One of the most difficult, time-consuming, and expensive parts of expanding your company internationally is establishing a subsidiary. There are different types of subsidiaries in the Netherlands, but the most popular type is the private limited liability company or Besloten Vennootschap (BV).
How to establish a Netherlands subsidiary
There are several factors to consider before expanding to the Netherlands. Start by determining your industry and the type of business you will operate. Then, look at any trade agreements or relationships that could grow stronger with a move to the Netherlands. These relationships could be a determining factor when evaluating which of the 12 provinces to choose for your headquarters. Although the Netherlands has relatively unified regulations, there may be small differences based on your specific region.
Although many people in the Netherlands speak English, the official national language is Dutch. In certain areas, you may also encounter other regional languages such as Frisian. Therefore, it could be beneficial to hire a translator or team members proficient in these various dialects to facilitate market entry.
You’ll also need to consider several Netherlands subsidiary laws that could impact employees. While it’s fairly easy for European Union (EU) members to move between the Netherlands and other member states, non-EU or EEA citizens will need a residence permit or a work permit. The Netherlands also has some regulated professions that require a recognized qualification.
Once you evaluate these factors, the Netherlands subsidiary setup process for the private limited liability company or Besloten Vennootschap (BV), includes:
- Checking your trade name
- Notarizing your Articles of Association
- Registering your business and name with the Netherlands Chamber of Commerce
- Registering with the Tax and Customs Administration
- Opening a corporate bank account
- Paying employee insurance
- Conducting a risk inventory and evaluation
Netherlands subsidiary laws
Netherlands subsidiary laws vary based on the type of company you decide to incorporate. For example, there is no minimum share capital for establishing a BV, but BVs can’t issue share certificates or bearer shares. On the other hand, public limited companies need a minimum share capital of EUR 45,000 but do not have the same restrictions as a BV.
A BV is a legal entity where shareholders’ liability lies only in proportion to their invested amount. A limited company’s disadvantages include that it is subject to higher tax rates and a list of the company’s capital consumption must be prepared every year.
Benefits of establishing a Netherlands subsidiary
Subsidiary setup is the first vital step before hiring employees, establishing a payroll, and conducting official business in the country.
Subsidiaries in the Netherlands are liable to a corporate tax imposed on a 2-tier system based on annual income – the rates are 20% and 25%. However, the Netherlands subsidiaries also enjoy tax exemptions and deductions as any other local company.
Other important considerations
Your company will need a significant amount of time and resources to set up a subsidiary in the Netherlands. If you do not have experts in Netherlands subsidiary laws on your team, it’s advisable to hire legal counsel or partner with global growth experts to handle compliance matters throughout the process.
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