All you need to know about establishing a Dutch subsidiary
5 Kasım 2024'da güncellendi
Looking to expand your business into Europe? Setting up a Dutch subsidiary could be your gateway to international success. The Netherlands consistently ranks among the world's top business destinations, offering a stable economy, strategic location, and attractive tax benefits that make it an ideal choice for foreign companies seeking European expansion.
Whether you're a small business owner or represent a large corporation, establishing a subsidiary in the Netherlands can provide your company with both independence and protection while opening doors to the entire European Union market. In this comprehensive guide, we'll walk you through everything you need to know about creating a Dutch subsidiary - from choosing the right legal structure to understanding tax implications and navigating the registration process.
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Why choose the Netherlands?
The Netherlands has many benefits, ranging from a stable economy to a strategic position to do business. As such, the country is often listed in renowned indexes in top positions. Thus, the Netherlands is considered one of the best countries in the world to do business. One such prestigious index is the Global Business Complexity Index 2023 (GBCI), published by consultancy TMF Group, which helps companies do business in other countries.
Of the 78 countries that are listed, the Netherlands is in 4th place, compared to 22nd last year. Next to that, the Netherlands ranks 4th among the world’s Best Countries for Business in 2024, according to Forbes. There is also the Global Talent Competitiveness Index 2023, which ranks 134 countries on their ability to attract, develop and retain skilled people. The Netherlands ranks fifth on this list.
In any case, you get the message: the country is extremely popular when it comes to doing business. The attractive and competitive corporate income tax rate also adds to this popularity. For profits up to 200,000 euros, you pay 19% corporate income tax, above this sum, you pay 25.8%. This is lower than many other European countries, in fact, the Netherlands is listed in the top 5 most attractive EU countries for corporate tax.
Some interesting facts about the Netherlands:
- The Netherlands is a country in the Northwest of Europe
- The current population is close to 18 million inhabitants
- The Netherlands is a constitutional monarchy, yet the king bears no political responsibility
- The Netherlands has twelve provinces, each with their own local governments
- The Dutch judiciary is centrally regulated
- The Netherlands is part of the Kingdom of the Netherlands, together with the countries Aruba, Curaçao and Sint Maarten.
Reasons to establish a subsidiary
The main reason entrepreneurs set up subsidiaries is to allow an existing foreign company to legally operate in the Netherlands.
Foreign companies that want to do business in the Netherlands can establish a company here that falls under their existing foreign legal entity. The company then functions as an extension of the foreign parent company, but also has a certain degree of independence. They will also have to deal with both international and Dutch legislation.
All foreign companies with subsidiaries in the Netherlands must be registered with the Chamber of Commerce. The international company established abroad can control its subsidiary in Holland, but, in contrast to the situation with branches, it does not carry full liability for the Dutch subsidiary’s debts, obligations and actions. The subsidiary does not have to engage in the same operations as its parent company, and, if necessary, it can register for the performance of more activities. This and the limited liability of the parent company are the two main advantages of opening a subsidiary.
Choosing a company type for your Dutch business
When you plan on opening a Dutch company, one of the first choices you will have to make is to choose the type of company. There are roughly two types of companies in the Netherlands, namely unincorporated and incorporated companies.
- Unincorporated companies are business types such as sole proprietorships, and several types of partnerships.
- Incorporated businesses are company types such as private and public limited liability companies and the foundation.
The main difference between these two types of companies is that incorporated businesses are considered to be separate legal entities, whereas unincorporated businesses are more of an extension of the owner(s). Therefore, you only enjoy limited liability when you establish an incorporated business, since this type of company has a legal personality and can enter into contractual agreements on its own. You are therefore generally not liable for any debts you create with a Dutch BV or NV, for example.
Which type you choose greatly depends on your specific plans, but in almost all cases, foreign entrepreneurs choose the BV for various practical reasons.
What is the difference between a branch and a subsidiary in the Netherlands?
A subsidiary is also considered to be a legal entity that can operate on its own. It is therefore different from a branch office, since a branch office doesn’t have legal personality. It can be established by one or more shareholders. If there is only one shareholder, this person will subsequently become the director-shareholder. The subsidiary has legal personality but is nonetheless controlled by the parent holding company.
So how is this control achieved?
The parent company needs to own at least 50% of the shares of the subsidiary in order to be able to control the subsidiary. In some other cases, it is also possible to get control of the subsidiary via special voting rights or different rights of the other shareholders.
Since these rights or shares provide the parent company with the possibility to make important decisions about the board of directors, for example, the parent company is able to exercise control over the subsidiary.
Due to its limited liability, the parent company is commonly only liable for its capital contribution to the subsidiary. The founders of a Dutch subsidiary are able to choose between two very common types of legal entities: private or public companies with limited liability.
The Dutch BV as a legal form
A private company with limited liability (or BV) is suitable for small and medium businesses. There is no minimum capital requirement for the incorporation of a BV as a Dutch subsidiary; it can already be established with 1 euro. Its share capital has to be split into non-transferable registered shares. The shareholders carry limited liability to the extent of their contributions to the capital of the company. One or multiple directors can be appointed to manage the business.
