ii) they have at least €16 million in issued capital and reserves; iii) they have installed a Works Council for the promotion and protection of the interests of the employees;
- The main difference between a SV and a medium and small size NV/BV is that for the former a supervisory board is mandatory, while for the other two it is optional. A supervisory board is made up by at least 3 members and it has the power to approve certain decisions made by the management board, such as changes in share capital, mergers and takeovers, changes in article of incorporation, appointment of executive members of directors, among others;
- Supervisory boards in foreign owned SV subsidiaries have the right to approve important management decisions, however they cannot hire or dismiss managing directors. To be considered a foreign owned SV, a company must meet the capital requirement mentioned above but must have half of the employees located outside of the Netherlands.
The Netherlands Holding Company
- Holding companies in the Netherlands are not given a special tax status under the Dutch laws. All companies holding shares in local or foreign subsidiaries are eligible for tax benefits, like participation exemption and access to DTAAs;
- In the Netherlands, participation exemption applies to dividends and capital gains in cases in which the parent company holds at least 5% shares of its subsidiaries, provided that they meet the following three requirements: i) the subsidiaries are not held as just a portfolio investment; ii) the subsidiaries are subject a reasonable tax rate according to Dutch standards; iii) less than 50% of the subsidiaries’ assets are passive assets;
- The existence of resident directors is necessary for a corporation to get access to tax reductions and DTAs in the Netherlands.
The Netherlands IP Holding Company
- The Netherlands is very encouraging of innovation companies, going as far as setting up a tax reduction scheme (innovation box). Under this scheme, a 7% tax rate will apply for profits and losses derived from self-developed intangible assets;
- Dutch IP Holding Companies can also apply for a R&D declaration through the Dutch Promotion of Research and Development Act (WBSO) to have access to subsidies and further deductions, such as a subsidy of up to 32% of employment costs related to R&D process;
- In order to gain access to incentives regarding innovation, the Netherlands government requires evidence of the existence of staff that perform roles related with R&D.
The Netherlands Cooperative (C)
- The name of a Dutch cooperative must end with B.A (limited liability) or U.A (excluded liability) and must include the word “cooperative”;
- Cooperatives do not have shareholders, but members. It must have more than one member, which can be individuals or legal entities;
- Cooperatives are not subject to withholding taxes.
The Netherlands Branch Office (B)
- A branch office is not a legal entity in the Netherlands, consequently a foreign company with a Dutch branch has full liability over the branch;
- The branch profits are treated like other corporate profits. A branch is liable to a corporate tax rate of 25%;
- The annual accounts of the foreign company are also to be filed with the trade register of the Chamber of Commerce.
The Netherlands Representative Office
- A representative office is the best type of entity to i) promote the business of the parent company and ii) to conduct market research. A representative office is not allowed to make direct sales within the Netherlands, and therefore is exempted from corporate tax;
- A representative office will be registered with the Dutch Chamber of Commerce under “Branch (without commercial activities) of a legal entity”.
Table of comparison between different Netherlands business entities
|LLC||PLC||Holding||IP Holding||Dutch Co-operations||Branch||Representative office|
|Operations and Logistics|
|Bank signatory must travel?||No||No||No||No||No||No||No|
|Is doing business in the Netherlands permitted?||Yes||Yes||Yes||Yes||Yes||Yes||No|
|Allowed to sign contracts with Dutch entities?||Yes||Yes||Yes||Yes||Yes||Yes||No|
|Allowed to issue invoices to local Clients?||Yes||Yes||Yes||Yes||Yes||Yes||No|
|Can rent office premises?||Yes||Yes||Yes||Yes||Yes||Yes||Yes|
|Tenancy agreement required before incorporation?||Yes||Yes||Yes||Yes||Yes||Yes||Yes|
|Allowed to import raw materials?||Yes||Yes||Yes||Yes||Yes||Yes||No|
|Allow to export goods?||Yes||Yes||Yes||Yes||Yes||Yes||No|
|Accounting and tax|
|Standard corporate tax payable||25%||25%||25%||25%||25%||25%||0%|
|Availability of reduced rate?||No||No||Yes||Yes, up to 5%||Yes||No||No|
|Corporate bank account?||ABN AMRO||Deutsche Bank||ABN AMRO||ABN AMRO||ING Netherlands||RBS Netherlands||SNS Bank|
|Statutory audit required?||Yes||Yes||Yes||Yes||Yes||Yes||No|
|Annual tax return to be submitted?||Yes||Yes||Yes||Yes||Yes||Yes||No|
|Access to double taxation treaties?||Yes||Yes||Yes||Yes||Yes||Yes||No|
|Issue share capital required?||€1||€45,000||€1||€1||€1||None||None|
|Resident director required for company set up?||No||No||No||No||No||Yes||Yes|
|Resident director required for double tax treaties and access tax benefits?||Yes||Yes||Yes||Yes||Yes||No||No|
|Minimum number of directors||1||1||1||1||1||1||1|
|Minimum number of shareholders||1||1||1||1||2||1||1|
|Individual shareholders allowed?||Yes||Yes||Yes||Yes||Yes||No||No|
|Corporate director(s) allowed?||Yes||Yes||Yes||Yes||Yes||No||No|
|Corporate shareholders allowed?||Yes||Yes||Yes||Yes||Yes||Yes||Yes|
|Public register of shareholders and directors?||Yes||Yes||Yes||Yes||Yes||Yes||Yes|
|Can the entity hire expatriate staff?||Yes||Yes||Yes||Yes||Yes||Yes||Yes|
|How long to get a work permit approved?||3 months||3 months||3 months||3 months||3 months||3 months||3 months|
|Fees and timelines|
|How long to set the company up?||3 weeks||4 weeks||3 weeks||3 weeks||4 weeks||4 weeks||4 weeks|
|How long to open corporate bank account?||4 weeks||4 weeks||4 weeks||4 weeks||4 weeks||4 weeks||4 weeks|
|Estimate of engagement costs||€12,960||€18,440||€15,440||€15,440||€15,440||€13,940||€13,690|
|Draft Invoice||View invoice PDF||View invoice PDF||View invoice PDF||View invoice PDF||View invoice PDF||View invoice PDF||View invoice PDF|