Why register a company in the Netherlands?

What can be more rewarding and exciting than starting your own business? But to start this journey you will have to struggle and provide to your fullest to excel and get to Eden heights. Start taking baby steps and keep tick marking everything, and finally, you will reach the end. And now, if you feel like your Netherlands-based company is all good, then it’s time to launch. Wait, wait, wait, did you register your company yet? If not, then listen up!

If you are looking into incorporating in the Netherlands, your success is guaranteed if you register your company with suitable and trusted agencies. But what is the reason that in a country like the Netherlands, where a lot of entrepreneurs mark their spots, it is necessary to get your Netherlands company registered before launching? Well, this topic needs a detailed discussion, so sit back and let us reveal the facts and help you out.

Also, if you are just here to get information about registering a company in the Netherlands, this article contains everything one needs to undergo the whole procedure.

Why Should People Incorporate a Company in the Netherlands?

The Netherlands is a stable and business-friendly country with a well-developed legal system. It is also a member of the European Union, which gives companies registered in the Netherlands access to the European market.

In addition, the Netherlands has a very favorable tax regime for companies. The corporate tax rate is only 15% in some cases, and there are many opportunities for companies to reduce their tax liability even further. The Netherlands also has a very efficient and straightforward process for setting up a company. 

Main reasons to incorporate a company in the Netherlands

A private limited liability company (BV) is the most common legal structure for businesses in the Netherlands. This type of company is easy and relatively inexpensive to set up and offers many benefits to entrepreneurs.

If you are planning to register a company in the Netherlands, there are many reasons why you should opt for a limited liability company (BV). The most important advantages of a BV are the limited liability of shareholders and the favorable tax regime for companies. Below, we will tell you about some outclass benefits to support the incorporation of a BV in the Netherlands.

1) A BV offers limited liability to its shareholders

The privately owned company with limited liability under Dutch law is a legal element with its rights and obligations. The capital of the BV is separated into shares held by at least one shareholder. In a nutshell, the shareholders are in the driver’s seat where finances are concerned, though the everyday running of the BV is the role of the company director.

2) It has a favorable tax regime:

All the empirical evidence demonstrates that the Netherlands is a tax haven. It deliberately offers companies that wouldn’t otherwise try to be residents within its territory the means to diminish their tax charges on interest, royalties, dividends, and capital gains from foreign subsidiaries.

3) A BV is a flexible legal entity:

Thus, the Netherlands’ most frequently used corporate element form is the BV. Because of its flexible character, the BV is exceptionally famous as a holding company in (international) group structures and as an operating company.

4) Easy setup:

It is very easy to incorporate in the Netherlands. One of the easiest set-ups in Europe.

5) Setting up a BV in the Netherlands is relatively inexpensive:

No, there is no prerequisite to investing any money. You truly need to deposit the nominal share capital (amount of shares x share value) in the company bank account once the company is incorporated. This can be just 0,01 euros.

What are the requirements for setting up a company in the Netherlands?

The essential requirements to find a private limited (BV) in the Netherlands are:

1. A valid business address (by and large can also be a residential address).
2. All shareholders and directors are more than 18 years old.
3. At least one shareholder and no less than one share of at least 0,01 euros.

To make the company functional, you will doubtlessly need a VAT number and a bank account. It is up to the bank to take you on as a client and up to the tax authorities to pass out a vat registration to your company.

We suggest you follow the so-called ‘substance requirements. Below you’ll track down a non-exhaustive list of these requirements:

• At least half of the directors of the company ought to be residents of the Netherlands.
• The business address of the company is in the Netherlands.
• The main bank accounts of the company are kept up with the Netherlands.
• The accounting of the company must take place in the Netherlands.
• The company must follow all its tax obligations in the Netherlands and isn’t treated as a tax resident of another country.

Failure to meet these requirements can prompt the company to be denied a VAT/BTW number and a bank account.

