Doing business in The Netherlands

Business

Many steps must be taken to start a business in the Netherlands. There are a lot of different entities, the most common entity to start doing business is a B.V. (‘BeslotenVennootschap’). There are differentforms of business, the most important ones will be described below.

 

 

 

 

Setting up a company

After choosing a form, certain steps must be taken to set up a company. The steps are different for each entity. For a B.V. the following steps are to be taken into account.

The Dutch ruling practice

In The Netherlands it’s possible to discuss and negotiate about the tax treatment of operations or transactions in advance. There are a several possible ways to do so.

An Advance Pricing Agreement (APA) is an agreement specifying the way of pricing that the taxpayer will apply to its related-company transactions.

An Advance Tax Ruling (ATR) is an agreement with the Dutch Tax Authorities determining the tax rights and obligations in the taxpayer’s specific situation. This can be used to prevent or resolve any tax disputes.Both agreements are binding for the taxpayer.

Corporate income tax

Dutch companies are usuallysubject to corporate income tax (CIT) onits worldwide income. Certainincome can be exempted or excluded fromthe tax base. Non-resident entities havea limited tax liability. Only ‘Dutch sourceincome’ is included in the CIT base of non-residentcorporate taxpayers.

The VAT system

Value Added Tax is charged on the supply of goods and services in the Netherlands made by a taxable person in the course of exercising a business, except when the supplies are zero-rated or exempt. A VAT taxable person is anyone performing business activities in the Netherlands. If the business is liable for VAT on its transactions in the Netherlands, it will have to register for VAT. VAT is also charged  when importing goods into the Netherlands.

Currently, the standard VAT rate in the Netherlands is 21%. A lower VAT rate of 6% applies to certain essential goods and services (i.e. food and drink, passenger transport and certain labour-intensive repair and maintenance activities). For the export of goods a 0% VAT rate applies.

Tax incentives

The Netherlands is a very attractive placefor performing R&D work and for investment. The Dutchtax system features several tax incentivesto stimulate innovation and businessactivities.

For example, there is a reduction of wage tax due on the wages of employees engaged in R&D of technologically new products.

Investments in certain business assets may qualify for an additional deduction for tax base calculating purposes. This goes for a number of assets, not excluded by the government.

Labour law

In 2015 the Dutch government introduced a new legal system on this matter. Flexibility in contracting and a more clear system for the dismissal of employees (and the pricetag that comes along!) are incorporated in the Dutch civil code.

Active participation in the company in the form of employee participation entities is still an important factor to take into account when doing business in the Netherlands.

 

Publisher: Van Ewijk Attorneys Mediators


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