Business in the Netherlands
Business in the Netherlands
As a foreign company or a private individual you may be toying with the idea of starting a business in the Netherlands. In the upcoming period we will be discussing the possibilities open to you. Topics we will cover include:
- Starting a business or branch in the Netherlands
- Becoming self-employed
- Starting a company while maintaining the 30%-ruling
In the first article we will examine starting up a new business or Dutch branch of your existing business. We will also indicate which tax obligations apply.
Starting a company/branch in the Netherlands
If you are planning to start a business in the Netherlands then there are a number of formalities which you must attend to. Also, beginning a business will have fiscal consequences.
In the Netherlands there are several business forms but the most common are the Besloten Vennootschap (BV) which is comparable to a Limited Liability Company, or a VOF/Eenmanszaak (Partnership/Sole Tradership).
If you are establishing a Dutch branch of your business or are starting up a business then the business must be registered at the Chamber of Commerce. Registering at the Chamber of Commerce must be done with the appropriate application forms, which must be completed in Dutch.
You can also register a Dutch branch of your business as a foreign legal business form (Ltd, GmbH, SA). You are not required to opt for the Dutch legal entity form (BV).
Dutch entity or foreign entity
As indicated above you can perform the business operations through a Dutch entity (such as a BV), or through a foreign entity (branch office).
Starting up a BV(subsidiary)
If you opt for the BV structure, this means that you create a separate entity for the Dutch business operations . The liabilities and the risk will all be undertaken by the Dutch entity. The organization will be treated as a Dutch company which will be owned by yourself or an established parent (holding) company. Establishing a business structure with a holding company at the head has several benefits compared to a sole BV structure.
Starting up a Branch organization
If you choose to organize your business as a Dutch branch with a head office outside the Netherlands, the foreign company will be the main player in the structure. Liabilities will shift from the Dutch entity to the foreign company. You must, however have an office space in the Netherlands in which the branch is permanently established. This will be the second establishment of the foreign company.
If you start up a business in the Netherlands you are of course liable for Dutch taxes. Taxes you will most likely have to contend with include:
- Corporate income tax
- Payroll tax
- Value Added Tax
After registration with the Chamber of Commerce your details will automatically be forwarded to the tax office. The tax authorities will then assess the taxes which you will be required to file.
If you register the business as a partnership or sole tradership then you will have to deal with personal income tax. The consequences for income tax are discussed in the third part in this series of articles.
Corporate income tax
If you run a profit in the Netherlands then you must pay corporate income tax over the profits. The rates (2013) for corporate income tax are as follows:
20% for profits up to €200.000
25% for profits over €200.000
The tax year runs from 1 January to 31 December of the calendar year. The corporate income tax return must be filed with the tax office before 1 July of the following year. For example, the 2013 tax return must be filed before 1 July 2014.
If staff are employed in the Netherland then there will be Dutch payroll tax withheld from their wages which must then be paid to the tax office through a Dutch payroll system. If the salary is determined under foreign tax rules then the salary will be recalculated to Dutch standards.
The payroll tax return must be done monthly via electronic software. If the tax return is not submitted on time or the tax is not paid, then fines and penalties will be imposed.
Value added tax
After establishment in the Netherlands you may have to calculate VAT on your income and expenditure. The reporting periods are: monthly, quarterly, yearly. The tax office determines which reporting period you have. The tax return must be submitted electronically, unless the tax office sends you a tax return form. The VAT return must be filed and paid before the end of the month following the month which the VAT return covers (e.g. the July VAT return must be filed and paid before 31 August). If payment is late or the return is not filed on time then fines and penalties will be imposed by the tax office.
Above we have broadly described the options are open to you when starting a business in the Netherlands and the consequences your choice of structure might have. Of course there are more options than we have discussed here, but these depend on the particular situation you may be in. please do not hesitate to contact us to if you would like to know which other possibilities may apply in your specific case. You can contact us via the website: www.koppelservices.com or by telephone: +31 (0)20-3445900.