Do you have certain ambitions about starting a company oversees? Then the Netherlands definitely proves to be a very attractive and competitive destination. Whilst some potential entrepreneurs have very detailed and personalized business plans and ideas, some others might have a harder time coming up with a fitting goal or business idea. In such cases, starting a franchise might prove to be a profitable way of making money overseas.  We will outline more information about this option below. If you would like personal advice, never hesitate to contact Intercompany Solutions directly.

Why become a franchise owner?

Sometimes as a starting entrepreneur, you can experience a lot of competition. Especially in specific sectors such as the food and beverage industry and the textile industry. This especially goes for countries where all industries are thriving, such as the Netherlands. In such cases, it can be lucrative to join forces with an already established company or brand. Once you start a franchise, you basically enter into a contract with the owner of a trade name. You can then legally open a company under this name, generally when you invest a certain amount. These trade names are often well-known brands or concepts, which makes it easy for customers to find you as a new company. These are proven success concepts, that give you a good start as an entrepreneur.

What is a franchise exactly?

Franchising is in essence a method of selling services or products via a franchiser. This franchiser already established a brand and trade name, as well as a profitable business system. If you decide to start up a franchise, you are appointed as a franchisee. The terms and contract are often similar, in most cases you will pay an initial fee and royalties to be able to do business within this franchiser’s system of conduct. The franchise itself is the brand under which you operate and as such, the franchise is the binding part in the contract. The entire practice of brand creation and distribution within the system is named franchising.

There are roughly two types of franchising. The most commonly known type is known as business format franchising. In this format, as a franchisee you will not only operate under a certain brand name to sell goods and/or services, but also will be provided with a system in order to operate the business properly. In other words; most of the work is already cut out for you to do. In most cases, you will acquire all the necessary material such as development support, a marketing strategy and operating manuals and learning material. Another possibility is product distribution franchising. This is a separate sector which often involves the automotive industry, bottling and other manufacturing industries. Both options provide you with start-up information, commodities and resources, which is ideal for starting entrepreneurs.

How to choose the right brand?

One of the toughest parts of starting a franchise business is choosing the right chain to invest in. One of the best and most straightforward ways to find out if a chain is suitable for you, is simply contacting the company itself and talking to already existing franchisees. Practical information often trumps theory, especially if you would like to know if previous franchisees are happy with their decision to join a certain chain. Try to find out via social media if you know any people who invested in a franchise. It might just provide you with the very information you need.

It is also a very good idea to ask a possible franchiser to look at their Uniform Franchise Offering Circular (UFOC), which should include information such as:

Always keep in mind that the franchiser is responsible for providing material and support, such as a suitable location, training materials, planning the opening of the location, marketing and communication advice and general support. Make sure to discuss these terms in detail once you have chosen a preferable chain, so you know what you can expect from each other in the near future.

Advantages and disadvantages of a franchise business

As briefly mentioned in the introduction, as a franchise entrepreneur you immediately benefit from brand recognition. Customers are familiar with the trade name and know what to expect from your company. This means you won’t have to spend as much time on marketing and promotion as in a regular situation, where you have to set up an entirely new brand as an entrepreneur. In addition, you run less risk, since the concept has already proven itself and as a franchisee you often have access to professional knowledge provided by the franchiser. The marketing is also arranged for you.

Are there any disadvantages? In some respect, there are. For example, as a franchisee you have less freedom to make decisions because you follow a certain formula. The degree of freedom also depends on whether it concerns a soft franchise formula, or a hard franchise formula. With a soft franchise formula, the rules are less strict and the franchisee is fairly free to run his/her own business. Of course, the entrepreneur must also adhere to a number of rules in such cases, but aspects such as advertising, marketing, purchasing and stock are generally not recorded. The franchisee is therefore free to fill in these aspects. With a hard franchise formula, the rules are quite strict and aspects such as house style, stock, purchase location and media expressions are fixed. Provisions have been drawn up for this by the franchiser, which limit the franchisee in this regard. In addition to a limited freedom, you as an entrepreneur must take into account that you also have to pay part of the turnover to the franchisee for using the trade name and the services that are provided.

Factors to take into account

The first step in becoming a franchise entrepreneur is making a choice: in which industry do you want to start your business? It is helpful, if you already have some work experience in this industry since it will make starting your business a lot easier. Do not focus on one franchise formula, but orient yourself well in the industry of your choice. If you provide sufficient comparison material, you can make a well-informed choice that suits you best. You can also decide to start in an entirely new market or sector, but please keep in mind that most franchisers require a minimum amount of knowledge and experience of their sectors.

How much will you need to invest?

If you are thinking about setting up a franchise business, you need starting capital to set up your company. These are costs such as the building in which you settle, any furnishing, training and other necessary materials. You often have to pay an entrance fee as well, which is a one-time fee to join the existing formula. The costs differ a lot per formula. Usually you can predict that the more successful the formula is, the higher the entrance fee will be. In addition, you pay a periodic franchise fee, which is laid down in the franchise contract. This fee consist of an amount for the services your franchiser provides to you. Make sure you set up a solid financial plan that covers all these costs.

Starting your franchise business in the Netherlands

When you have made a choice and the franchiser wants to enter into a partnership with you, you will both consult. During this consultation, you will discuss the franchise agreement and the franchise manual. Investigations must also be carried out, such as a location study and a feasibility study. These examinations are mandatory. In this start-up phase, make use of a specialized lawyer and accountant, so that you can be sure that your business has a chance of success. When all this is completed, you both sign the contract, and you can start immediately. You will start with specialized training to prepare you for everything within your franchise formula. After completing this training, you will start the company at your chosen location.

If you would like personal advice on starting a business in the Netherlands, Intercompany Solutions can aid you. We have assisted a wide plethora of foreign entrepreneurs and investors in any imaginable sector, which means we can assist you with specialized information tailored to your specific sector of choice. Intercompany Solutions can also prepare a financial plan for you and help with the periodical and yearly tax return. Please contact us directly if you would like to know more about the services we offer, or if you would like to receive a personal quote.

Sources:

Hiring staff involves more red tape than you might think. Here are the things you need to know if you are planning to take on some new employees.

You can only employ official staff if the person who works for your company meets several requirements. Someone is considered an employee when he or she:

- Has worked for your company for three consecutive months
- Worked for payment every week or at least twenty hours a month

Furthermore, there must be a certain authority relationship, wages must be paid, and an obligation to perform work. If your answer to all the above is 'yes', you can get started with the following things.

Payrolling needs to be performed in the country where the work takes place. If you have workers in The Netherlands, the payroll needs to be filled in The Netherlands.

Drafting an employment contract
First of all, you must agree on an employment contract with your potential staff member. In theory, this is allowed orally, but preferably in writing: that way, the agreements are clear to all parties. The following matters can or must be covered in the employment contract:

Name (initials, prefix, surname), date of birth, address and place of residence of the employee and name, address, place of residence of the employer
Place (s) where work is carried out
Employee's job title and primary duties
Time of entry into service
Duration of the employment contract (if it has been concluded for a definite period)
Holiday entitlements
Wages and payment period
Usual working hours (per week or per day)
Participation in a pension scheme (if applicable)
Whether the CLA applies (and which one it concerns)
Any probationary period
Notice period (or its calculation)
Incapacity for work and illness
Possible right of recourse
Identification obligation
Competition/relationship clause (only applicable for higher or specific positions)
Cost of personnel

In addition to the monthly gross salary of your staff, you may have to deal with additional costs for:

Holiday pay
Thirteenth month
Medical expenses
Education
Pension fund
Travel expenses

The existing collective labour agreement in your field plays a vital role in this. Almost all collective labour agreements contain agreements about the terms of employment for specific industries.

Determine wage costs
The wage costs for you are approximately 30% higher than the gross salary that your employee receives. After all, you also pay part of the insurance and other additional costs.

In addition to the pension, these are often the holiday pay (usually 8% of the gross salary) and the thirteenth month. This is subject to wage tax and premiums, which you must pay as an employer.

Paying pension contributions
Social insurances apply to every employee about pension rights (AOW and ANW). As an employer, you can offer additional pension provisions. You usually share the premium for this with the employee.

In most cases, this is already regulated in the collective labour agreement or the pension fund industry. You are obliged to report this to the new employee.

Payroll taxes and registration with the tax authorities
As an employer, you also have to deal with payroll taxes from the tax authorities. Payroll taxes are a collective term for:

Payroll tax / national insurance contributions
Income-related healthcare insurance contribution (Zvw)
Employee insurance premiums (WW and WAO / WIA)
You can find more information about this in the payroll tax manual. You will receive this from the tax authorities when you register as an employer. You can also view this manual online by downloading it from the Tax and Customs Administration website.

Maintain payroll
Apart from the contract mentioned above and tax obligations, there is also a lot of extra administration involved, particularly payroll.

Payroll administration consists of various forms and calculations. You have to think of forms such as the wage statement, the payslip and the annual statement. These are all forms that are important for calculating wages and amounts due.

But don't let all this put you off. There is plenty of advice available should you need it. Contact Intercompany Solutions for more information.

If you decide to expand your business to the Netherlands or even start an entirely new business, there are many legal entities you can choose from. Most entrepreneurs choose the Dutch BV, since this business type by far outweighs many other legal entities in terms of financial and fiscal benefits. But some business activities are better suited with a more specialized legal entity, that tailors certain specifics uniquely to the business ideology and goals. A foundation, which is named ‘stichting’ in Dutch, is often your best option if you want to start an endeavor with a more idealistic goal. We will provide you with more information about this legal entity in this article.

What is a Dutch foundation company exactly?

A foundation is a type of Dutch legal form with its own legal personality. The main purpose of a foundation is to strive towards achieving a social endeavor or idealistic goal. This inevitably means, that a foundation should not aspire to generate profit. If any profit is made, it should be allocated to achieve the purpose for which the foundation was established. Foundations do not have to pay taxes unless they operate as a business. In this case a corporation tax has to be paid. Additionally, foundations that have more turnover than six million euros, for a duration of two years consecutively, have to file their annual accounts.

