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Setting up a business in the Netherlands

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If you wish to set up a business in the Netherlands, here is some useful information to guide you with related procedures.

Thanks to its suitable economic conditions, the Netherlands greatly encourage entrepreneurship. In fact, the country has been attracting foreign investment for years due to its dense population, high purchasing power, modern infrastructure, as well as its openness towards other European Union economies. Moreover, Dutch authorities have set up a series of measures through liberal policies and numerous incentives so as to attract foreign investment.

Types of companies

There are five legal types of companies in the Netherlands: the private liability company (Belosten Venoostschap met beperkteaansprakelijkhei or BV), the public limited company (Naamloze Vennootschap or NV), the general partnership (Vennootschap onder Firma or VOF), the limited partnership (Sponsor Vernootschap) and finally the subsidiary (Bijkantoor).

The BV can be created with a minimum paid capital amounting to 18,000 euros against 45,000 euros for the NV. Moreover, the NV must mention the responsible staff wages. Finally, NV shares cannot be priced while BV shares cannot be transferred freely due to clause agreements mentioned in the company's statutes. This clause generally stipulates shareholders or other decision makers’ general meeting, or a preference right applied by other shareholders. The European limited liability company (SE) is based on the same concept as the NV. However, the SE is allowed to shift its head office to another European Union country since 2004.

As regards other types of companies, there is no minimum capital requirement. The subsidiary, for its part, requires a minimum of two partners. In the case of a general partnership (VOF), the partners' liability is joint and multiple, while in a limited partnership (SV) active partners have limited liability, especially to run the business. Liability of passive partners is limited to the amount contributed.

Finally, the subsidiary does not require capital if it is registered in the commercial register as it has not been set up by an individual but depends on a head office. Management is hence joint and multiple.

Procedures

A BV may be set up by one or more moral or physical individuals. The latter will have to produce a notarized incorporation deed to the Dutch Ministry of Justice. This document should include the company name, its corporate purposes, the registered office address and the principal capital, as well as the number and nominal value of shares. It should also mention the co-founders' names and addresses. Proceedings could take between two and four months, during which the founders can start running their business provided they inform third parties that the company is still being constituted.

Note that the company's deed should be translated in Dutch if it has been written in another language. Moreover, the management should appoint at least one director, regardless of his nationality and place of residence.

Once the company has been registered, it should obtain a Value Added Tax (VAT) number with the Tax department if its activities are subject to the related system. The initial capital should also be deposited in a Dutch bank account after obtaining the VAT registration number. The investor is free to choose any Dutch bank provided it meets his requirements.

The company will be authorized to recruit staff once it has been registered and starts running.

Permits

Setting up a business in the Netherlands also involves obtaining numerous permits. In fact, foreign investors have to apply for business permit for some types of industries, namely construction, food, installations, transport, etc. Other authorizations may also apply in some cases. Hence, you are advised to inquire about these with the nearest municipality to your business address.

Labor laws

According to Dutch labor laws, workers benefit from special attention regarding employment contracts, dismissal, social dialogue, any many other issues. For instance, fixed-term employment contracts may be renewed up to three times for a total of three years period. The contract is automatically converted into a permanent contract thereafter.

Dismissal in the Netherlands is governed by many laws. A short term employment contract cannot be terminated by the employer without the UWV WERKbedrijf's approval or by a court judgment. A list of admissible dismissal motives has been set up. Moreover, the amount of compensation to be paid to the dismissed employee depends on his age of the latter, its age and the impact of his responsibility in the dispute. Note that dismissal in cases of pregnancy or other illness is prohibited.

Finally, companies having between 10 and 49 employees have to set up a staff committee if requested by the majority of employees. This group's power is more restricted than that of the staff council. But it still guarantees some workers’ rights.

 Useful links:

KVK - Chamber of Commerce www.kvk.nl
NFIA - Agency for Foreign Investments www.nfia.nl
Ministry of Social Affairs and Labour www.government.nl
Europa – Startups for the Netherlands europa.eu

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