There are different methods for the incorporation of a Dutch BV, depending on the main goal: either the privacy of the directors and shareholders, tax minimization, a holding structure for international business, or a BV owned by a special structure, e.g. a foundation.
The Dutch NV as a legal form
Entrepreneurs can also open a public limited liability company (NV) as a subsidiary. Do note that the minimum capital required to establish an NV is 45,000 euros, split into bearer and registered shares. NVs can issue certificates of shares with respect to bearer shares, in contrast to private companies with limited liability. Shares can also be transferable. The shareholders carry limited liability, covering the capital they have provided to the company.
In contrast to BVs, NVs can be traded on the stock exchange, and as such, anyone can buy shares of this type of company. Be advised that Dutch subsidiaries must have a minimum of two managers, forming a management board. A board of supervisors can also be formed to oversee the activities of the managers. Large companies like NVs follow more stringent requirements in yearly reporting, auditing and accounting.
Hollandalı iştiraklerin vergilendirilmesi
Any subsidiary registered in Holland is considered to be a resident company and has to pay corporate income tax, which is identical to any other local company. Therefore, registration with the Dutch tax authorities is obligatory. The subsidiary should also be registered with the Administration for Social Security in order to hire employees locally.
The corporate tax in Holland is 19% for yearly profits up to 200,000 euros and 25.8% for income exceeding this threshold in 2024.
National companies pay taxes with respect to any profits generated worldwide. Holland is an EU member, so the EU Directive for parent companies and subsidiaries is applicable to Dutch subsidiaries of international companies.
The Directive and the treaties for the avoidance of double taxation between Holland and other countries guarantee significant tax relief and incentives. Other taxes that Dutch companies need to pay include the tax on property, the transfer tax and contributions to social security. The fiscal year usually matches the calendar year. All subsidiaries of international companies need to follow Dutch reporting and accounting principles. In compliance with the filing requirements can result in hefty fines and penalties.
How do I set up a subsidiary in the Netherlands?
If you want to set up a subsidiary, Intercompany Solutions can assist you throughout the entire process. This can save you a lot of time and money since the procedure is hard to carry out when you are operating from another country. Via power of attorney, you can mandate us to act on your behalf, which means that you won’t have to travel physically to the Netherlands to establish the subsidiary.
One of the first things that you will have to do is check whether the name you chose for the subsidiary is unique. This is done at the Dutch Chamber of Commerce, after which a confirmation of the name’s validity is sent by email. If the name is available, the founders can proceed with registration. We then need some extra information from you:
- The names of all shareholders
- Valid IDs of all shareholders
- A valid registration address in the Netherlands for your subsidiary
Once we have this information, we will go to a notary public to incorporate the subsidiary. In most cases, this entails incorporating a Dutch BV. Since depositing the share capital that is required is part of the incorporation, you will need to open an account at a local bank, deposit the required capital, and obtain a document to certify the deposit. Before registration at the Chamber of Commerce, the subsidiary founders must also obtain a non-objection declaration issued by the Ministry of Justice. For this purpose, you have to file an application and pay the relevant fees. The articles of association, the subsidiary establishment application, and the deed of incorporation are then finished by the notary. All documents mentioned above have to be presented to the Chamber of Commerce, accompanied by a deposit certificate and the non-objection declaration. The procedure for subsidiary registration for business purposes in Holland is uncomplicated and takes approximately 3-5 business days, provided that you are able to send us all the necessary documents in time.
Can a foreigner set up a company in the Netherlands?
Intercompany Solutions has assisted hundreds of foreign entrepreneurs from over 50 different nationalities. Our clients range from small, one-person startups to multinational corporations and everything in between. Our processes are aimed at foreign entrepreneurs, and, as such, we know the most practical ways to assist with your company registration. We can assist with the full package of company registration in the Netherlands:
- Hollanda'da şirket kuruluşu
- Yerel bir banka hesabının açılması
- KDV veya EORI numarası için başvuru
- Applications for a variety of permits
- Application for a visa or start-up permit
- Başlangıç yardımı
- Finansal hizmetler
- İdari hizmetler
- Sekreterlik hizmetleri
- Yasal yardım
- Tax and financial services
- medya
- Genel iş tavsiyesi
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Ne kadar Intercompany Solutions sana yardımcı olabilir
Intercompany Solutions has helped thousands of foreign entrepreneurs during the past years to set up a Dutch business, expand to the Netherlands via a subsidiary, and provide all sorts of extra services.
Ranging from the opening of a Dutch bank account, applying for a permit, and obtaining an EORI number to periodical tax return filings and specialized legal advice. We can assist you with everything you need to know about the establishment of company in the Netherlands and take care of these matters for you in a professional and effective way.
We offer our services at highly competitive rates, which we can also combine in interesting package deals. If you need more information on the procedures for setting up a Dutch business, do not hesitate to contact our local agents. They will provide you with more information on company formation and legal advice.
Want to speak with our experts? Click here to request a free consultation