Netherlands - Next global destination for your business
Netherlands ranks 2nd on economic performance, 4th in business efficiency, 12th on government efficiency and 7th on infrastructure. Hence it is an optimum place for registration of a company.
Netherlands Economy
The Netherlands’ economic freedom score is 78, making its economy the 8th freest in the 2023 Index. It is ranked 5th out of 44 countries in the Europe region, and its overall score is above the world and regional averages.
Foreign Direct Investments
The Netherlands has a highly open and globalized economy that consistently ranks among the top FDI destinations worldwide. As per OECD, FDI inflows reached a record high of USD 40.8 billion in the first semester of 2022.
Opportunity Mapping
The Netherlands provide business opportunity in almost every sector as innovation is country’s top priority. Some sectors are the IT and Technological Industry, the Creative Industry, the Water Sector and the Agriculture and Food Industry.
India in Netherlands
Despite the continuing economic crisis in the Euro Zone bilateral trade between India and Netherlands continued to gather momentum. Trade and investment cooperation a key component of India–Netherlands relationship has shown satisfactory growth over the years. There have been major acquisitions and mergers by Indian companies including that of Tata Steel , Apollo- Vredestein, acquisition of Theodoor Glissen by Hinduja Group and many Indian companies and exploring the possibilities for further tie-ups.
Corporate Structure
Conducting business in Netherlands is generally simple and stress free due to Dutch people’s openness to and acceptance of entrepreneurship which makes it world’s one of the most liberal country.
Limited Partnership (CV)
A limited partnership consists of at least two persons. Within a cv, there are two types of partner – a managing partner and a limited partner. It is mandatory to list your limited partnership in the Business Register maintained by the Chamber of Commerce.
Private Limited Company (BV)
A BV does not require a minimum share capital deposit. It must have at least one resident director and one shareholder of any nationality and liability is limited to capital deposited.
Public Limited Company (NV)
The NV requires a share capital of 45,000 EUR. On incorporation, at least 20% of the authorised capital must be issued and at least 25% of the par value of each share issued must be paid in. The NV can have a single shareholder.
Foreign Entities in Netherlands
The Netherlands ranks high in terms of business climate by both site selectors and corporate executives. Foreign entities can register a Dutch branch or register the foreign entity in the Netherlands and use this entity to start doing business. Alternatively a foreign entity can set up a Dutch company and become a (sole) shareholder of such an entity. There are no special restrictions on foreign-owned companies planning to start a business in The Netherlands.
Taxation System
The corporate tax system of the Netherlands contains a number of well-known features providing for an attractive investment climate, such as: the fiscal unity regime with tax consolidation for group companies.
Corporate Tax
The standard CIT rate is 25.8%. There are two taxable income brackets. A lower rate of 19% (15% in 2022) applies to the first income bracket of EUR 200,000 (EUR 395,000 in 2022). The standard rate applies to the excess of the taxable income.
Dividend Tax
Dividends from Dutch resident corporations are generally subject to a 15% Dutch dividend WHT. Additionally, dividends may be exempted under Dutch tax law, subject to anti-abuse rules.
VAT
VAT is payable on the supply of goods and services rendered in the Netherlands as well as on the importation of goods and on the ‘intra-European’ acquisition of goods. There are three VAT rates, which are 21%, 9%, and 0%.
Taxation of Non Resident entities
Unlike countries where non-residents’ income is subjected to flat tax rates, or certain types of taxes are exempt altogether, the Netherlands taxes its non-residents on their Netherlands-sourced income at similar rates applicable to the residents. Non-resident companies are liable to CIT only with respect to Dutch-source income, like profits from a PE or income from real estate located in the Netherlands.
Foreign Entity Options
The Netherlands' open economy, attractive investment climate and international tax laws have always attracted – and continue to attract – many foreign businesses.
Branch Office
Ongoing business operations conducted in the Netherlands on behalf of a foreign business constitute a 'branch'. and doesn’t need to have its own independent legal form. One can register the foreign company branch at the Netherlands Chamber of Commerce.
Representative Office
A representative office is not a legally defined or regulated entity. It does not need to be listed in the Business Register. It may not engage in actual business, and may not enter into contracts or generate any form of revenue.
Permanent Establishment
A 'permanent establishment' is a foreign company's premises located in the Netherlands and capable of acting as a fully self-sufficient business. The permanent establishment is part of your cross-border business, from which goods and/or services are provided.
Netherlands Business
An appealing aspect is the principle of incorporation in Netherlands, that recognises foreign legal entities. This means that foreign legal entities planning to do Company Formation in Netherlands don't have to be converted to a Dutch legal form. The legal entity's organisation and structure is then governed by the foreign law under which it was founded. Other foreign legal forms/entities may be simply registered as a foreign legal entity with commercial activities in the Netherlands.
