BR Exclusive: How to open a business in the Netherlands

Anca Alexe 30/05/2018 | 07:00

The Netherlands can be a very good place to start a business for entrepreneurs all over the EU, as it offers great infrastructure, openness to innovation and technology and a high level of English proficiency among the general population and in its administrative system.  The country is also a logistical hub and it offers opportunities for business immigration and remote company incorporation.

EU, EEA and Swiss nationals are allowed to live and work in the Netherlands according to EU law. Residents from other countries will need to apply for a residence permit and a work permit in some cases. However, it is advisable to register with the immigration and Naturalisation Service, as many Dutch authorities ask for a proof of registration. You will also have to register at your local municipality (if you intend to stay over four months) and apply for a BSN (citizen service number).

According to KPMG’s guide to international business location costs, the Netherlands is one of the top three countries with the lowest business costs, especially for digital and research and development services.

Types of businesses you can open

Choosing the right type of business is important, as it determines liability for your business debts and tax obligations. We’ll look at two of the most popular business forms – the sole trader and the private limited company (BV – besloten vennootschap).

Sole Trader

This unincorporated business type is the most common form for freelancers and those who are starting a business without partners or large investors, also known as sole proprietorship (eenmanszaak in Dutch). It is quick and easy to open and run and it benefits from several tax breaks in the first three to five years, if some requirements are met.

When you become a sole trader, your business and personal incomes don’t have to be kept separate, meaning you can use a personal bank account to receive and pay invoices. Furthermore, you can still employ other people as a sole trader.

A sole trader business is free to establish (or requires a very small registration fee), requires no starting capital and has 100 percent private liability. However, you’ll get no sickness or unemployment benefits as a sole trader and if your company goes into debt, the debtors are entitled to your personal assets as well.

Sole traders pay income tax, which may be considerably higher than corporate tax – a reason why many entrepreneurs choose to open a limited liability company (BV) instead of a sole proprietorship. However, you will need to consider the fact that administration costs can be higher for a BV.

Limited liability company (BV)

This is a process for registering a limited liability company (BV):

  1. Complete a form on the KVK website (Kamer van Koophandel – the Dutch Chamber of Commerce) – forms are available in both English and Dutch.
  2. Once your form is complete, schedule an appointment to your local KvK branch, where you will need to bring:

– your completed form

– a payment of EUR 50

– a valid ID

– your business address and contact details

After you register, you will be given a unique business number (KvK number), which you will need to use on all business documents and invoices.

You will need a notarial deed for a BV, which will cost you around EUR 300, but prices vary.

Businesses are required to keep administrative records for seven years, including electronic and paper records such as: sent/received invoices, bank statements, contracts and agreements, business activity expenses.

Taxes

The corporate tax rate in the Netherlands depends on the yearly profit of the company: 20 percent for annual profits less than or equal to EUR 200,000 and 25 percent for profits above this amount.

You will also pay income tax, and you will need to prove you are an entrepreneur to gain access to certain tax benefits – you are advised to get an accountant to help you calculate your income tax correctly.

If you have employees, you will have to deduct payroll tax from their salaries, including wage tax, national insurance and pension contributions.

The Netherlands offers beneficial regulatory provisions and tax incentives for international investors. The country is expected to lower corporate tax rates in the near future and also to end dividend taxation.  For now, BVs need to pay a dividend tax of 15 percent. Shareholders must then pay 25 percent tax on their dividends.

VAT is 21 percent for services and goods supplied in the country. Within the EU, delivery of services and goods can be performed with no VAT charge.

 

Photo: dreamstime.com

 

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