Doing business in the Netherlands
Would you like more information about doing business in the Netherlands or want to know how to avoid the risk of having a Dutch permanent establishment?
MFFA Belastingadvies | Tax Advice
Doing business in the Netherlands
Are you interested in doing business in the Netherlands or Western Europe? Want to incorporate a Dutch company by setting up a branch or opening a Dutch BV? As a one stop shop (tax structuring, incorporation process, accounting, payroll, VAT) we will guide you through the whole process with very competitive prices (not big 4!)
The fiscal climate in Holland can influence your business positively. However, certain fiscal issues might have a negative impact, if you do not take the right steps. Our Dutch tax advisors have prepared an information guide called “Doing business in the Netherlands”, explaining what you can expect here in Holland.
Download our free brochure “Doing business in the Netherlands”
Setting up a business in the Netherlands
Foreign companies doing business in the Netherlands can do this with the existing foreign legal entity in the country without the need to convert it into a Dutch legal entity (so through a branch). However, a Dutch legal entity can also be used to set up business operations. In Holland we have two types of legal entities called “BV” (private limited liability company) and “NV” (public limited liability company). Besides these, other common used companies are “eenmanszaak” (sole proprietorship), “VOF” (general partnership), “CV”(limited partnership) and the attractive Dutch “Coop” (Cooperative)
If you have only employees working in the Netherlands and don’t want to set up a company, please contact us for any tax risks delegate employees to the Netherlands (assignment, secondment)
For self-employed / sole proprietor / freelancer: click here for more information about starting a business in the Netherlands as a freelancer.
On income received by an employee working in the Netherlands, wage tax must be withheld by the employer. The wage tax withheld is a pre-levy by the employer on the personal income tax due by the employee. Consequently, the employer withholds the social security premium and wage tax due from the income received as a single amount and subsequently pays this to the Dutch revenue. The amount which is combined is called as wage tax. Based on the labor contract, the wage tax is calculated on the value of the remunerations received by the employee. Furthermore, the income tax is levied on the full income of individuals domiciled here in the Netherlands (Dutch tax residents). Taxation takes place on the worldwide income.
Those individuals who are not domiciled here in the Netherlands, but receive Dutch income, are liable to pay income tax on their income (non-Dutch tax residents).
30% ruling tax incentive
Business in Holland you can use the 30% ruling to attract qualified employees for the company. The 30 ruling in the Netherlands is a tax incentive to attract qualified expat employees to the Netherlands. In case the 30 ruling is granted by the Dutch tax authorities, the expat employee will receive a taxable salary reduced to a 70% taxable salary. In other words: 30% of the agreed income will be exempt from wage tax and personal income tax. (i.e. an individual earns € 100,000 gross, € 30,000 will be exempt. The taxable income is € 70,000). In order to apply for the “30% ruling” the expat must fulfill certain requirements (living > 150 km from the Dutch border and earn at least gross € 37.000:2017).
Withholding tax rates
If you are doing business in the Netherlands and you want to distribute dividends, it is required to withhold dividend withholding tax at a rate of 15% on these dividends, unless a reduced rate applies under Dutch tax law, a tax treaty or the EU Directive if certain conditions are met. The shareholders therefore only receive 85% of the dividend. Beside dividend payments by Dutch companies the tax is also applicable to other similar payments, such as certain share repurchases, liquidation distribution, etc., as well as interest paid on hybrid loans. It is applicable if profits are transferred to by the Dutch branches of foreign companies. In certain cases, domestic law provides for an exemption from withholding tax or grants the right to a refund.
In Europe, VAT is charged on the supply of goods and services. Where an entrepreneur or business makes supplies that are subject to VAT, the entrepreneur or business should be VAT registered so it can file a Dutch VAT return. VAT registered taxable persons are able to claim back the paid input VAT. As a result, the VAT costs are shifted to private individuals, entrepreneurs and those businesses who are VAT exempt (having no possibility to reclaim the paid VAT back). The VAT rate in the Netherlands is at the moment 21% (standard rate) or a reduced rate of 6% and 0% (for supply in the EU intra-Community supplies and export). See also our article about Netherlands VAT explained.
More information about doing business in the Netherlands?
Would you like more information about doing business in the Netherlands or want to know how to avoid the risk of having a Dutch permanent establishment? Want information because you are planning to hire workers in Holland? Feel free to contact us. You can also call us from within The Netherlands at (0)85 0030140 or call us from abroad at +31 (0)20 2615615.
Do you have any questions or do you want to know more about our prices?
Amsterdam: Keizersgracht 62, 1015 CS
Amstelveen: Laan van Kronenburg 14, 1183 AS
Bovensmilde (Assen): Witterweg 2, 9421 PG
The Hague: Schenkkade 50, 2595 AR
Eindhoven: Hurksestraat 64, 5652 AL