More information on the foundation company

Every foundation must at least have a board of directors, similar to the Dutch BV. A supervisory board which monitors the board of directors may be appointed within the statutes. A foundation does not have any members and is thus not required to hold a members meeting to make important decisions. Since foundations are a legal entity, the board of directors is usually not personally liable. This is also comparable to the Dutch BV. The exceptions to this are:

All board members of the foundation have signing authority. Specific rules may be established in the statutes, but only  as long as these are amended by an official notary. Furthermore, others may also be granted singing authority through the power of attorney. Foundations may hire staff and are obligated to pay taxes and social security contributions for its staff. In case a foundation is to hire staff, they must also register as an employer with the Dutch tax authorities. Board members may be on the payroll of a foundation, except if the foundation has an ANBI status. We will explain this in more detail later.

Next to that, on the 27th of September 2020 a new law regarding foundations will go into effect. This rule will require anyone within the foundation deemed as: “ultimate beneficial owner(s)” or UBO, to be included in a so called UBO register. UBO’s are persons within the foundation that own more than 25% of the shares and voting rights, or who have the final say when taking company decisions. This act is a measure against fraud in an ongoing government effort regarding the Prevention of Money Laundering and Terrorism Financing Act, also known as the Wwft.

How to establish an NGO in the Netherlands?

A foundation may be started alone, with others and also with other legal entities. A foundation may even be started in your name, by someone else after your death (as long as this is clearly stated in your will). A foundation must be started by drafting a deed and amending it by an official notary. This deed will be deposited at the Dutch Chamber of Commerce. Some examples of what this deed should include are statutes, the name of the foundation including the “stichting” suffix and also its location. Intercompany Solutions can assist you during the entire registration process due to years of experience withing the field of setting up NGO’s.

What is the Dutch ANBI status?

ANBI is a Dutch abbreviation for: “Algemeen nut beogende instellingen”, which can be translated to institutions with a public benefit for the common good. ANBI’s usually are devoted entirely to serving a public benefit, such as a charity, cultural or scientific institution. The aim is not to generate profit, but to improve society as a whole or certain societal causes.

Tax benefits

ANBI’s may enjoy a variety of tax benefits. Some examples of these advantages include not paying inheritance or gift tax (when used for the public benefit), a (partial) refund of energy tax and more. Additionally, donors may also enjoy certain benefits such as subtracting the financial donations from their taxes. The ANBI status has to be requested through the Dutch Tax Authorities and is subject to strict conditions.

Conditions

In order to be eligible for ANBI status, an organization has to meet all conditions and criteria set by the Dutch Tax Authorities. These conditions are as follows:

ANBI’s may lose their status, if they no longer comply with conditions and requirements as set by the Dutch tax authorities. This can have serious consequences for the continuity of your business, so if you want to acquire the ANBI status, it is advisable that you are absolutely sure you can comply with all the legally necessary requirements.

What is a Dutch SSBI?

SSBI is the Dutch abbreviation for “Sociaal belang behartigende instellingen”, which can be translated as social interest promoting institutions. SSBIs are usually organizations which serve the interest of their members, or a small target group. Additionally, SSBI’s may also have a social benefit. Some examples of SSBI’s consist of (but are not limited to) choirs, dance groups, sports organizations, hobby clubs, petting zoos, playgrounds, associations for staff, elderly and the neighborhood.

Tax benefits

SSBI’s are not required to pay gift or inheritance taxes, as long as they apply for exemptions thereof by filing their gift taxes. If you own an SSBI, you also do not have to pay any profit tax.

Conditions

In order to be eligible for SSBI status an organization has to meet all conditions as set by the Dutch tax authorities. These conditions are as follows:

Intercompany Solutions can set up your Dutch foundation in just a few business days

Intercompany solutions can identify which legal form is best fitted for your interests and arrange all legal formalities needed for starting your own NGO. We can also help you with any questions you might have in this regard. If you require more information or would like some personal advice, you can contact us to discuss your options.

Sources:

https://ondernemersplein.kvk.nl/wat-is-een-ngo-en-hoe-start-u-er-een/

https://ondernemersplein.kvk.nl/de-stichting/

The most commonly chosen legal entity in the Netherlands is the BV company. The BV offers many interesting opportunities for business owners, especially if you expect to earn more than the 245,000 euros threshold. In this article we will explain in detail why the Dutch BV is a good choice as a legal entity, and we will also explain the history of the so-called flex BV. This will provide you with an ample amount of information in order to make a grounded decision regarding the legal entity to choose for your Dutch company or branch office.

The advantages of a Dutch BV Company

When you establish a Dutch business, you are required to choose a legal entity. Choosing the wrong or a not fitting legal entity in your situation can have unpleasant consequences for your business. Changing the legal form in a later stage is possible, but it is also expensive. In addition, it is basically a waste of money if you have to do this immediately after the company’s creation, because you have not sufficiently studied the possibilities beforehand.

In short, setting up a BV has the following advantages:

  1. The BV is a legal form with limited liability
  2. The compulsory starting capital is only 1 euro cent
  3. You only pay 15% or 25% tax on the profit of your BV
  4. You can divide your properties and financial risks between multiple BV’s via a holding company
  5. You can attract new investors through shares
  6. A BV emanates a professional impression

1.      Liability

A BV enjoys limited liability. This means that it is not the board of directors, but the BV itself that is liable for any debts. A director of a BV can only be held liable if there is evidence of improper administration. This applies when the accounts are not in order, or if the annual accounts have been submitted too late to the Dutch Chamber of Commerce.

2.      Low mandatory starting capital

This is one of the main benefits of a flex BV, which we will elaborate on later in this article. During the past, it was mandatory to invest a minimum starting capital of €18,000 when establishing up a BV. Nowadays, you can already set up a BV with a starting capital of only 1 cent. The threshold of high investment is therefore no longer applicable, which makes this legal entity much easier accessible to people who don’t own a large amount of starting capital.

3.      Low corporate taxes

When you own a sole proprietorship, you pay income tax on the profits. The highest tax bracket is currently 52%. The corporate tax rates that are calculated over your profits are substantially lower; currently only 15% or 25%. As stated above, this will drop even further this year. Please keep in mind that you will still need to pay income tax, when you choose to pay yourself a salary as director/shareholder. We can also assist you with our accounting services.

4.      Spreading risks via a holding company

If you choose to set up a BV, you will also be able to merge multiple BV’s into a so-called holding structure. By setting up a holding company, you indicate that several BV’s fall under one parent company. However, the holding structure is set up in such a way that these all remain separate BV’s. You therefore avoid the risk that all your companies will go bankrupt, if one of the BV’s goes down.

5.      New investors via shares

One of the main concerns of starting entrepreneurs and also already existing business owners is how to raise capital efficiently. If you own a BV, you can raise new capital fairly easily by issuing shares. Many investors prefer this way to invest their money, as being a shareholder means being at limited risk. All shareholders are only liable in a BV for the amount they have invested.

6.      A Dutch BV makes a professional impression

Setting up a BV includes much more work than setting up a sole trader company, for example. You will need to meet a certain number of requirements, and you have to have the deed of incorporation passed by a notary. This notary also has the duty to investigate the BV if he believes that something is not right. In addition, a BV must have its administration in order and an annual overview must be submitted to the Dutch Chamber of Commerce in the form of annual accounts. The chances that a BV has its business in order are therefore much greater, than in the case of a VOF or a sole proprietorship. The average Dutch person also knows this and thus, this contributes to the professional character of your company.

More information about the flex BV

Flex BV is a term used for all private companies that were established after 1 October 2012. On that date, new regulations regarding the BV were introduced. The requirements to be able to set up a BV were then relaxed, hence the term flex BV. A flex BV is a regular BV. The reason that two terms have entered circulation is due to a change in the law. The law on simplification and flexibility of existing BV law meets long-expressed demands in many areas. Because of the simplified rules and procedures surrounding the establishment of a BV, the BV was quickly renamed flex BV as a legal form.

Introduction of the Dutch flex BV

The flex BV was introduced by a bill that was passed by the Dutch Senate on June 12, 2012. The bill concerns the introduction of the flex BV and a change in governance and supervision. The law became legally binding on 1 October 2012, and the establishment of BV’s changed from that moment. Some things that haven’t changed are the notarial deed of incorporation of the flex BV, stating the name, registered office and purpose. The declaration of objection also does not have to be mentioned, after previous abolition. Furthermore, the contribution of a minimum (nominal) value of the shares in the flex BV, placed at the time of its formation, will not change either.

However, from 1 October 2012, it is sufficient that the notary receives knowledge by means of a bank statement, which share capital has been transferred to the BV from the private bank account of the founder. Before 1 October 2012, this procedure was a lot more complex. As a result, the process of setting up a Dutch BV is now much faster. In a number of situations, the auditor’s report has been abolished. This was necessary, if a transaction between the founder and the flex BV was carried out in the first two years after the first registration of the BV in the trade register.

Minimum capital to start a flex BV

One of the largest changes that has taken place concerns the capital of the flex BV. The previously required minimum capital of €18,000 has been completely abolished. However, the BV will have to continue to issue shares upon incorporation. The shares indicate to whom the profits and assets of the flex BV belong. This is especially important, when the flex BV has several shareholders. The new law states that the nominal value of the shares will be linked to the determinability of the share and therefore also to the relationship between the shareholders. The nominal value of the shares is determined during incorporation. A minimum amount of 1 euro cent will have to be paid, according to the explanatory memorandum. For pragmatic reasons, we always set the minimum share capital at 1 euro. You are no longer obliged to hold the euro as the currency for your share capital, however.

Profits of a flex BV

The goals and destination of the profits of the flex BV will be determined by the General Meeting of Shareholders. If the Meeting wishes to pay the profits to the shareholder(s), the board will first have to carry out a distribution test contrary to the situation before 2012. This test determines whether the benefits do not jeopardize the progress of the flex BV. If the board opposes the profit distribution, it will not be allowed to continue. If the profit distribution does take place, the board will be liable for any possible negative consequences of the profit distribution. In addition, the shareholder(s) who receive the dividend may be required to return the profits. This provided that the shareholder knew about the objections to the distribution of profits, or could have reasonably suspected that the BV would not be able to continue to pay its debts after the profit distribution. The distribution test will be applied to all forms of distribution, except for the distribution of profits in shares (stock).

