Setting up a business in the Netherlands

I want to conduct business in the Netherlands. Do I need to establish a legal entity there?

No. There are no special restrictions on foreign-owned companies starting a business through a branch office in the Netherlands, nor are there restrictions on foreign ownership of land or on repatriation of capital and profits.

What are the pros and cons of establishing a legal entity in the Netherlands?

The most important legal difference between a branch and a Dutch subsidiary is exposure to liability. Because a subsidiary has a legal identity separate from that of its shareholders, its liability extends only to the amount of its capital contribution. This means that the liability of a subsidiary is generally limited to the assets owned by that subsidiary. On the other hand, a branch is not a separate legal entity, so the foreign company of which it is a part, is fully liable for all the obligations of the branch.

A branch is easier and less expensive to establish than a subsidiary. The foreign head office need only file certain documents and data with the Trade Register of the Chamber of Commerce in the district in which the branch will be located.

Branches and subsidiaries are taxed on virtually the same basis. The few differences will be discussed later.

How long does it take to set up a legal entity in the Netherlands?

The incorporation of a BV or NV requires the services of a civil-law-notary, a Dutch lawyer specialising in drafting and executing deeds of incorporation and articles of association.

Prior to incorporation, a Statement of No Objection must be obtained from the Ministry of Justice. It normally takes about two to five business days after submission of the required documents to obtain that Statement. Once the notary has obtained the Statement of No Objection, the incorporation can be finalised within a day.

Gathering the necessary information regarding beneficial owners, first managing directors, etc. by the incorporators is often the most time-consuming part of the process.

What type of company can I register in the Netherlands to start my business there?

There are two types of legal forms that start-ups typically set up in the Netherlands. The first type does not involve a legal person and your entire personal assets are liable for obligations. Sole traders, VOF or partnerships under common firm, CV or limited partnership and partnerships come under this type.

The other legal form is one that involves a legal person and you are only liable for the amount that you have invested. This legal form has rights and obligations that are independent from those of the people who have invested in it. A BV of limited liability private company is the most common type of legal type for a start-up. Associations and foundations also come under this second category.

Freelancers occupy a special position under Dutch law, whereas the NV or public limited company is rarely the legal form a start-up opts for.

What are the costs involved in setting up a legal entity in the Netherlands?

Out-of-pocket expenses for the services of the civil-law-notary are in the range of € 2,500 for an NV or BV with relatively "standardised" articles of association.

Dutch law also requires a minimum issued and paid-in capital of € 18,000 for BV companies and € 45,000 for NV companies.

Do you have to be physically present when incorporating a legal entity?

No, the incorporators of an NV or BV may be domiciled anywhere, and can be represented at the incorporation by means of a written power of attorney.

Are there any official processes I should keep in mind while setting up my business in a Dutch city?

It is necessary for you to register your business with the Chamber of Commerce of the area where you have decided to operate from. Your business will be entered in the trade register, which is a public document.

Once you are ready for business, you should get the Opgaaf gegevens startende or Statement of Information Form from the Starter’s Desk of the tax authority. The tax authorities will make a provisional assessment of your business, decide which taxes you need to pay and assign you the necessary registration numbers to pay these. The Chamber of Commerce can help you with this as well.