Are you thinking of starting a business in the Netherlands as a foreigner or bringing your business into the Netherlands from abroad? In this guide, we explain the basics of starting a company in the Netherlands.

Legal business structures

If you want to start a business in the Netherlands, you first have to consider which legal structure you choose for your business. The business structure most suitable for your company depends on several factors.

The legal structure determines such issues as liability and tax obligations. Also bear in mind that if you choose a legal structure with a legal personality, such as a private limited company (BV), notarial deeds would need to be drawn up.

These are the legal business structures available in the Netherlands:

• Sole proprietorship
• General or commercial partnership (vof)
• Professional or public partnership
• Limited partnership (cv)
• Private limited company (bv)
• Public limited company (nv)
• Cooperative

Setting up a company

The business structures chosen most often in the Netherlands are the Private limited company, Sole proprietorship, and General partnership. Below is a summary of the steps to set up these companies.

Setting up a private limited company or Dutch BV

A private limited company is a business structure with a legal personality, meaning the bv is generally speaking liable for any debts, rather than you as an individual.

A Dutch bv can be set up with yourself as the sole director/major shareholder or with other individuals and/or legal entities. A private limited company’s equity is divided into shares that are owned by shareholders.

A bv cannot be set up by yourself but has to be done by a civil-law notary, due to legal requirements for setting up a private limited company. Essentially, there are four elements:

1. Drawing up the statutes in a notarial deed (incorporation).
2. Making a deposit of €0.01 starting capital, in cash or in kind.
3. Registration in the KVK Business Register (Handelsregister). This is usually carried out by a civil-law notary. You remain personally liable until the registration is complete.
4. Registration at the Dutch Tax and Customs Administration (Belastingdienst), is also usually taken care of by the civil-law notary.

Setting up a sole proprietorship (eenmanszaak) in the Netherlands

Setting up a sole proprietorship is quick and easy. However, it is a business structure without legal personality, so as a sole trader you alone are responsible and liable for the company, its finances, and its debts.

To set up as a sole trader in the Netherlands, you have to register with the Netherlands Chamber of Commerce (KVK), to be listed in the Dutch Business Register (Handelsregister). Then, KVK will pass on your details to the Dutch tax authorities (Belastingdienst), who will determine if you are an entrepreneur for BTW (Value-added Tax, VAT). If you are, you will receive a BTW-id (VAT identification number) and BTW-number (VAT number) by post within two weeks.

Should you already have a business abroad as a sole trader or sole proprietor, then you still need to register with KVK. The Netherlands recognises all foreign legal business structures, except sole proprietorship.

Setting up a general partnership (vof)

In a general partnership, two or more persons work together under one common name. Every person participating in a general partnership becomes a partner. All partners contribute to the company in the form of cash, goods, or labour. However, partners are personally liable for debts – even if another partner is responsible for causing the debts – as a vof is not a legal corporate identity.

To set up a general partnership, no minimum amount of capital is required. You need to register the partnership in the Business Register (Handelsregister).

It is advisable to set up a partnership agreement before registering, to clarify agreements about powers, equity, profit sharing, etc. It is not required to do this with a civil-law notary, but a legal adviser, lawyer, or accountant can help you draw up a partnership agreement. On average, the costs are between €200 and €400.

Important notes on starting a business in Netherlands as a foreigner

Local business address

You will need a business address in the Netherlands in order to register your business. Please note: you cannot use a P.O. box address as your business address.

Registration fee

You can register with the Dutch Business Register from abroad. A non-recurring registration fee of €51.95 has to be paid for each registration.

Keeping records

If you have a business in the Netherlands, you are legally obliged to keep records and retain them for at least 7 years. However, you must keep data related to immovable property or electronic services, broadcasting, or telecommunications services for at least 10 years. The obligation also applies when your business ceases trading within the specified period.

Funding

If you need funding to start your company, you may involve private investors or banks. Investors usually want some security for their investment, which can be provided, for example, by:

• proving you can pay back the investors if the business goes bankrupt; or
• starting a private limited company (bv), as this is a legal entity, which is more secure as a creditor than structures where you are personally liable.