What else has changed?

Next to the abovementioned test and the lowering of capital, other things have changed too. The organization of the articles of association has been simplified. You can increase the share capital now without the need for an amendment to the articles of association, that aims to increase the share capital. The indication of the share capital in the statutes is no longer mandatory. The ‘nachgründung’ has also been abolished. As a result, the restrictions that applied regarding the transactions (such as assets/liabilities transactions) between founders and the established BV expire within 2 years after the registration of the BV in the trade register transactions.

It has also become easier to buy your own shares. The financial assistance ban has been abolished. As a result, it is no longer prohibited to provide security for the purpose of taking shares in the capital of the BV and to grant loans only to the extent permitted by the freely distributable reserves. In the event of a capital reduction, a creditor’s move is no longer possible.

Regarding the rights and obligations of shareholders

It is allowed to issue shares without voting rights and/or profit rights (dividend). For example, it might sometimes be easier to reward employees with shares. However, you must state in your articles of association whether or not meeting rights have been granted for this particular employee. The blocking rule is also no longer mandatory but optional. As a result, if you wish – if one of the shareholders leaves the BV– the shares no longer have to be offered to the other shareholders before they can be sold to someone else.

In order to enable you to act faster, decisions may henceforth be taken outside the general meeting. If the articles of association so provide, general meetings may also be held abroad. The notice period of shareholders and other shareholders for a general meeting is shortened from 15 to 8 days. As a result, the notice period in the articles of association is also automatically shortened to 8 days. This does not require a change in the articles of association. Articles of association can be changed more easily even if the BV has already been established. “Old BV’s” (meaning founded before 1 October 2012) are also covered by the Flex BV legislation, since a BV is essentially the same as a flex BV as we previously mentioned.

The transfer of shares for a certain period of time can be excluded from the articles of association. The shareholders may give instructions to the board, however the board is not obliged to follow them if this would be contrary to the interests of the company. Shareholders or shareholders who alone or jointly represent at least 1% of the subscribed capital may request the board (and supervisory board) to convene the general meeting. Shareholders may, under certain circumstances, be obliged to provide financing to the BV or to provide certain services/products to the BV if this is included in the articles of association. The articles of association may determine the voting ratio with regard to the taking of certain decisions and to what extent a shareholder can appoint, suspend or dismiss his own director or supervisory board member.

Regarding profit distributions (dividends)

Distributions can only be carried out, if the owned funds exceed any statutory and statutory reserves. Furthermore, benefits can only be made if the benefit test is met. The board’s approval for the distribution is required. Directors who knew or could reasonably have foreseen that the company would not be able to pay its due and payable debts afterwards are joint and severally liable for the amount paid out, unless proof to the contrary is provided. The shareholder or profit-holder is also obliged to repay the benefit he received, should the BV go bankrupt within one year of the payment.

Intercompany Solutions can inform you about all the benefits of a Dutch BV

You probably noticed that the creation of a flex BV has become much easier since the changes in the Dutch law system, which has made setting up a Dutch BV more attractive for many entrepreneurs. However, as far as liability is concerned, the legislator continues to strictly monitor any improper administration. If you want to know more about liability within a BV, how to set up a Dutch BV or how to branch out to the Netherlands, feel free to contact us for in-depth information and advice.

Once someone starts a business, they obviously expect to achieve success with their company and ideas. This doesn’t always turn out as expected unfortunately, since doing business inevitably comes with a certain amount of risks. The worst case scenario is bankruptcy, which will be followed by the closing of the BV company that was established. The following information is a guideline to help you understand the steps involved in closing a BV company. Be mindful that the articles of association (statutes) which were drawn up while forming the BV, may apply and provide further context to these steps. Also be aware of the fact that this guideline is not applicable when you change your legal structure, sell or transfer ownership, or file for bankruptcy.

Closing a Dutch BV company can be categorized by:

Dissolving the legal entity

A BV is a legal entity, this means you need to dissolve the legal entity before you can actually close the BV. This is done through an act of dissolution. The act of dissolution has to be approved during a general shareholders’ meeting. The minutes of this meeting need to contain at least:

You do not need a notarial deed to execute this. Your statutes may contain additional guidelines, such as a minimum attendance and minimum amount of votes. Once taken, an act of dissolution is final and cannot be reversed without the interference of a judge. After the decision for dissolution is taken the phrase “in liquidation” need to be added to the statutory name of the legal entity in all the documents, announcements and correspondence. This helps all relevant and related parties know that the BV will be dissolved. Finally, the act of dissolution needs to be deposited at the Dutch Chamber of Commerce. It is important that the liquidator is easily identifiable in this deposit for (possible) creditors.

Liquidating assets

After filing and depositing the necessary paperwork for dissolution, your BV does not automatically cease to exist. You first need to identify if the BV has benefits. If there are no benefits, the BV ceases to exist immediately after the act of dissolution. In this case you have to inform the Chamber of Commerce of the dissolution of the BV and the legal entity. If there are benefits, then you need to identify whether these are sufficient to cover all debts or not. If there is sufficient capital to cover all debts, the BV must continue to exist until all of its assets are liquidated. This can be done through either regular liquidation or turbo liquidation.

Regular liquidation

Regular liquidation applies if the BV still has assets, such as (but not limited to): real estate, inventory and liquid assets. These need to be liquidated before the BV can be closed by the person appointed as liquidator in the act of dissolution. Surpluses need to be split amongst shareholders by the liquidator. This needs to be documented by showing the size, composition and justification of the surplus. Additionally, a plan of distribution must be deposited at the Dutch Chamber of Commerce and to the person in charge of storing company papers. Furthermore, it is required to place an ad in the newspaper informing readers of the dissolution and where they can find the stored company papers for inspection.

Please note that creditors may come forward up to two months after filing for dissolution and object to the documentation through a petition to the court. In the case of an objection, the liquidator has to deposit the objection at the Dutch Chamber of Commerce and run another ad notifying the readers of the objection. The same applies once the court makes a decision on the objection. Liquidators are not allowed to make payments to shareholders and or beneficiaries without authorization from the court during the objection period. Payments to shareholders and beneficiaries can be made only if no objections are made within the objection period by following the proposed plan of distribution. Please be informed that there is a specific procedure, if you cannot identify all beneficiaries. It is advised to run an advertisement to inform the readers of the benefits to be paid. If the beneficiaries still have not been identified after six months, the balance can be paid on consignment under a statutory provision and preserved by the state.

The liquidation phase ends immediately, once there are no more benefits. This also needs to be reported to the Dutch Chamber of Commerce. The person appointed to store all documents and records must now do this for seven years and inform the chamber of commerce of this task within eight days, also providing them with their name and address. After this the Chamber of Commerce will close the file of your BV. In case of court involvement, you need to notify the judge within a month after the liquidation ends.

Turboliquidation

Turboliquidation is only possible if the BV has no benefits, debts and/or outstanding invoices. Additionally, the BV may not be a shareholder or owner of another BV and the shares may not have been certified and sold yet. In this case you can skip the liquidation phase as there are no assets to liquidate. You will also need an act of dissolution and deposit this, alongside other forms, including a closing balance at the Dutch Chamber of Commerce. After this is all done, the legal entity ceases to exist immediately. In 2020 the Dutch government made new rules regarding turboliquidation. Under these rules creditors gain more rights, if companies have been liquidated before they can file claims. Next to that, shareholders may be held accountable personally.

Insufficient benefits and bankruptcy

If you have insufficient benefits to pay off your debt, then you will have to file for bankruptcy. In this case you will usually sign a creditors’ agreement. This agreement generally encompasses that (some) claimants receive a percentage of their claim. If this step is neglected you may privately be held liable. If new or outstanding debts show up after the BV has already been closed, the liquidation process may be reopened by the liquidator. In this case the legal entity of the BV will come into existence only for settlement of the debt. The BV will still stay dissolved.  If you want to know more about this subject or are seeking professional assistance, Intercompany Solutions can help you during every step of the process. Feel free to contact us any time, also please know that your personal details will always be handled with discretion.

With Brexit being a main topic during the past years, it’s easy to overlook other countries and economies in relation to the Netherlands. Just like many British companies, there is a substantial amount of African business owners who have made the decision to move their companies to Holland or set up a subsidiary here. Due to the positive economic climate and many international trade opportunities, setting up a business in the Netherlands is seen as a lucrative expansion for many investors and entrepreneurs.

Intensification of trade between the Netherlands and Africa

During the last years, there has been a multitude of trade missions between Africa and the Netherlands. The Netherlands-African Business Council has hosted these in order to research and encourage international cooperation between the various countries, in order to facilitate the exchange of experience and assets between Dutch and African entrepreneurs.[1] The goal is to establish solid business relationships and open up possibilities for international trade and partnerships.

This approach offers many African business owners to get acquainted with the Dutch business climate, the many opportunities here and thus; possible expansion of their businesses. Next to already existing large corporations opening up branch offices, there is also a growth in small businesses being set up in Holland. Freelancers and online entrepreneurs can reap many benefits of owning a Dutch business and having access to the European Single Market.

Benefits of a branch office in the Netherlands

The Dutch offer many interesting opportunities and benefits when starting a company in the Netherlands, or when investing in an already existing enterprise. There are many sectors in which the Dutch excel, such as digital services and e-commerce, agriculture, the tech sector, healthcare, innovative concepts and many other sectors and business types. You will also find an extremely well-educated workforce that is almost entirely bilingual or trilingual even.

Due to the excellent infrastructure in the Netherlands, you have almost every other EU country at your disposal. Rotterdam houses one of the largest ports in Europe and the world, whilst Schiphol offers you opportunities for worldwide shipping. There are also many active freelancers in the Netherlands from all over the world, making it easy for you to find qualified personnel and assistance. Due to its international recognition as a very stable country economically, politically and culturally, you can greatly benefit from a branch office in the Netherlands. Especially when you are currently based outside the EU, such as in Africa.

