The Netherlands, the 4th largest exporter in the world, is one of the most favorable economies for investment and trade. As a distribution center for business to many European countries, it is one of the largest trade centers in the European Union. After the Brexit process in the UK, it increased its investment attractiveness. Investors from all over the world dream of starting a company and doing business in the Netherlands. It is a country where entrepreneurs who want to do global business should essentially consider starting a business.
There are many different legal forms of company types in the Netherlands. We can generally categorize these under two headings: 1) Capital Companies with Legal Entity 2) Companies without Legal Entity. Let us now examine these types of companies in detail.
There are 5 types of companies with legal personality in the Netherlands. These are:
The most important feature of such companies is that the shareholders are not responsible for the company’s debts with their own assets. When the company defaults on payment, the company’s obligation is limited to company assets, and there is no recourse to the partners’ personal assets. The company has a legal personality and can borrow, lend, sue, and acquire property independent of shareholders.
Now, let’s get to know the first two types of companies, which are commercial in common, more closely.
It is a type of large-scale company; with this type of company, you can spread your capital by being listed on the stock market. You can issue bonds and obtain debt. It is generally preferred by companies and banks that want to go public. It can also be established by a single natural or legal person. The initial share capital is a minimum of € 45,000 and must be deposited into the company account. It can issue and issue both registered and bearer shares. In this respect, its shares are freely transferable. The board of directors manages it. At the annual general meeting, shareholders may re-appoint the board of directors and directors.
BV is the most preferred company type in the Netherlands. There is no minimum capital requirement. Establishing the company with a symbolic capital such as 1 EUR cent is possible. It can be established by a single legal person or natural person. There is no limit to the number of partnerships. Its equity capital is divided into shares. Its shares are registered and can be transferred through a notary public. It is similar to the limited company in Turkey.
The main difference between companies with legal entities and companies without legal entities is that the shareholders have unlimited liability for all their personal assets. No minimum capital requirement is required to establish a company in this type of company. Partnerships can be established with at least two persons or legal entities.
There are four types of partnership companies in the Netherlands. These:
Now let’s get to know these types of companies more closely.
It is a one-person sole proprietorship. It may have multiple employees, but a single person sets it up. The founding person is responsible for the company’s debts with all his assets. The tax number of the business is the same as the tax number of the founding person. It is subject to income tax like an ordinary citizen. In addition, if the tax office considers you an entrepreneur, you can benefit from various tax deductions such as entrepreneurial tax deductions, investment deductions, and retirement contribution deductions. Registration with the Chamber of Commerce is mandatory. In the Netherlands, one person can legally open only one sole proprietorship.
It is a type of company established by two or more people who will do joint business for profit. Shares of partners are equal. The partners are responsible for the company’s debts, including their assets. One of the essential features of the general partnership is its partners’ joint and separate legal responsibilities. For example, if one of the partners fails to fulfill its obligations, the creditors may pursue the corporate and individual assets of the other partners. Partners personally pay income tax on their share of profits.
Two or more people install it. In this type of company, there are two separate partners, a managing partner, and a non-managing partner. The non-management partner does not interfere in the management and is only responsible for the company’s actions, limited to the capital he has invested. The managing partner is responsible for the company’s liabilities with all his assets. It is mandatory to be registered with the Chamber of Commerce. Partners personally pay income tax on their share of profits.
It is the type of partnership that allows multiple professionals to work under the same name. It is a form of business often preferred by lawyers, dentists, accountants, and self-employed professionals. The partners are equally responsible for the possible liabilities of the company. Registration with the Chamber of Commerce is mandatory. Partners personally pay income tax on their share of profits.
As can be understood from the detailed explanations above, there are many different types of companies in the Netherlands. The nature of the work to be done, the company’s objectives, the amount of capital to be invested, the shareholding structure, the estimated sales volume, and tax advantages are evaluated, and the most suitable company type is decided with good consultancy. It is possible to switch from one kind of company to another as needed. Of course, these transition processes involve attorneys, notaries, and consultancy fees.
It is the most preferred and most common type of company in the Netherlands. It corresponds to a limited company in Turkey. BV is formed by the registration of the articles of association of the company in the trade registry. The partners take their decisions at the general assembly. BV can also be established with a single person. When it is established with more than one partner, one or all of the partners can be a legal person. Partners need not be Dutch or EU citizens or have a residence permit. Suppose the partners do not have the opportunity to come to the Netherlands. In that case, it is possible to carry out their transactions by issuing a power of attorney on behalf of a third party with any notary public in Turkey.
The company may perform any activity that is legally permitted. There is no minimum capital requirement for establishing a BV company. A company can be established with a symbolic capital of 1 EUR cent. A BV company based in the Netherlands must have at least one director. In addition, at least 50% of the company’s executive board must be made up of Dutch taxpayers. All medium-sized and large-sized companies in the Netherlands must have their annual audit done by an auditor registered in the Netherlands. The partners appoint the auditor.