Company on hold

It is not possible in the Netherlands to put your company on hold or file for dormant status. The KVK and the Tax Administration consider having a business, means having business activities. As long as your business is registered, legal obligations such as filing tax returns, keeping business records, and honoring any contracts with suppliers/customers must continue.

If you do not have business activities, you can de-register your company. Legal entities, such as the bv, have to be dissolved before de-registering.

Taxes for Dutch businesses

The tax authorities in the Netherlands are the Dutch Tax and Customs Administration (Belastingdienst). When you register your company with the Business Register (Handelsregister), your business will be automatically registered with the Tax Administration as well. In the case of a private limited company (bv), the notary usually takes care of this.

The Netherlands Chamber of Commerce will (KVK) checks whether you have sufficient tax substance in the Netherlands.

The most common business taxes in the Netherlands are:

• Turnover tax or Value-added Tax (btw): it is added to most (not all) goods and services your business sells in the Netherlands. The rates are 0%, 9% or 21%. VAT/btw your business pays on goods and services it purchases for itself, can usually be reclaimed.
• Income tax: as a sole trader or a partner in a general partnership, you will have to pay income tax on your business profits.
• Corporate income tax: private limited companies (bv) or public limited companies (nv) have to file returns for corporate income tax at the end of the company’s financial year. Losses may be offset against profits. Your business may be eligible for a special tariff if it is innovative and profitable.
• Dividend tax: if you distribute profits to your shareholders, as a private or public limited company, in the form of dividends, you have to pay Dutch dividend tax.

Tax	Rate (on taxable income, if applicable)
VAT/btw	0%, 9%, 21%
Income tax (box 1)	up to €69,399: 37.07% from €69,399: 49,50%
Corporate income tax	up to and incl. €395,000: 15,0% above €395,000: 25,8%
Dividend tax	15%

Since there are many factors that determine which taxes you have to pay and at which rate, we recommend you ask for advice from a tax advisor.

Accounting

When doing business in the Netherlands, you require an IBAN bank account. This enables account holders in the Single Euro Payment Area (SEPA) Zone to make national and cross-border euro payments. If you already have a bank account in the SEPA Zone, it is not needed to set up a new one.

For certain business structures, it is mandatory to file annual accounts with the Netherlands Chamber of Commerce (KVK), including private and public limited companies and general partnerships where all managing partners are foreign.

Annual accounts are financial statements. The information you must include in these depends on the size of your business. At the minimum, it consists of a balance sheet with limited explanatory notes. Other information which may be filed is directors’ reports and profit and loss accounts.

You may consider outsourcing the bookkeeping and accounting of your business.

Moving your existing company to the Netherlands

It is possible to move your existing company and its legal structure from your own country to the Netherlands. Nevertheless, you have to register in the Dutch Business Register. Dutch company law recognizes all foreign business structures, except sole proprietorships.

The law of the country of origin determines the rules for incorporation, duties, and rights of a company with legal personality, the company structure, power representation, termination rules, and liability. Dutch law applies to taxation, establishment, bankruptcy, etc.

You may want to move an existing business structure to the Netherlands as it is relatively easy and cheap, compared to Dutch legal structures that require a notary’s service (such as a bv/private limited company).

However, you must keep up-to-date on your original country’s company law. You may also run into practical challenges, as banks, insurance companies, and other companies are often reluctant to enter into agreements with foreign companies. Seek expert advice on whether moving your existing company is beneficial for your situation.

HKWJ Group One-stop Solution

As a Dutch company with offices in Hong Kong and the Netherlands, HKWJ Group can be your first point of contact and provide a wide arrange of services to get your business up and running, such as:

• Company setup
• Accounts management
• Opening a bank account in the Netherlands
• Tax advisory and filing
• Payroll payment
• VAT management
• Filing of the annual financial accounts
• Legal advice

Are you thinking of starting a business in the Netherlands as a foreigner? Do you already have a business abroad? Contact us now to find out more.