Examples of successful African business ventures

During the past few years, multiple South African organizations and companies have decided to expand to the Netherlands. During an official ceremony in Cape Town, three companies have announced their business expanding to The Hague. The Hague has been known for many years as the international city of peace and justice, hence the expansion is also a bit symbolic. The companies (Hystead Limited, IoT.nxt, and NuvaLaw) were assisted by various Dutch governmental institutions such as the Municipality of The Hague, The Hague Business Agency, Netherlands Foreign Investment Agency (NFIA) and InnovationQuarter. These organizations are actively involved in attracting more African companies to the region, as this will benefit the diversity and eco-system of companies settled in the Netherlands. [2]

Foreign companies are seen as having a very beneficial impact on the economy in the Netherlands. When foreign entrepreneurs and investors put effort into opening branch offices in the country, trade becomes more diverse and often also more friendly for the environment. More and more trade agreements are being made with underdeveloped countries as well, in order to boost local economies and companies. During the past decades the number of foreign products in the Netherlands grew exponentially, mainly via initiatives like these. A branch office in the Netherlands might result in a substantial business growth for any entrepreneur, making it a solid move for expanding business activities all over the world due to Holland’s fantastic infrastructure.

How this will affect the South African companies

All three companies have expressed their enthusiasm regarding the expansion. The COO of Hystead Limited mentioned that the management offices in the Netherlands will have a positive influence on their growing shopping center portfolio. The CMO of IoT.nxt states that the office in The Hague will function as a base for serious international expansion. Next to that, the Strategy Director at NuvaLaw hopes to partner up with multiple insurance companies in the region as well as beyond. Having a branch office strategically placed in a city like The Hague can provide you with an ample amount of extra business opportunities, new clients, a highly skilled potential workforce and many options for networking and building a stable contactbase.[3]

How to set up a company in the Netherlands?

If you are currently an African citizen or your company is based in another non-EU country, then you will need to take some extra steps in order to establish a business in the Netherlands. As opposed to EU investors and citizens, you will need to obtain one or multiple permits in order to be able to start up or expand your business activities. For a lot of people this can be quite a complicated task, as there are many steps involved, and you will also need to prepare the necessary documentation.

In all these cases, Intercompany Solutions can assist you with every detail and step you need to take. We can tell you in detail which documents you will need to prepare, which information we need from you and where to send the paperwork. In simple cases we can perform all the steps in just a few business days, making it possible for you to immediately start your business activities. If you need to obtain certain permits, this might take a while longer. Please take a look at our general procedure for more information about starting a company or a branch office in the Netherlands. If you have questions or would like to receive a personal quote, never hesitate to contact us for advice and information.

[1] https://www.nabc.nl/the-netherlands-african-business-council/about-us

[2] The Hague Business Agency. (2017, 29 November). Three South African Companies Open offices in The Hague Region. Link: https://investinholland.com/news/three-south-african-companies-open-offices-hague-region/

[3] Idem

A possibly very interesting and lucrative business idea would be to start up an online casino in the Netherlands in the near future. Until very recently, there were only 14 physical casinos in the Netherlands. These were all state-owned, meaning the private sector didn’t have any access to the casino sector. Since 2019 these conditions have changed, however. In this year the so-called Remote Gaming Act was passed by the Dutch Senate, which is mainly aimed at finally liberalizing this market. This, in turn, will but an end to the state monopoly on gambling, and it will also open up possibilities for online casino’s in the Netherlands.

The liberalization of Dutch casinos

First a bit of history about Dutch gambling. The National Foundation for the Exploitation of Games of Chance, founded in 1974, was the first to receive a casino license from the Dutch government on 17 December 1975. Until the present day, this is also the only casino license in the Netherlands. The company operates under the name Holland Casino and opened the first casino in Zandvoort on October 1, 1976. We are now much further down the road, yet Holland Casino is still a state-owned company. This is due to some scandals in the past regarding gambling and related problems.

According to official documentation, a main reason for the government not to issue more casino licenses, is the fact that Holland Casino is the only casino that knows how to implement correct measures against gambling addiction. The unofficial reason could be, that competition means that the state earns less due to competitors. This will inevitably drop the profits of Holland Casino and thus, the Dutch state. In any case it seemed that the prevention policy, both against gambling addiction and against money laundering, did not seem to work very well. Nonetheless, the Dutch government has adopted a new law, in which private ownership of a casino will be entirely possible.

A highly controversial sector at times

To state some examples; a director of a well-known automobile company once gambled 23 million euros away in Holland Casino. He nevertheless kept coming back to the casino and was even rewarded for this fact. There is also some controversy about ATM’s in the building that offer the possibility of withdrawing amounts as high as 2500 euros. This is not exactly considered responsible behavior, if one is to prevent gambling addiction and comparable problems. The casino is still open, but will now have to compete against new players. The same strict rules will apply, as well as newly established laws and regulations for the private sector.

The situation since 2020

Due to the rather controversial problems mentioned above, the Dutch cabinet (with Mark Rutte as Prime Minister) has decided that gambling and games of chance should no longer be part of official governments tasks. Thus, Holland Casino should be privatized, and other private sector companies should also attain the possibility of entering this market. The only exception is the Dutch State Lottery (Staatsloterij), which will still remain in the hands of the state. The lottery brings in high amounts of money on a yearly basis, though without the added hassle and problems of an actual casino.

Another factor that might have played a significant role, is the influence of the European Union (EU) on the decision of the Dutch state to privatize the casino sector. The EU considers games of chance and gambling a purely commercial business endeavor, even though the EU policy on games of chance itself is more liberal than national policy. The EU is influential and generally its incentives are followed by member states. Multiple nations have been frowned at, regarding their monopolistic rules and behavior in the gambling sector. In the Netherlands it is quite controversial that the government issues licenses, but only to government controlled institutions and not possible competitors. That will all change this year.

Casino laws in the Netherlands

As far as expectations go, the remote Gaming Act will be finally implemented during 2021. Interested entrepreneurs can apply for a license since last year. This license is a strict requirement to operate within this sector in the Netherlands. An interesting difference with previous laws, is that taxes will be imposed on the operators instead of the players under the new act. This means a 29% tax rate will be applied to every imaginable form of online gambling. The idea is that tax revenue will be increased, since prizes lower than 449 euro were exempt from tax until now.

Due to the increase in illegal (online) gambling the past few years, the Dutch government decided that gamblers need a certain amount of protection from shady corporations. Therefore, the act aims at providing fair environments for its gamblers and put a stop to fraud. This is the reason that the new casino laws are rather strict, in order to facilitate these goals. The operators are required to comply with these strict rules, otherwise they cannot do business. One of these measures is a necessary affiliation with the Central Exclusion Register for every operator, to ensure that certain blacklisted players cannot gamble. Another measure is close monitoring of risky behavior. Every operator is required to invest 200,000 euros yearly into the prevention of gambling addiction as well. Next to that, the operators need to run a control database that continually shares all activities on the website with the “Kansspelautoriteit” (KSA) which is the Dutch organization that monitors all gambling institutions.

More information about the licensing procedure

So before you can establish an online casino in the Netherlands, you will need to acquire the gambling license. To realize this, you will have to look at all requirements with an honest outlook and see for yourself, whether this is an achievable goal. The largest problem for most will be the investment necessary; including all costs, a license is quite a financial burden. If you are already a player in the industry, however, and you enjoy owning some healthy capital, it might be a very solid investment as the market is just about to break open. The most important factor is to stay in line with Dutch laws, otherwise you risk hefty fines at best and jail time including confiscation of profits in the worst case scenario. The licenses in the Netherlands have not yet been finalized, but it is already known that the application costs for a license will be around 50,000 euros at the Gaming Commission.

What are the approximate total costs of a casino license?

As stated above, the application to qualify for a gambling license is 50,000 euros and the only thing you get for this money, is that your application will be processed and judged. This does not give you any guarantee that you will obtain the permit whatsoever. In addition to these one-off costs, there are other required expenses listed below. Please note, that in some cases these are still estimates.

Expense                                                             Amount                                                             Frequency

Application                                                        € 50,000                                                             Once

Game systems inspection                           € 500,000                                                           Annually

Supervision KSA                                             € 150,000                                                           Annually

Automation costs (eg hosting and personnel costs) € 100,000                                Annually

Addiction Prevention                                   € 200,000                                                           Annually

Other costs (eg courses)                              € 100,000                                                           Annually

Extra security                                                   € 810,000                                                           One-off *

* When enforcing the rules.

How can customers pay in online casinos?

If you want to enter the Dutch casino market, you will not only need to express loyalty to the Dutch law system, but also to your consumers. This means you need to offer transparent services with safe payment methods. This entails direct deposits, but also major credit cards. In the online casino community a lot more options exist though, such as PaySafeCard, Trustly, Neteller and Skrill. Furthermore, there are many other casinos in the European Union such as in Malta. These casinos accept EUR, and we strongly advise you to also offer that option, as this is the national currency in the Netherlands as well. It will also relieve Dutch players from having to pay conversion fees.

Intercompany Solutions can set up your online casino business in just a few working days

If you want to invest in or compete with a completely new national gambling sector, then you should seriously consider investing in the Dutch casino market this year. There is still the option of acquiring a license, since the applications are not closed. In order to attain this license, you will need to meet certain criteria and also invest the application costs. If you would like to know more about legal issues and specific regulations concerning Dutch gambling and casinos, Intercompany Solutions can assist you. We can also take care of the entire company registration process, advise you on payment options for your casino, take care of your accounting and make sure that you always meet all legal requirements. If you would like to know more about our services, don’t hesitate to contact us for more information or a personal quote.

Sources:

https://ondernemersplein.kvk.nl/vergunning-online-kansspelen/

https://www.rijksoverheid.nl/onderwerpen/kansspelen/regels-kansspelen

 

Sometimes entrepreneurs set up a company, but later find out they chose the wrong sector, didn’t invest enough in certain projects, went down a wrong road or simply underestimated their capacity for success. There are other factors that can lead to the demise of a company, such as incorrect business practices or personal problems. In such cases it can be wise to consider selling a company, because there are many business owners out there who might have the right expertise and experience to make the company successful. This is why there are company takeovers; as they provide the seller with some capital to start up again and the buyer with a fresh new project. If you would like to invest in a new company, then you need to acquire knowledge of at least some basic topics about company acquisitions. In this article we have outlined these basics.

