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The Netherlands is the oldest jurisdiction providing tax benefits to international companies. As their global or European headquarters, the Netherlands is used by a large number of corporations controlling branches in other countries. The Netherlands offers a very stable legal environment, a favorable environment for holding companies and a very high corporate image. However, it is worth using these advantages especially for large companies. Especially in recent years, the country has introduced extremely administratively demanding business regulation, and the costs associated with running a company are very high. Nevertheless, the Netherlands remains, and will remain for the foreseeable future, the country of first choice for holding companies demanding an uncompromisin­g image.

ECONOMIC AND BUSINESS ENVIRONMENT IN THE NETHERLANDS

As part of the World Bank's Doing Business analysis, which compares the world's juris­dictions according to the favorable conditions for doing business for small and medium-sized companies, the Netherlands was ranked 21st out of 189 countries.
According to the foreign trade indicator Trading Across Borders, the Netherlands is in 13th place, when compared to the average of OECD countries, it stands out mainly because of the shorter time required for imports and exports.

The Netherlands is characterized by low time demands (123 hours per year) also from the point of view of paying taxes, where it ranks 23rd in the Paying Taxes category. The total frequency of tax payments of a medium-sized company per year is slightly lower than the average of OECD countries.

Why choose a company in the Netherlands for your business

  • The Netherlands is one of the oldest jurisdictions.
  • Offers tax breaks to foreign companies.
  • The Netherlands is counted among the onshore countries and can be described as a country with a very interesting corporate taxation system.
  • There are a large number of business entities operating in the country that are tax-advantaged in some way, which makes them ideal for international tax planning.
  • The popularity of Dutch companies is related to their use as parent companies for the management of subsidiary companies. This is made possible by a very extensive system of double taxation treaties with other countries.
  • It offers a very stable environment with a highly developed legal system and offers a prestigious corporate image.

The most common type of company is the Besloten Vennootschap (BV), equivalent to our limited liability company, and the Naamloze Vennootschap (NV), which corresponds to our joint stock company. The minimum share capital is one one-cent share, so this is more of a formality than an actual investment.
The usual share capital for a BV-type company is EUR 18,000, for an NV-type company it is EUR 45,000. Companies are required to keep their registered office in the Netherlands.

The company register is publicly accessible, so companies offer a low level of anonymity. As with any other European destination, a certain amount of paperwork is required. Businesses must keep accounts and file tax returns. Under certain conditions, companies are subject to audit. The basic corporate income tax rates are 20 % and 25% depending on the amount of taxable income. The lower rate applies to incomes up to EUR 200,000.

The reason why the Netherlands is often chosen as the seat of the parent company is the absence of withholding tax on dividend payments. Although the basic rate of withholding tax is 15 %, effective use of double taxation treaties is able to eliminate it. VAT rates are set at 0 %, 6 % and 19 %.

Incorporating a company in the Netherlands requires

  • Depositing the share capital into a bank account
  • Checking the company name at the Chamber of Commerce
  • Drafting of the partnership agreement and its verification by a notary
  • Receipt of Certificate of No Objection from the Ministry of Justice
  • Entry of the company in the commercial register and its registration with the local tax authority
  • The registered office of the company must be registered in the Netherlands

The minimum share capital is one share of 1 cent each, and the shares may be in any currency. The usual share capital of a BV-type company is EUR 18,000, in the case of an NV-type company it is EUR 45,000. Registered shares with limited or zero transfer rights and shares with or without voting rights are permitted. Restrictions on the transfer of shares agreed upon by the shareholders may be part of the company's articles of association.

Basic information

  • Type of legal entity: limited liability company (BV)
  • Establishment time: 5 working days
  • Number of shareholders: minimum 1, maximum not specified
  • Shareholders: they can be FO or business entities
  • Share capital: EUR 1 minimum, maximum undetermined
  • Shares on bearer: not allowed
  • A registered address in the Netherlands is required
  • Local registered agent is not required
  • Directors: the minimum is 1, a natural person
  • Resident function of director: directors do not have to reside in the Netherlands

Taxation

  • Corporate income tax is 25 % (20 % of the first €200,000 of taxable income)
  • Affiliate rate is 25 %
  • Capital gains tax is 25 %
  • The dividend tax rate is 15 %
  • Interest, royalties 0 %
  • Net operating losses can be carried back with income one year earlier and 9 years forward
  • The standard VAT rate for most goods and services is 21 %. There is also a reduced rate of 6 % for some goods and services
  • VAT registration is mandatory for all companies providing taxable supplies
  • Double taxation agreements applied with more than 70 countries, which determined tax rates on dividends, interest and royalties. Most dividends paid to an individual are exempt from tax
  • Accounting and preparation of accounts is necessary, filing of tax return is necessary
  • The audit is not mandatory

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