Would you like to start a business as an expat? The Netherlands is an ideal place for entrepreneurs. There are numerous market opportunities and a healthy economy with plenty of potential investors open to new ideas.
However, the Netherlands is also known for the a number of administrative procedures that you have to consider when starting your own company. To set up a business in the Netherlands, for example, one of the first things you need to decide is if you want to register and operate the company remotely. Or if you want to work and reside in the country.
If you are from a country not from the EU, EEA, Visa free travel country, you might need to apply for a business visa to come by. For long term residency you might need to apply for an Authorization for Provisional Residence, and possibly even a work permit or TWV. When completing the application, keep in mind that your proposed business must benefit the Netherlands in some way.
The next step is to decide which legal form is right for your company. It is essential to choose a structure with the appropriate legal form as this determines liability for tax purposes. ICS can help you with this process. Generally foreign entrepreneurs are best suited to start a Dutch BV company.
BV or Sole Trader (eenmanszaak)
Freelancers living in the Netherlands, often choose the sole trader structure. However, the most frequent option for professional small and middle sized businesses is a the BV, which is a limited liability company. The advantages of the Dutch BV for foreign entrepreneurs are:
- You can open a BV remotely with our services
- You can operate a BV from anywhere in the world
- You can request a bank account remotely with our services
- It is a very common structure for foreign entrepreneurs in the Netherlands
- You do not need an address in the Netherlands
- You do not have to be a resident to open the BV
- You do not need a residence permit or visa
- You do not have a minimum requirement of time you need to spend in the Netherlands
- You can open it before you live in the Netherlands (and run it remotely)
For the Sole Trader (Eenmanszaak)
- You need to live in the Netherlands
- You cannot run it completely remotely, as you are required to stay in the Netherlands more than 50% of the year
- You need to have a Dutch fiscal identification number and Dutch residence address
- You cannot open it before you live in the Netherlands
Registering your company at the Chamber of Commerce
Once you have decided the kind of business you wish to set up, the next thing you need to do is to register the company with the Chamber of Commerce, which is mandatory. Registration must occur from one week before the start of business to one week after work has commenced.
Very soon after your business is registered with the Chamber of Commerce, you will be issued with a unique company number or the Chamber of Commerce number. It is a statutory requirement to include this number on all company invoices and mail.
Dutch Corporate Tax
As well as registering with the Chamber of Commerce, your fledgling business must additionally be registered with the Tax Authorities. We recommend registering as soon as you can in order to claim a VAT deduction. ICS is specialized in tax registration for foreign business owners.
What about Dutch VAT?
When customers are invoiced for your services or when they pay you for your products, you will need to add an extra 21% VAT tax to your rate.
The VAT return must be calculated every quarter and paid directly to the tax authorities. However, VAT may be deducted from VAT spent. VAT is not a cost for the entrepreneur, it is only a cost for the end consumer.
Vat is not the only tax.
Entrepreneurs in the Netherlands will at least encounter some of the following taxes.
- Corporate tax, this tax is paid upon the company profit after all company costs.
- Income tax, this is tax on salary that an individual pays when receiving income. Income tax includes tax on dividends, wages and bonuses.
- Payroll tax, this is the tax that company owners pay on top of the salary to the government.
Why does the Netherlands have Payroll tax?
With the payroll tax, costs such as health insurance and unemployment benefits for every resident is covered. Every tax paying resident of the Netherlands has the right to these benefits.
In the Netherlands, businesses must keep business records. Every business owner is legally obliged to keep them for at least 7 years. If you close your company, your accountant or bookkeeper is required to hold the documents for you. The bookkeeper will be legally appointed as the custodian for your records.
The business Administration includes:
- Contracts and agreements
- Costs of business activities
- Invoices sent and received
- Your balances and bank statements
- Annual accounts
- VAT and tax filings
Dormant company accounting
The Netherlands does not have a type of dormant company. If your firm is inactive (little or no invoices), you can request your accountant for the VAT filings and Payroll tax to be halted. However, you are still legally required to file the end-of-year corporate tax filing, the board to sign off on the numbers in an official declaration and depositing of the annual statement in the Chamber of Commerce. ICS does offer special accounting prices for firms with no activities. Please ask one of our accounting specialists for more information.
Insurance and pensions
As an entrepreneur, you are prepared to take risks and you may have plenty of responsibilities.
It is advisable to take out insurance to protect you against risks and to guarantee an income if you are unable to work in the future.
In the Netherlands, entrepreneurs are liable for personal injury and material damage that you, your employees or your product cause on your behalf. Business liability insurance is, therefore in some more risky type of business categories (construction and so on), essential to reimburse the damage that your company may cause to others. Another frequently used insurance is disability insurance which assures you of an income if you are unable to work because of ill-health.
Health insurance is mandatory for everyone in the Netherlands. As an entrepreneur, your contributions are based on your taxable income. Legal assistance insurance is also recommended as conflicts may occur, whether with clients, employees or suppliers. This type of insurance guarantees help and advice on legal issues.
- Hiring staff in the Netherlands: information for foreign business owners
- Foreign multinational corporations & the Netherlands annual budget
- Business taxes in the Netherlands: a quick overview
- Registration with the Dutch Tax Authorities: all you need to know
- Registration with the Dutch Tax Authorities