The steps required for the establishment of the company are as follows:
In addition, you may need to obtain additional permits depending on the sector in which you operate. You should also have acquired the necessary permissions from the relevant legal authorities concerning public health and safety, such as food, environment, and hospital.
According to Dutch law, companies must keep their accounting records in a certain way and submit them annually to the chamber of commerce and tax office to which they are affiliated.
The following are the tax types that companies are liable to in the Netherlands:
In the Netherlands, corporate tax is lower than income tax. Corporate tax is levied on profit, which is the basis of tax. As of 2022, corporate tax is 15% on profitability up to 395.000 EUR, and the parts exceeding this are taxed at 25.8%. In this respect, the Netherlands is one of the countries with the lowest corporate tax among EU countries.
Company formation in the Netherlands does not depend on the shareholders’ nationality or managing directors’ nationality. Even foreigners can set up a company without any special permission. There is no need for a residence permit to move a company existing in Turkey to the Netherlands or establish an individual company in the Netherlands.
There is no need for special permission to establish a company with foreign capital and open a branch or representative office of a company headquartered in another country. There is no difference between the principles that domestic and foreign companies are subject to in terms of their commercial activities. Companies with foreign capital can also work in any field where domestic capital can work. There is no domestic partner requirement for the companies to be established.
A foreign manager with a residence or settlement permit, i.e. residing in the Netherlands, can run a company without legal obstacles. The same applies to EU citizens with freedom of movement.
If company directors or partners want to stay in the Netherlands, they usually must apply for a temporary (MVV) and permanent residence permit unless they are also EU citizens. If the company they founded is an innovative start-up, you can apply for a start-up visa.
If you live in the Netherlands or have an income from the Netherlands, you must also have health insurance and pay the Dutch National Insurance Contribution.
Foreign companies can open branches in the Netherlands. The branch they will open will entirely depend on the parent company abroad. In this case, the outside parent company will be responsible for all the activities, debts and liabilities of the branch in the Netherlands. The branch does not have legal personality and can be considered the Dutch branch of the parent company abroad. The branch and the parent company must have the same title and the same line of business.
Opening a branch will be faster and less costly as it is subject to fewer procedures than establishing a company. For example, it is obligatory to establish a company through a notary public. It is sufficient for the branch manager to apply to the trade registry to open a branch. Accounting operations and legal obligations of branches are also less. Branches have less tax liability than companies.
Before a branch can start commercial activities, it must be registered with the local Chamber of Commerce along with the necessary documents. After obtaining the registration certificate with the registration number from the Chamber of Commerce, the registration of the branch to the relevant tax offices and social security institutions must be completed. Once the branch is established, its activities in the Netherlands must be carried out by a representative who will act on behalf of the parent company through a power of attorney.
Investment Incentives in the Netherlands
Incentive programs in the Netherlands are given depending on conditions such as the employment the investment will bring and its contribution to the development. There are many incentive packages such as incentives for new companies, tax advantages for SME-type companies, incentives for start-ups, and incentives for research and development activities. Since the incentive programs are comprehensive, we recommend making the necessary examinations and applications through an investment consultant in line with your business plans.
First, you need to create a business plan. Before starting a business plan, visiting Germany and making business contacts and connections with a local partner is extremely important. Again, starting with the support of a consultancy company that knows the German market well will be the lowest cost strategy and will provide you with investment consultancy and market research services.
We recommend that you create your vision and at least a 3-year strategy plan within the framework of the business plan. Within this strategy plan, it is crucial to determine the sector and business in which you will operate, clarify your goals and objectives, and draw up your investment budget.
The next step after research and planning is to take action. The strategy with the lowest risk and cost in a foreign market is to advance through partners or consultants who know the German market well.
Opening an office in Cologne, MHR & Partners established local partnerships in Germany, the Netherlands, England, and Belgium as part of its strategy to become a global company. With the help of these partners, we offer end-to-end turnkey solutions and consultancy services for you to establish a business from scratch safely and quickly and manage all the processes you may need after the establishment.
You can contact Sworn-in Certified Public Accountant Mehmet Akif Özmen directly (+90 542 830 3408 or firstname.lastname@example.org) to set up a business in Germany.
As MHR & Partners, we are directly and indirectly active in more than 20 countries worldwide. We aim to operate with 10 branches in 100 countries in 10 years. We offer you end-to-end consultancy and support services in establishing a company, obtaining a residence permit, and in all operational processes abroad, primarily financial issues.
Our priority is to provide consultancy services to companies with a growth vision and business strategy abroad. We attach particular importance to the uninterrupted continuation of our services with the assurance of MHR & Partners (Mühür YMM AŞ) after the company establishment stages. Our core mission is to be a safe harbor and provide sustainable services.
We want to be a bridge to our customers’ business plans for growth and development, even in the most remote parts of the world.
To establish a business in the Netherlands, you can contact Sworn-in Certified Public Accountant Mehmet Akif Özmen directly (+90 542 830 3408 or email@example.com). If you wish, you can reserve a meeting by filling out the form below.
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