Different Dutch legal entities

There are a number of different legal business structures in the Netherlands. These structures can be categorized as structures with a legal personality, and structures without a legal personality. Owners of a structure without a legal personality are personally liable for any debt the company incurs. Structures with a legal personality have to be drawn up and amended by a civil law notary. These structures are not personally liable for the debt of the company, bar some exceptions. The sole proprietorship (eenmanszaak), general partnership (vennootschap onder firma or vof), professional partnership (maatschap) and limited partnership (commanditaire vennootschap or cv) are business structures without a legal personality.

The private limited company (besloten vennootschap or bv), public limited company (naamloze vennootschap or nv), cooperative (coöperatie), association (vereniging) and foundation (stichting) are business structures with a legal personality. The procedure for taking over a company in the Netherlands depends mostly on the current and desired legal structure. We will describe the different procedures for taking over a company based on the legal structure in the next paragraphs, and also provide some insights on how to find suitable companies. You can also giveexpects some tips regarding what to be mindful of.

Business structures without a legal personality

The sole proprietorship, general partnership, professional partnership and limited partnership share the same basis for takeovers: neither of these structures requires an amendment by a civil notary, unless realty/property is involved in the transaction. This section will first discuss the limitations of a sole proprietorship and the difference between the four types of partnerships. Furthermore, it will explain the steps between potential buyers and sellers first, followed by the official steps necessary at the chamber of commerce.

Please be aware that you are only allowed to have one sole proprietorship in the Netherlands. If you already have a sole proprietorship, then you are not allowed to register an additional one. Instead, you have to adjust the business activities as established within the business register (handelsregister) of the Dutch Chamber of Commerce (Kamer van Koophandel). These changes will need to reflect and include your new activities. Alternatively, you may choose to register an additional trade name instead. In the Netherlands, owners of many sole proprietorships are also ZZP’ers (Zelfstandigen zonder personeel), which can be translated as entrepreneurs without personnel.

A general partnership, professional partnership and limited partnership differs from a sole proprietorship in the sense that the first three may have multiple owners, whereas a sole proprietorship always belongs to one person only. The most important owners are called UBO’s (ultimate beneficial owners). When dealing with either of these, you will need to identify who the UBO’s are of the company you wish to take over and if they are correctly registered as such. Additionally, you may also need to register either yourself or possible business partners as UBO’s at the end of the takeover trajectory.

What to do if you find a suitable company?

Moving forward, this section will discuss the trajectory between buyers and sellers assuming that a suitable company has been found already. If you are looking for information on how to find suitable companies, you may read the tips and tricks for finding a company which are mentioned further in the guide. In order to take over a company, you will of course need to discuss a reasonable price. This price is presented within a sales memorandum, and is based on various aspects of the company such as supplies and the customer base for example. Patents and goodwill may also apply. Subsequently, the sales memorandum will also provide an explanation how pricing is established exactly. A nondisclosure agreement (NDA) may be signed to ensure private information stays confidential.

The negotiation phase

During the negotiation phase you will need to sign a letter of intent. A letter of intent encompasses the duration for which the letter and its contents will be valid, any exclusivity agreements, the valuation methods, applicable law, dispute settlements and more relevant information. Please be mindful, that any agreements within the letter of intent are binding. Be sure to discuss exactly which parts of the company you will take over and if any parts of the company are excluded. If so, you also need to specify exactly which parts these are. All buyers are required to perform a due diligence check. All provided information inside and outside the sales memorandum needs to be verified, based on the accuracy and completeness thereof.

It is advised to research if there is important information which may not be presented within the memorandum, such as liability cases, lawsuits, claims or debts. Once all information is verified, you will need to gauge if the takeover is financially feasible. Examples of financing are also mentioned below in the tips and tricks for finding a company. During the finalization, you will need to sign a takeover contract. The letter of intent serves as the basis for this contract. Once everything is agreed upon, you will need to make an appointment with the Dutch Chamber of Commerce. To this end, you will need to prepare and file a registration form specific to the legal structure you wish to take over during this appointment.

A sole proprietorship requires a different registration form, for example, than a professional partnership. The current company owner also has to confirm that he will discontinue his activities, and that the company will be continued by someone else. This can be done easily by filing a form. There is a separate form for a sole proprietorship and general, professional and limited partnerships. You are required to bring this form with you and submit it to the chamber of commerce during your appointment with them. Intercompany Solutions advises to hire a professional party to help you evaluate the sales memorandum, perform the due diligence and UBO check, prepare the relevant files for the chamber of commerce and advise you during negotiations and finalization of the takeover contract. Our professionals are eager to assist you during this trajectory.

Tips and tricks to find a suitable a company

Finding a suitable company to take over is no small feat. There is a surplus of companies varying by  type, size and industry. Luckily you can simplify this process, by narrowing down the scope of your search with a so-called search profile. This search profile helps you highlight key elements you are looking for in a company. A search profile may consist of, but is not limited to, the following elements:

Type of industry

You may look for a company within your own industry because of familiarity with the subject,  expertise and an already built up network. This is not necessary however; you can choose any industry or sector that you feel drawn to. When trying to establish the type of industry, ask yourself what your expertise and potential within different industries are and which industry you feel most comfortable with. Also make sure that you have at least some in-depth information about the specific industry, or make sure to hire professionals to assist you with certain decisions.

Region

When deciding upon a region you can consider a plethora of factors. Personal factors may be the time it takes you to travel to this location, the quality of the neighborhood and the accessibility of a possible office building. Likewise, some of these can also be applied to your customer base and business network. Other factors may also apply. Is the environment and surrounding area suitable for your industry? Will you need any special permits? Are you expecting a lot of international clients and, thus, prefer a location in close proximity to an airport and hotels? These and other questions are easily answered if you make a list of pros and cons regarding the region.

Type or size of the company

What kind of company are you looking for? An enterprise in the production sector, services or something else? Do you want to import or export goods? Do you want a company with personnel? If so, is there a maximum of employees you are willing to take over? Do you want to do business with consumers or other companies? As you can see, there are many different factors you can take into account. It is important to realize that all companies have strengths and weaknesses, and that there will never be just one company which is a perfect fit.

Stage of the company

Are you looking for a company which you will need to grow, or are you looking for a well-established company that has strong and steady margins already (which is also known by the somewhat undignified term ‘cash cow’)? Additionally, you may also look for a turn-around company. These companies are usually on the brink of collapse and in dire need of change. The price of these companies is usually much lower, but the risk involved is also greater. The effort you will need to put in to stabilize the company is also much more substantial.

Cost of takeover, cash flow and financing options

If you want to take over a company, you will need a source to finance this. The best way is always with existing capital of course, if you want to be safe. You need to think about your budget and what kind of earnings you expect in the future. Are you in need of financing, and if so, what type of financing should you use? Think of bank loans, crowdfunding or investors for example. There are even specialized forms of financing between sellers and buyers, such as seller loans and profit rights. Just make sure the risks don’t outweigh potential benefits. If you are rather new to acquisitions, we strongly advise to hire a professional partner such as Intercompany Solutions who can assist you during every step of the way.

Risks

As mentioned above, you need to think about the risks involved, and what the timeframe for the takeover should be. A common misconception is that turnover, costs and company value have a 100% carryover rate. This is incorrect, as customers may have a personal attachment to the previous owner. Thus, it is not guaranteed that these customers will stay if ownership changes. Additionally, any change you implement in the company may also directly impact performance numbers. It is advised to pay special attention to the operating budget and substantiate which parts will be profitable in your new situation. Since a sole proprietorship is essentially an agreement between the owner and the customer, you will also need permission from the customers to use their information. This is due to them factually entering a new agreement with you as a person, and not as a legal business personality.

Business plan

A business plan can help you identify the strengths and weaknesses of both you as an entrepreneur, the company you would like to acquire and if it’s a match. Concluding, it will need to answer the most important question: whether taking over and running the company is feasible. When taking over a sole proprietorship, you may not be charged any VAT. Consequently, you will start paying income tax based on the profits of the company. Intercompany solutions can provide you with a database of companies for sale and help you create an optimized search profile. We can also identify whether you are eligible for tax breaks, such as self-employment and starters deductions and advise which type of financing is most beneficial for your situation.

The acquisition procedure

Every corporate takeover starts with a merger proposal. This proposal must be deposited within the commercial register (handelsregister) and stay there for a minimum duration of six months. The merger proposal should contain information about the legal structure of the companies, their name and location and what the new management formation will look like. A notary may amend the merger proposal, if certain complaints or objections have been filed within six months after depositing the proposal within the commercial register.

Large companies are subject to an additional set of rules and require permission (concentratiemelding) from the Authority for Consumers & Markets (Autoriteit Consument & Markt, ACM), if they wish to take over another company. The cost of requesting this permission from the ACM is around 17.450 euros. The ACM may deny permission, if the company takeover may influence the competition negatively. Companies may then offer a proposal how to minimize negative effects related to the takeover. If this proposal is denied, companies may apply for a permit application (vergunningsaanvraag). The costs for this permit application are an additional 34.900 euros.  Companies will need to request permission from the ACM, if:

Additionally, healthcare providers are subject to even stricter rules in order to keep these facilities accessible for everyone. Takeovers within the health care sector must request permission from the ACM, if:

Finally, pension funds are also subject to different rules. Pension funds must request permission for takeover from the ACM, if:

There are a number of different ways in which a takeover can take place. These are, but are not limited to: shares, assets and mergers.

Shares

Takeovers by shares consist of a full offer, partial offer, tender offer and mandatory offer. A full offer is the most common type of public offer within the Netherlands. Within this offer, the acquisition encompasses all issued and outstanding shares. A partial offer is aimed at only acquiring a part of the issued and outstanding shares, with a maximum of 30% minus one voting right in the general shareholders meeting. These offers are often used to disrupt public offers of competitors.

Tender offers will ask shareholders to sell their shares at the price and amount asked by the buyer. This amount may not exceed 30% including a minus one vote. The highest price accepted by the buyer will be paid to all shareholders who wish to sell their shares in this fashion. A mandatory offer is issued by the EU/EEA, when a person or legal entity obtains more than 30% of the voting rights in a company. Shares will be sold for a price based on the highest price paid one year before the announcement of the mandatory offer, or directly before the offer is completed.

