Nicknamed the “gateway to Europe”, the Netherlands has become a premier destination for companies looking to expand into Europe because of its strategic location, capable multilingual workforce, world-class education system, high GDP, and ongoing innovation. Check out the following information you need to help you start your business or expand it.
About the Netherlands
Home to a little over 17 million people, the Netherlands is a small yet innovative nation. The country embraces new ideas through financial incentives for innovation and sustainability, with programs like the Innovation Credit and the Energy Investment Allowance.
Many leading global businesses, such as Uber, have setup their headquarters in the Netherlands because of the English-speaking workforce and pro-business climate.
The country is also strategically located with Europe’s most lucrative markets close to the cities of Amsterdam and Rotterdam. Finally, the Netherlands has an entrepreneurial spirit, using technology to boost key industries like agriculture, food, financial services, logistics, and energy.
The Netherlands uses a civil law system and customary can be applied in exceptional circumstances. Theoretically, case law does not play a major role in deciding case, however in practice it is important when deciding a matter.
There are 11 district courts, four courts of appeal, and one Supreme Court. Every district court has a limited jurisdiction sector, which hears cases such as employment, rent disputes, etc.
Business Entities in the Netherlands
Sole proprietor or sole trader (eenmanszaak)
In the Netherlands, you can set up only one sole proprietorship. However, you can operate under different trade names and perform multiple commercial activities. This type of business structure lets you assume sole responsibility for the company, in all aspects like its debts and finances. Taxation is based on your income tax rate.
General or commercial partnership (vennootschap onder firma)
A minimum of two individuals is required to set up a general partnership. Every partner should contribute resources to the entity in the form of money, labor, or goods. Partners are liable for their share of debts, regardless if another partner causes them. It’s advisable to draw up an agreement to limit liability from your assets.
Professional or public partnership (maatschap)
If you plan to work alongside other professionals in a public capacity, create a legal entity in the form of a public or professional partnership. Each partner should bring in investment in the form of labor, cash, or goods.
Meanwhile, as partners are equally liable for possible debts of the company and must work on equal standing, it is advised to have a partnership contract that outlines the equity brought in by each partner, share of profits, and scope of work.
Limited partnership (commanditaire vennootschap)
A limited partnership is ideal for those who want to start a firm but do not have the capital. It requires at least two persons – one partner working as a managing partner and the other a limited or silent partner. The managing partners run the day-to-day business while the silent partners are involved in the financial affairs.
The combination of tax rates in the Netherlands and financial incentives make the country an excellent choice for a European business expansion.
Corporate income tax rates are 15% for the first €245,000 of taxable profits and 25% for exceeding said amount. A special, optional tax rate may apply for profit resulting from patented intangible assets such as inventions by placing these in a special tariff box on your corporate income tax return: the innovation box.
The Netherlands also holds nearly 100 bilateral tax treaties to avoid double taxation and to provide reduced or no withholding tax on dividends, interest, and royalties.
Companies looking to bring their employees from abroad can benefit from the 30% ruling that allows employers to offer 30% of employee salaries tax-free to compensate for the costs international employees incur when moving to the Netherlands.
The standard weekly working hours in the Netherlands is 38 hours per week. Companies can extend it into a 40-hour workweek, however in such a case, employees must be compensated for the extra hours worked.
Across a period of four weeks, an employee may not work more than 55 hours per week unless their service was essential. Any form of overtime pay needs to be stipulated in the work contract.
Employees working full-time in the Netherlands have a minimum of 20 days of paid vacation leave per year. It is usual for companies to offer around 24 to 32 days of annual leave to attract employees or compensate for overtime. Some companies allow employees to get extra days off by not getting the salary they would have earned for that working day.
Public Holidays in the Netherlands
- New Year’s Day
- Good Friday
- Easter Monday
- King’s Day
- National Remembrance Day
- Liberation Date
- Ascension Day
- Pentecost Sunday
- Pentecost Monday
- Sinterklass / Saint Nicholas Day
- Christmas Day
- Boxing Day
- New Year’s Eve
Healthcare in the Netherlands
The Netherlands offers universal healthcare managed by the government and supplemented by private insurers. The healthcare system in the Netherlands is ranked number two on the 2019 Euro Health Consumer Index.
In order to benefit from this, you will need basic health insurance. Employed individuals may have this partly covered by their employers paying a percentage of the salary towards health insurance. Self-employed individuals are responsible for their own monthly contributions.
Dutch insurance entitles individuals to free medical treatment, which includes prescriptions. You will need a private insurance policy for specialized treatments such as dental treatment and physiotherapy.
Having the Right Partner in the Netherlands
When considering starting a business or expanding to a new region, like the Netherlands, it is important to have a good understanding of local regulations and processes. Having a partner like INS Global makes entering a new market quick and easy. We are able to take the administrative burden away from your company. We can help your business across a range of different fields such as PEO (which allows your business to hire employees without setting up a separate entity), recruitment, payroll administration and many more. INS Global aims to simplify your global expansion, by providing your business with high quality expertise. Contact us today and let our consultants assist you.