Located at the heart of Europe, the Netherlands is known for its stable, business-friendly climate and highly educated workforce. The Netherlands’ prosperous and business-friendly economy depends heavily on foreign trade. As the eurozone’s sixth-largest economy, it has been able to attract the world’s largest multinational groups.
Consisting of a highly-skilled, multilingual workforce—at least 90% of the Dutch population are fluent in English. The country has become a center of excellence for life sciences and healthcare. It’s home to the European Medicines Agency (EMA), as well as one of the world’s most concentrated life sciences and healthcare clusters.
It’s also the world’s second-largest exporter of agricultural products by value, behind the United States. The Netherlands’ logistics infrastructure provides unparalleled access to Europe. Rotterdam is Europe’s largest seaport and the world’s tenth largest container port. And 15 of the world’s top 20 agri-food companies—including Nestlé, AB InBev, Coca-Cola, Unilever, Heineken, Cargill and Kraft Heinz—have major production or research and development (R&D) operations in the country.
Here are five considerations to ensure success when investing there.
1. Choose the right structure for your investment
There are no restrictions on foreign investors planning to start a business in the Netherlands. Under Dutch law, they can choose from several entity options. The most common are:
- Private limited company
- Public limited company
- General partnership
- Limited partnership
- Cooperative
- Branch
- Foundation
All companies in the Netherlands are required to prepare annual accounts and maintain accounting records. Annual accounts should be prepared using Dutch Generally Accepted Accounting Principles (Dutch GAAP) or International Financial Reporting Standards (IFRS), depending on the entity.
It takes about three and a half days and four procedures to set up a business in the Netherlands—significantly less than the Organization for Economic Cooperation and Development (OECD) average.
2. Understand tax obligations in the Netherlands
The Netherlands has an extensive network of some 127 bilateral tax treaties to avoid double taxation. Several tax incentives aim to stimulate investment in energy-efficient or environmental assets. There are also incentives for R&D activities in information technology, biotechnology, and environmental technology.
The Netherlands tax regime is also favorable for profits from certain activities by seagoing vessels.
People living in the Netherlands are subject to tax on their worldwide income and wealth. Non-residents are taxed only on income derived in the country. Dividends from Dutch companies are subject to a 15% withholding tax rate.
3. Stay up-to-date with employment regulations in the Netherlands
Employment contracts may be verbal or written, formalized in a letter signed by both parties. In either case, the employer must inform the employee in writing of their employment conditions. Under Dutch law, an employment contract must be terminated in writing.
Employers must deduct payroll taxes and contributions from employees’ wages and transfer them to the relevant authorities. Dutch law provides for transition budgets as compensation for terminating an employment contract. These payments help support the former employee as they look for another job.
4. Make sure you have the right permits for foreign employees
From January 1, 2021, employers must apply for a work permit to employ non-EU or EEA nationals, including UK citizens. Highly skilled individuals can qualify for either a Dutch Highly Skilled Migrant Visa or the EU Blue Card.
5. Factor in HR legislation and the minimum wage
Employers in the Netherlands are forbidden from discriminating or excluding employees on the grounds of religion, beliefs, political opinions, age, race, gender, disabilities, or any other ground.
The government reviews the minimum wage twice a year—on January 1 and July 1—in line with average changes in collectively agreed wages in the country. The minimum wage is calculated on a sliding scale for employees under 21.
How CSC can help you invest in the Netherlands
Despite the country’s open economy and business-friendly climate, newcomers may find the Netherlands’ tax and legal systems difficult to navigate. Before entering the Netherlands market, foreign investors should seek professional advice to understand these complex matters. That’s why working with a trusted local partner is essential.
CSC provides a wide range of financial and administrative services to clients operating and investing in the international business environment. We help companies to expand globally, offering support with restructuring, outsourcing, and further developments.
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