Assets

Assets and liabilities may also be sold to the buyer. In this example, shareholders are paid for the distribution of the company’s assets. In general, this type of sale has to be approved by a majority of the general shareholders meeting. This option is interesting if there are tax or legal barriers involved with public offers, or if the buyer only wants to buy specific parts of the company.

Mergers

Companies can only merge if they have the same legal structure. A merger can result in the shares of either company disappearing into the other and being reissued or in the formation of a new legal entity altogether. Usually these kinds of mergers require an absolute majority of the general shareholders meeting, or at least two third of the votes.

Intercompany Solutions can assist you with professional advice and experience

Taking over a company requires a stable and realistic outlook, plus you will also need to be very familiar with various Dutch laws and regulations regarding company acquisitions. If you are interested in the possibilities for you or your existing company, feel free to contact us anytime. We can assist you during every step of the process and are happy to answer any question you might have.

Intercompany Solutions can also assist with the accounting requirements and due diligence for corporate takeovers.

Also take a look at our complete guide for starting a business in The Netherlands.

Sources:

https://www.kvk.nl/advies-en-informatie/bedrijf-starten/een-bedrijf-overnemen/een-bedrijf-overnemen-in-6-stappen/

https://business.gov.nl/regulation/mergers-takeovers/

 

If you are planning to establish a branch office in the Netherlands or are otherwise interested in starting a Dutch company, you will need to follow some standard steps in order to realize this goal. One of these steps entails registering your company or branch office with the national tax authorities. This will enable you to send invoices to customers, pay and receive VAT and all other financial activities that are tied to owning a business. You can find some interesting facts about the Dutch Tax Authorities in this article, as well as practical information about the registration procedure and Dutch taxes.

The Dutch tax system

The Netherlands is well known for being a country with a very competitive tax system, that actively stimulates (foreign) entrepreneurship and investors. Especially globally trading multinationals, since the Dutch tax regime allows for a smooth transition into doing business with the entire European Union. Even though the tax rates and obligations concur with the standards of the EU, the Dutch are nevertheless known as competitive innovators that always try to facilitate healthy business opportunities. Thus, the corporate tax rates are relatively low compared to many neighboring countries.

Next to the national tax regime, the Netherlands is also part of a very large tax treaty network. The country has bilateral tax treaties with a staggering amount of more than 90 different countries. This provides Dutch tax residents with an extensive amount of benefits, since it makes it much easier to do business internationally and especially within the European Union. Due to the fact that the Netherlands is an EU Member State, you enjoy the perks of free trade and movement within all Member States.

Benefits and features of the Dutch tax system

The Dutch tax system offers several positive features for your business abroad, such as:

Which taxes do you have to pay in the Netherlands?

If you plan to set up a business in the Netherlands, you will have to pay taxes just like in any other country. In Holland you pay tax on income, assets and wealth. In the Dutch tax system the different types of income are divided into three separate boxes with their own specific rates:

  1. The taxable income from profits, employment and owning real-estate, such as wages, pensions, social benefits and the ‘WOZ’ value of your home
  2. The taxable income from substantial interest
  3. The taxable income from savings and investments

If you happen to be a non-resident taxpayer, then you might be eligible to claim a basic allowance in Box 3 when you determine the benefits from certain investments and savings that are based in the Netherlands. This might lower the tax rate in specific situations. In the Netherlands, taxes are withheld every month from the salaries of all employees. Once a year ends, tax returns are filed in order to declare the exact amount of income and assets. Any discrepancies are then cleared up, and you receive a final tax notice with the amount you either have to pay or receive. Often the amount that was withheld during the previous year is mostly correct.

Various federal taxes in the Netherlands

In the Netherlands, the national tax legislation is in the hands of the Ministry of Finance. The Dutch Tax Authorities levies and collects all obligated taxes. This includes income tax, corporate tax, inheritance tax, gift tax and transfer tax. Next to charging individuals directly, the Dutch government charges various indirect taxes too:

Dutch VAT (BTW)

BTW (which means Belasting Toegevoegde Waarde) is the Dutch equivalent of value-added-tax (VAT). This sales tax always applies when you sell or buy services or goods. The Dutch VAT system has three preset tariffs:

Who needs to pay taxes in the Netherlands?

In general, all Dutch residents are obligated to pay taxes. This includes employees, company owners and investors. Your personal circumstances can tell you whether you qualify as a Dutch resident or not, so you will need to define your position in the Netherlands if you want to know the exact amount of taxes you need to pay. This can include whether you are residing in the country or not, where you work and where your home and family is situated. There are roughly four categories you can fall under, which we will describe below.

1.      Resident taxpayers

If you can be considered as a resident taxpayer in Holland, then you will have to pay taxes on your entire worldwide income. Hence, it doesn’t really matter where your income comes from in this case; all taxes should be paid to the Dutch Tax Authorities. All varieties of income (such as employment, business income and investments) are seen as taxable.

2.      Non-resident taxpayers

If you are not a resident taxpayer, you will not have to pay taxes on all income, just the income that can actually be levied in the Netherlands. This can include income from employment, if your employer is a Dutch company. But also business profits, certain benefits, being part of a shareholding and also income from owning Dutch real estate. In some cases, income that you earned outside the country may also be taxable.

3.      Qualifying non-resident taxpayers

You fall under this category if you don’t live in the Netherlands, but pay taxes on most of your annual income. This generally applies if you are a resident of an EU country, an EEA member state, one of the oversees municipalities of the Netherlands or Switzerland. In this case you are obligated to pay Dutch taxes on more than 90% of your total worldwide income. The beneficial part is that this also allows you to enjoy benefits such as tax deductions and tax-free allowances.

4.      Partial non-resident taxpayers

You can be considered a partial non-resident taxpayer if you come to live and work in the Netherlands and are also eligible for the 30% ruling benefit for incoming employees. In this case the Dutch Tax Authorities will see you as a non-resident taxpayer regarding income tax. If you choose this option, you will have to pay less taxes in the Netherlands. This will exclude you from certain benefits though. To be 100% sure about your situation, we advise to ask a specialist about the best option for you. Intercompany Solutions can tell you everything you need to know.

Corporate tax rates in the Netherlands

All companies established in the Netherlands are subject to Dutch corporate tax. Since 2021 a rate of 15% applies if the yearly taxable amount is 245.000 euros or less. If you make more profit than 245.000 euros, a corporate tax rate of 25% applies. In some cases, you can apply for an exemption in order to be able to access lower tax rates. Non-resident companies have a limited tax liability regarding income from Dutch sources. If you also supply goods or services from the Netherlands, you will have to charge VAT as well. You will have to declare the VAT charged four times per year (quarterly) whereas the corporate tax declaration is sent once per year.

Import and export of goods in the Netherlands

If you choose to establish a company or subsidiary in the Netherlands that imports and exports goods from all over the world, you will need to take into account that you will have to pay both import duties as well as VAT. This is especially so when you are importing goods from outside the EU. In special cases, you might also have to pay several other levies such as consumption tax and excise duty.

Import duties are taxes that are levied on goods that are imported into the Netherlands. The Dutch Tax Authorities collect this duty and the transfer the collected sums to the EU. The Member States can also retain a part of the import duties, in order to cover the costs for collection. If you import goods from a Member State, then you don’t have to pay import duties. You will still have to pay VAT though. The VAT rate in this case will be the same as the Dutch VAT rate that applies for the specific services or goods.

If you choose to import or export excise goods, then you will have to pay excise duty. Excise goods are products such as tobacco and alcoholic beverages. If you import non-alcoholic beverages, you will have to pay consumption tax. There are some other extra levies that prevent certain products coming on the European market for very low prices, this entails (amongst others) levies on certain industrial and agricultural products.

Tax liability in the Netherlands

If you own a corporate entity that is established in the Netherlands and also resides there, you will basically always be subject to Dutch corporate income tax. If you own a branch office in the Netherlands of an otherwise foreign company, then you will also be subject to corporate income tax as your company has an establishment in the country. Non-resident corporations that have branches in the Netherlands don’t fall under any special rules, nor is there any special tax assigned to these. There is however no Dutch tax imposed on the remittance of profits by the branch office to its head office in the country of origin.

The tax liability is limited to profits made by a branch office that qualifies as a permanent establishment. This means, that activities of a more supporting or auxiliary nature are exempt from the definition of a permanent establishment. Thus, these are not subject to Dutch corporate income tax. Therefore, Dutch branch offices and subsidiaries are inherently treated the same as any other Dutch owned company. Your Dutch branch office will be subject to all taxes on your worldwide profits and other capital gains, if it is either incorporated in the Netherlands or controlled from the Netherlands.

As a foreigner, it can be quite complicated to simply dive into all the tax rules and regulations in the Netherlands. It is always best to seek help from a professional in order to know exactly where you stand and what your obligations are. If you don’t pay taxes, file incorrect declarations or withhold information, this can result in very hefty fines for you and your company. We therefore always advise to seek professional assistance when you are planning on establishing a Dutch company, subsidiary or branch office. Intercompany Solutions can help you during every step in the entire process.

Read here for more information about accounting requirements in The Netherlands.

Intercompany Solutions can register your company in the Netherlands

If you want to register your company with the Dutch Tax Authorities, you will first need to register your company at the Dutch Chamber of Commerce. We follow a fixed procedure for every new company, you can find more information about the way we work in this article. Once your company has a Chamber of Commerce number, you will automatically be registered with the Dutch Tax Authorities as well. If you have any questions or would like to receive more information, please don’t hesitate to contact us.

Many established foreign businesses in the Netherlands are focused on trade. This is no coincidence, since the Netherlands is a European Union (EU) Member State and thus, has full access to the European Single Market. That’s not the sole reason though, since the country also has many international trade agreements that facilitate swift import and export options to all corners of the world. Add the excellent infrastructure and a highly developed logistics sector, and you have a perfect base for your import & export business in the Netherlands. We will cover various topics in this guide, such as establishing a Dutch business, more information about the import and export sector and all the relevant applicable laws and regulations.