We firmly advise every BV company to have at least 1 Dutch resident (nationality not important) on the directorate.

While it is technically conceivable to register an NL company without living in the Netherlands, there are a couple of things to consider.

Mainly, every company should have at least 1 Dutch resident as its director. This is essential for the ‘substance requirements.

Failing to meet this requirement can imply that the company won’t get a VAT number and/or bank account.

If a company does not have a local director, we would require:

1. A clear reason why this is not necessary for the company to meet this requirement. And details on how the company will function remotely.

                                                                          “OR”

2.  A detailed plan on how the company is intending to meet this requirement soon. In other words, will the company enlist a director, or will you move to the Netherlands to become the local director in the next couple of months? And if so, how this will work precisely?

Advantages of incorporating a company in the Netherlands.

1. Increase the reputation of your business

Numerous countries plan to enact laws shielding their economies from base erosion and profit shifting to tax havens. The Netherlands should be visible in this structure as a sustainable solution to such changes. The Netherlands offers a beneficial tax regime and a conducive business climate and is among the EU’s most politically steady and pro-business governments.

2. Pay fewer taxes

If the taxable amount is € 395,000 or less, the corporate income tax rate is 15% (2022). If the taxable amount is more than € 395,000, the corporate income tax rate is € 59,250 plus 25,8% for the taxable amount exceeding € 395,000.

Besides, the current bilateral investment treaty (1) and the bilateral double taxation treaty between Russia and The Netherlands (2) give a very beneficial regime for cross-border activities.

3. A Dutch BV company is easy to form, control and close

Opening a Dutch BV company doesn’t need to deposit a minimum paid-up share capital longer. The incorporation of a BV will require approximately one week, assuming correct and timely fulfillment of the reasonable level of effort necessities. Moreover, a Dutch BV without resources and liabilities can be broken up without formal liquidation. Other than the BV, one can likewise incorporate various other Dutch entities, such as the Dutch NV company, an association, a foundation (3), and a cooperative association (Dutch Coop) or an open or shut Dutch limited partnership (CV).

4. protect your ownership (money, assets, real estate)

If you are looking for venture and legal protection of your assets, the ideal choice is to subject them through a Dutch entity to the Dutch jurisdiction, which takes for granted to safeguard property rights in The Netherlands, the EU, and abroad.

What is the VAT rate in the Netherlands? How does VAT work in the Netherlands?

In the Netherlands, consumers pay value-added tax (VAT) on all goods and services they purchase. VAT is included in the cost. The buyer pays the VAT to the trader, who then transmits it to the Tax and Customs Administration.

To run a company in the Netherlands, VAT registration is required. Once the registration process is finished, VAT registration can be appointed to the company.

Finally, VAT registration allows for setting up an investor’s VAT ID, which can be used to issue VAT receipts. The investor isn’t at risk for the company’s VAT liabilities but just for the company’s activity.

What are the (tax) compliance & accounting in the Netherlands?

Generally, tax compliance refers to taxpayers’ – whether people or businesses – decisions to promptly comply with state, federal, and international tax laws and guidelines.

Look down below; we have listed the most common business taxes in the Netherlands:

1. Turnover tax (btw) / Value added tax (VAT)
2.  Income tax in the Netherlands
3. Corporate tax rates in the Netherlands
4. Dutch dividend tax
5. Business tax advice for foreign companies
6. The municipal, waterboard, and provincial taxes

Conclusion

You must have got an idea that how beneficial Incorporating a company in the Netherlands can be. And luckily the compliance requirements are not cumbersome. No doubt everything is just ideal in the Netherlands for business persons no matter if it’s the genuinely ideal tax regime or a low corporate tax rate. But still starting everything from scratch gets challenging for a newbie so we would recommend you to get help from an outclass professional company like Firm EU and your success is guaranteed.

Want to learn more about the Netherlands & the company incorporation process? Take a look at the FirmEU – The Netherlands page!