Why choose a business in trade?

Why choose the import & export business? Often the market in certain countries is limited. Not all countries benefit from good access to trade, lack solid means of transportation and/or infrastructure, or are otherwise shut out from certain markets such as the United Kingdom after Brexit. But it is fairly straightforward to jump into this market via a different country like the Netherlands, because exporting is easier than you think. During the past few decades plenty of options have become available, such as drop shipping in all countries and holding oversees stock, for example. You can start your entire company from oversees, as you can literally arrange everything from a distance nowadays.

We have outlined in this article what you should consider, when taking your first entrepreneurial steps across the border. From export restrictions to customs regulations. To ensure that your business border crossing does not turn sour, we can advise you on your export and import projects. The internationalization of society offers many different possibilities nowadays, including several national and international support programs for market entry, market processing and a new business abroad.

Import & export from abroad

In the past centuries it would have been entirely impossible to establish a trade business from afar. Nowadays, almost everything is possible via long-distance. It doesn’t really matter where you live this moment; if you have internet access you can establish a trade company in the Netherlands, because that is everything you need. Next to being able to trade withing the Netherlands, you will also have access to the entire European Single Market and plentiful possibilities to trade worldwide.

Both import and export have been substantially simplified in the EU, as all goods and services can cross any border within the EU free of charge. This doesn’t only imply that you don’t pay any customs fees, but you also save time due to the fact that your shipments don’t have to be accompanied by a large array of documents. Doing business with non-EU countries also offers many opportunities, as the Netherlands has made beneficial trade agreements all over the globe. The Netherlands holds a very strategical position in the world of trade and logistics. If you want to start a business in this sector, you can benefit from all its resources.

Distributors

If you want to compete with other similar entrepreneurs, you must constantly ensure that you buy the necessary precursors in the necessary quality from reliable suppliers at the best possible prices. If you would like some assistance in that regard, we can help identify solid suppliers and check their creditworthiness and performance. We can also advise you with large procurement transactions and their corresponding tax settlements. Due to the very large amount of distributors and drop shipping agencies, it can be tricky to distinguish between sensible and shady companies. It’s advisable to find an associate to help you with such practicalities.

Market analysis

An overview of sales and the competitive situation in a target market is at the top of the toolbox of an exporter and an exporter. You will need stay informed at all times, because prices, rules and laws in this sector change constantly. Every delivery of goods or services across each border is recorded statistically worldwide. We know how for example how many kilos of cheese the Netherlands has exported, how many drills Brazil imports or where Belgium supplies its baby food. You will need to focus on various subjects and take important factors into consideration, such as:

We will discuss all these subjects briefly below, so you have an idea what you are up against. This will also provide you with some insight regarding your possible potential within this sector and its worldwide market, plus; whether you have anything beneficial or original to add. It’s a highly competitive market that involves a lot of persistence and up-to-date knowledge in order to succeed.

Import regulations

The international trade of goods and services is subject to the import rules of the EU. Capital imports are not subject to foreign exchange restrictions; foreign equity investments in domestic companies are therefore fully possible. Please keep in mind that there are of course certain exemptions, such as soft drugs and other specific products and services. In the Netherlands, the sale and consumption of so-called 'soft drugs' is known to be tolerated. Under EU law, these fall into the category of medicinal products and narcotics and are excluded from the free movement of goods in the European Union. The import of medicinal products and narcotics into the individual Member States is only possible through competent authorities.

Customs regulations

The Netherlands is a Member State of the EU. This means that the provisions of intra-Community trade in goods or products from other EU Member States have been in force since the country became a member. Transactions between companies that are entitled to deduct VAT and have a UID number are made with a VAT rate of 0%, since the acquisition is subject to the import VAT of the receiving State. In other words; you don’t pay any VAT at all within the entire EU. Sometimes you might need to pay special tax though, such as excise duty.

Other import duties

If you want to import special like as alcoholic beverages, you need to take into consideration that certain goods are subject to import tax such as excise duty. These need to be paid by the company that imports these goods, or a fiscal representative of this company. The payment of these taxes (“accijns”) also needs to be reported to the Dutch Tax authorities on a periodical basis.

Packaging regulations & designation of origin

The packaging and labelling requirements for food and beverages, as well as for other products, such as washing powder, children's toys, wallpaper, paper, mattress fillings, preservatives, dyes and other additives are generally contained in the Dutch Trade Law and the related special regulations. There are also some EU-wide rules on packaging and product labelling.  In the Netherlands, the ‘Nederlandse Voedsel- en Warenautoriteit’ authority monitors compliance with legal regulations and standards in various areas. Its control area includes food, consumer products, energy certificates, as well as plant and animal welfare and non-smoker protection.

Accompanying documents

If you trade within the borders of the EU, then the amount of necessary shipping documentation will be limited to standard items such as a packing slip and accompanying invoice. For special goods or materials you might need safety documentation and other necessary material for safe and legal transportation. If you want to start an import and export company in specialty goods, we strongly advise you to inform yourself about specific regulations covering these items. This to make sure you comply to all the laws and regulations.

Species conservation

The Netherlands is part of CITES (the name for the Convention on International Trade in Endangered Species of Wild Fauna and Flora), also known as the Washington Convention. Imports or exports of endangered species and plant species listed in the Convention to and from the European Union, are subject to strict customs controls. Many species or products from these animals require identification and/or import documents. Not only live animals and plants are categorized, but also preparations and products from these animals, such as their eggs, jewelry and souvenirs made of ivory, leather bags (crocodile), claws, teeth, skins, turtle shells, snake skins and related items of natural origin. Given the sometimes difficult classification for laymen as to whether a species or a product is subject to documents, it is certainly best – to protect endangered species and avoid seizures and possibly large fines on importation – to refrain from buying such souvenirs.

Otherwise, precise information on the necessary accompanying documents (CITES papers) should be obtained before departure. If a seller or buyer states that the offered flora or fauna is either not subject to the rules laid out in the Convention on the Protection of Species, or that the accompanying documents submitted by the dealers are sufficient, should never be relied upon, even in good faith. Tax and customs law issues require precise clarification.

Financing export activities

You need to take into consideration that a trade business takes a lot of time and effort to sustain. Unless you are able to hire qualified personnel who will handle daily business activities, we suggest you map out potential risks involved. Especially when doing business across the border, upfront costs and risks should not be underestimated. National banks, export funds, control banks, AWS and private export insurers have many answers to questions about financing, hedging of export transactions and direct investment.

Start-up aid for exporters & export subsidies

If you are just at the beginning of starting a company, our experts can take a close look at your idea and check if you might have access to any subsidies or tax benefits. We can also check whether you are sufficiently prepared for your project, help in assessing chances of success and define target groups and test markets with you. The goal is to transform your business idea into a strategy with minimum risks involved. We have an overview of all support measures and can help you make sure that you can benefit from all possible options.

Intercompany Solutions can assist you in setting up a trade company

If you are contemplating a starting a business in the Dutch import and export sector, we can assist you during various steps in the process, such as:

We can also help you with other general issues, such as company registration, acquiring a VAT number and opening a bank account. Please feel free to contact us anytime with your questions, or if you would like to receive a personalized quote.

With worldwide lockdowns and infrastructural restrictions, it proved to be very tough for many companies and entrepreneurs to keep operating on a normal scale. In the UK specifically, Brexit also makes business as usual very difficult. Due to Brexit, companies in the UK can no longer profit from the free movement of services and goods that is inherent to the European Union. Instead, they now have to comply to almost 30 different VAT rules that differ per European country.

This has already led to an increase of companies looking to settle in the Netherlands in the past few years and that amount keeps rising. Even during Corona times, the Dutch offer a stable economic climate and unrestricted access to all the benefits of being a member state of the EU. If you are currently having difficulties keeping your company afloat due to Brexit restrictions, it might be an excellent idea for you to consider opening up a branch office in the Netherlands, or move your company entirely.

Companies afflicted by Brexit and Corona

During the past year a lot has changed. Next to the UK finally exiting the EU, Corona hit the world which resulted in several strict measures in various countries. Especially for UK companies this coincidence of events resulted in companies and entrepreneurs failing to meet deadlines, provide services or ship goods over the border. The EU and UK came to a trade agreement, but the freedom of movement that accompanied being a member state of the EU is sorely missed. 

The amount of paperwork most businesses have to fill out just to ship goods is substantially higher, leading to shipping delays and problems at the border. The UK government has therefore advised many company owners to open subsidiary offices in EU member states, such as Ireland and the Netherlands. A lot of companies already made this decision and thus, now operate within the borders of the EU again.

Benefits of a branch office in the Netherlands

If you need a safe haven to be able to run your business activities as usual, the Netherlands is a perfect fit for companies originally based in the UK. Next to being close in proximity, the Dutch offer a wide array of possibilities and benefits for entrepreneurs. The economic climate in the Netherlands is still very stable. There are hundreds of companies already making the move according to the NFIA, mostly because Holland is strategically perfectly placed for internationally oriented businesses, 

The Dutch have made a very positive name for themselves, being open and welcoming to foreign companies and investors since centuries. The Netherlands offers innovation and groundbreaking work in many fields, such as public healthcare, technology, IT infrastructure, agriculture and also in more artistic fields such as design and marketing. If you are into technology and gadgets, your company will flourish with many interesting cooperation possibilities and a wealth of acquirable knowledge and information.

If you want to open a branch office and hire personnel, you will find high-quality employees easily. The Dutch are in general bilingual, sometimes even trilingual and also very computer savvy. There are also plenty of expats residing in the Netherlands, if you prefer someone who speaks native English or has a certain professional affinity with your services or products. 

How can you open a subsidiary office in the Netherlands?

Many entrepreneurs worry that the whole process of establishing a subsidiary company or a branch office in the Netherlands is a tedious and difficult task. If you plan to do it alone, it can be indeed tricky. You will need to obtain a vast array of documents and take the right steps to register your company correctly, in order to also obtain a VAT number and a bank account. You will also have to get the necessary permits, since the UK is no longer considered a part of the EU and this complicates registration a bit. 

Then there is also the question of the preferable legal entity you want to choose, which depends on several factors. You will need to know the (expected) amount of profits in the foreseeable future, how many people you plan to employ and the amount of directors or partners involved. If you want to know a bit more about legal entities, you can find some in-depth information on this page.

Intercompany Solutions can register a subsidiary office for you in just a few days

If you really want the job well done, we always advice to hire a professional company to fill out the forms and do the work for you. Intercompany Solutions has many years of experience in establishing and registering foreign companies in the Netherlands, meaning we can take care of the entire process from A to Z. You can contact us for more information, or look at our website for more information about the process.

Have you ever considered starting a company in the Netherlands in the soft drug industry? Then there are a lot of things you should know beforehand, as you otherwise might be confronted with the risk of criminal charges. The sale and possession of drugs is technically a criminal offense by law. In order to reduce the illegal production, consumption and sales of hard drugs, the Netherlands has invoked a special toleration policy regarding the sales of cannabis, which includes marijuana and hash. Due to this toleration policy, coffee shops are not persecuted by the public persecution office for selling cannabis.

Coffee shops are companies which are legally allowed to sell cannabis (not to be confused with regular coffee bars), as long as they adhere to the strict rules imposed upon them. Please be mindful that this toleration policy does not apply to hard drugs, and any violation regarding these may lead to persecution. You may find more information regarding soft and hard drugs in the Dutch Opium Act. Furthermore, the public is not allowed to carry more than five grams of cannabis at any time, and will not be persecuted if they carry less than five grams. Public consumption may be prohibited by municipalities though. Consumption of cannabis in these prohibited areas may result in arrest, confiscation of drugs and also punishment by fine.

Looking to start a company in The Netherlands? Read further.

Gedoogverklaring

To open a cannabis company you will generally need a “gedoogverklaring” (which is a tolerance statement) and an operating license for the catering industry (“horeca”). The tolerance statement is based on a maximum quota of coffee shops which are allowed within that municipality. This amount varies from municipality to municipality. Many of these quotas have long been met, which makes it impossible to apply for a new tolerance statement. You may, however, choose to take over an existing coffee shop if its owner decides to quit.

Some municipalities have waiting lists for obtaining the tolerance statement. Depending on the municipality, additional conditions may be set in order to apply for the waiting list. These may include, but are not limited to:

Bibob screening

When applying for a tolerance statement, the Dutch government may apply a probity screening under the Dutch Public Administration Act. This act is also known as ‘Bibob’, and serves to identify the possible risk of criminal activities. Under this act the government is allowed to investigate your background and/or that of your company when applying for such a license. If the screening identifies any risks, the government is allowed to deny or revoke your license in order to avoid the government from facilitating criminal activities.

The license for operating within the catering industry and its requirements also vary per municipality. The content of these requirements pertain to the area surrounding your company and usually involve rules regarding safety, decency and public order. These may be, but are not limited to opening times, noise and light nuisance, parking and more. If you already have a municipality in mind, we suggest you look at the specific requirements in this particular area to know what you need to abide with.

Rules regarding cannabis companies

If you want to open a Dutch coffee shop, there are many rules you need to take into consideration. There are special policies regarding coffee shops. The basic rules for all coffee shops are abbreviated under the AHOJGI-criteria. Depending on the municipality though, additional rules may apply. It is the sole discretion of said municipality to identify whether coffee shops are allowed to engage their business activities within the given rules of that municipality.

The AHOJGI-criteria are as follows:

Other rules may include, that coffee shops may not be in close proximity to schools or other coffee shops, or prohibit them from inhabiting certain areas at all. Furthermore, strict rules regarding accounting, terms of sale and public counter sales may apply. An example of such a rule is that coffee shops may not vendor sales directly to the street.

Stricter rules

In 2013 the Dutch government changed their approach regarding coffee shops in order to decrease the nuisance to the surrounding area, by changing the scope of the coffee shop's focus to the local market. A new rule was introduced on the 1st of January 2013 prohibiting foreigners from entering and buying cannabis at coffee shops. Only Dutch residents are allowed to enter coffee shops and purchase cannabis there. This means, that coffee shops are tasked with identifying whether their customers have Dutch residency and whether they are of legal age to buy cannabis.

Navigating the many intricacies of opening a coffee shop is very difficult. One wrong application may prohibit you from obtaining the needed licenses. Intercompany Solutions can help you identify which municipalities have available tolerance statements, applying for said tolerance statements or waiting lists thereof, fulfilling the requirements of the waiting list, applying for a license to operate within the catering industry, help you with the Bibob screening and many other issues. We can also advise you regarding the rules and regulations of auditing your customers on their residency and age and accounting related matters.

Growing cannabis in the Netherlands

It is currently strictly prohibited to grow Cannabis in The Netherlands. This means that the supply of cannabis to coffee shops goes through an illegal back door, but the sales thereof to the public goes through a tolerated front door (in the coffee shop). The Dutch government has identified that this may cause problems with the acquisition and production of cannabis, which in turn may create problems for the public safety, order and health. This is due to the fact that the production of cannabis is not tolerated, and regulated variation in quality of supplied cannabis may strongly vary.

Individuals may, however, own up to five cannabis plants as this is deemed noncommercial use. However, authorities may confiscate these plants as owning them is illegal, while consumption is tolerated. Owning more than five cannabis plants may lead to persecution. Medical cannabis is regulated through the Bureau of Medicinal Cannabis (BMC) from the Dutch Ministry of Health, Welfare and Sport. Any application to produce medical cannabis goes through this organization.

In 2018 an advisory committee has researched the issue regarding the production and sales of non-medical cannabis and published their findings and recommendations to the Dutch government. In turn, the Dutch government reacted to these recommendations. A decision was made, to do a trial with a closed cannabis supply chain based on the recommendations from the advisory committee. This also contains additions from the government regarding the scope and rules for this trial.

The closed cannabis supply chain

The closed Cannabis Supply Chain is a trial that will run in the Netherlands during 2021, which focuses on the regulated sales and cultivation of cannabis. The government and other (independent research) parties will closely monitor the production, distribution and sales of said regulated cannabis and evaluate whether it is possible and feasible to change the current illegal supply thereof. Based on the recommendations from the advisory committee and additions from the government regarding the scope and rules for this trial, ten municipalities have been chosen to participate in the trial. All coffee shops within these municipalities are required to oblige with the trial. Existing rules regarding coffee shops may be altered during the trial.

Opportunities for new growers

The closed cannabis supply chain opens up opportunities for new growers, as up to ten new growers will be selected during the trial. These people or companies will legally be allowed to cultivate and sell cannabis to the coffee shops, whilst partaking in the trial. Specific rules regarding facilities, quality management, security, record keeping, staff requirements and production estimates will apply for these new growers. Interested parties may submit an application which will be reviewed.

Applicants may be either natural or legal persons, of which both have to be situated in the Netherlands. Cultivation farms need to be located in The Netherlands as well, but are not limited to the participating municipalities. A solid business plan must be presented and will be assessed by all parties involved. Some elements that are required for the business plan are a ground plan of the cultivation site, transportation plan, quality compliance and several other necessary factors in order to adhere to the rules. Additionally, applicants will need a certification of good conduct and undergo a Bibob screening. Intercompany Solutions can help you formulate a business plan adhering to all criteria, which are needed for this assessment and help you with requesting a certification of good conduct. The date for application is not known yet.

Cannabidiol (CBD)

Cannabidiol, abbreviated as CBD, is a substance which can be found in the flower tops of the hemp plant. It can be extracted in a number of different ways and is sold as either oil, capsules, paste, ointment or tea. Unlike cannabis, cannabidiol is legal to buy and sell and does not warrant the use of the toleration policy. As such you can find it in common drug and health stores as long as the amount of THC is below 0,05% and the daily dose of CBD does not exceed 160 mg. Another requirement is that it may not be advertised as medicine. CBD has proven to have multiple health benefits in the last decades, which is why it is being studied and used in order to see whether it might be beneficial to use next to regular medication in many situations. This is a very interesting market that has just come to the surface, it might be worthwhile to research this topic if you have business interests in this particular area.

Production of cannabidiol

CBD is extracted from the hemp plant, which is classified under the Opium Act. In 1999 the Dutch law regarding hemp was adjusted, legalizing the harvest of fiber hemp. This consists of only the seeds and fibers of the hemp plant. Under this law, the production of hemp plants with less than 0,2% THC is allowed for companies which qualify for an exemption from the Opium Act. The production of CBD is illegal, however, as it is not harvested from the seeds and fibers but rather from the flower tops. Since processing other parts than the seeds and fibers from the hemp plant is illegal, companies choose to export these “leftover” parts to countries where it is legal to process them. These countries then extract the CBD from the leaves and create either CBD oil, capsules, paste, ointments or tea.  In turn, this processed CBD is now legal to import and sell within the Netherlands. You can find more elaborate information regarding the production and sales of CBD in this article.

Intercompany Solutions can inform you about all laws and regulations

If you want to participate in the cannabis market, you will need to be informed about all regulations and restrictions in order to pursue the legal road. Any business activities that are considered illegal in the Netherlands might lead to prosecution and, in the worst case scenario, you being arrested. If you want to know more about this interesting market, Intercompany Solutions can provide you with the necessary information and advice to set up your company 100% legally. Feel free to contact us for more elaborate information.

Sources:

https://www.government.nl/topics/drugs/toleration-policy-regarding-soft-drugs-and-coffee-shops

https://www.government.nl/documents/reports/2018/06/20/an-experiment-with-a-closed-cannabis-chain

https://www.government.nl/documents/parliamentary-documents/2018/07/06/government%E2%80%99s-response-to-report-of-the-advisory-committee-on-the-controlled-cannabis-supply-chain-experiments-with-a-controlled-supply

https://www.government.nl/documents/reports/2019/10/31/rules-for-the-experiment-with-a-controlled-supply-of-cannabis-to-coffee-shops

https://business.gov.nl/regulation/public-administration-probity-screening-act/

https://www.government.nl/topics/drugs/documents/reports/2019/10/31/rules-for-the-experiment-with-a-controlled-supply-of-cannabis-to-coffee-shops

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