For expats interested in starting a business in the Netherlands, the process is fairly straightforward. See below for information about Dutch business structures, registering a new business, operating a business from home, VAT taxes and guidelines for employing staff in Holland.
Often times, a trailing spouse or expat partner of a Dutch national may have trouble finding employment in the Netherlands. This can be due to their experience being in an industry not overly developed in the Dutch marketplace, having professional credentials not recognized in the Netherlands, not being able to speak Dutch, etc. In the end, many of them decide to start their own business. This may be related to the indivdual expertise or it may be in a completely new field they train for.
Starting a business can be a good option for those who are able to offer specialized services which do not require a physical presence (for example, writing assignments, editorial and proofreading services, investment advice) or services which previously may have required a physical presence but nowadays can be offered through video calling platforms like Skype (for example, counselling sessions, language training, tutoring). This can allow the individual to offer their services to a wider audience of potential customers across the Netherlands (and beyond) while keeping overhead expenses low by working from home (one needs to also see if there would be any negative implications on their Dutch taxes when operating a home-based business in the Netherlands).
Starting a business that requires a substantial up-front investment (inventory, store rental, office space), should only be undertaken following an in-depth analysis to determine the business and revenue potential. There are various governmental agencies which provide the data and tools to assist in the market review. For example, the national Dutch statistics bureau, CBS, offers a wealth of data, while the Kamer van Koophandel (KvK), the Dutch chamber of commerce, can assist with formulating a strategic business plan. Qredits Microfinanciering Nederland offers business coaching support.
Before the person can register their business, they need to decide on the appropriate Dutch legal entity structure is best suited to their business needs…
DUTCH BUSINESS STRUCTURES
Sole Trader (Individual Business Owner)
With a ‘Eenmanszaak’ (sole proprietorship) there is only one owner (although it can have employees). Income tax is paid on the net income (profits after expenses). Sole traders can be held personally liable for the business’ financial obligations (as can their spouse). This type of business is often (mistakenly) referred to as ZZP (‘zelfstandig zonder personeel’, self-employed without staff), but they are not exactly the same (ZZP is not a legal business entity the same way an ‘Eenmanszaak’ is).
Doing Business in the Netherlands is an English-language site operated by the Dutch government. They publish more information on self-employment in the Netherlands
Partnerships are generally created between certain professionals, such as attorneys and GPs. For tax purposes the partners are considered self-employed entrepreneurs (ZZPers). Partners are liable for business (financial) obligations individually and spouses can also be liable, though a marriage contract can limit liability.
General Partnership (Vennootschap Onder Firma, VOF)
A general partnership is a business run by more than one person. Partnership agreements will determine contributions, liability and entitlement. For tax purposes, each partner is usually considered a self-employed entrepreneur, and income tax is payable on profits. All partners (and their spouses) are jointly, personally liable for business debts and obligations, though a marriage contract can protect spousal assets.
Limited Partnership (Commanditaire Vennootschap, CV)
A limited partnership is a business run by more than one person. It has two kinds of partners: active and limited. The limited partner tends to be the financial backer for the company, and often enters into a partnership with a sole trader who needs financial backing. The limited partner tends to allow the active partner to make the day-to-day decisions and is only at legally at risk of losing their financial investment if they are not involved in managing the company in any way. Limited partners are not required to register with the Trade Register.
Active partners are liable to third parties and personal assets (including those of a spouse) are not protected from creditors (though a marriage contract can protect spousal assets). It is highly recommended to enter into a partnership agreement when becoming a partner, in order to clarify the duration of the partnership, contribution expectations, profit split, among other things.
For tax purposes, an active partner is usually considered to be a self-employed entrepreneur and is required to pay income tax on their share of profits. A limited partner who has provided only financial backing for the company is not considered a self-employed entrepreneur, but rather has joint entitlement.
Private Limited Liability Company (Besloten Vennootschap, BV)
A BV is a private limited liability company and is considered to be a legal entity, which limits the risks to the owner(s). Shareholders are only liable for their own capital contribution. To start a private company (BV), at least €18,000 in paid-in capital (not necessarily cash) is required. Shares are allocated based on the capital, and for tax purposes, any person owning more than five percent of shares has a “substantial interest” in the company and is liable for taxes on capital gains or dividends paid. It is necessary for owners to obtain a background check for fraud or bankruptcy from the Ministry of Justice. BVs are often considered to be the best way for a foreign company to establish a subsidiary in the Netherlands.
Company information and proof of incorporation in a foreign country (if applicable) must be filed annually with the Chamber of Commerce (Kamer van Koophandel, KvK).
Note: Directors of companies registered outside of the Netherlands are legally liable for the actions of the company until all legal requirements are completed.
Before starting, search through the Chamber of Commerce Trade Registry to verify that the chosen business name is unique and appropriate. All BV company names must begin or end with “BV” For example: Acme Anvils BV.
Public Limited Liability Corporation (Naamloze Vennootschap, NV)
This can be a subsidiary of a foreign company. An NV is owned by shareholders and shares may be traded on the public stock market, though shares are not held in any private person’s name. Therefore owners may choose to remain unidentified. NVs may only be formed if it has at least €45,000 in paid-in capital. It is not a common type of business structure.
A company incorporated in a foreign country may engage in business in the Netherlands through a branch office. Easier to establish than a subsidiary, a branch, unlike a subsidiary, is not considered a separate legal entity, so the associated foreign head office is liable for branch obligations.
Operating a branch does not require government approval, but the branch and the branch manager must register with the local Chamber of Commerce Trade Register.
The foreign company must also provide the Chamber of Commerce with:
- The articles of incorporation (in Dutch, French, German or English) as well as bylaws
The annual report, including accounting details, as governed by the laws of the country of incorporation (may be in Dutch, French, German or English).
- An extract from the trade register or document of registration in the country of incorporation, not more than one month old
- Information regarding the registered office, the law under which the company is incorporated and (to be submitted annually) a report on the share capital IF the company is incorporated outside of the EU/EEA.
This is the structure commonly used by non-profit organisations. A foundation is considered a legal entity with no members, and is allowed to make some money although this is usually used to cover costs. Any profits are subject to corporate tax and possibly turnover tax. Managers are generally not personally liable for foundation obligations, though it is sometimes possible.
A non-profit organisation with a goal that has voting members who are generally each allocated one vote. Associations may earn money, but the money must be used for the association goal and may not be distributed to members. Profits are liable to taxation. There are two ways to organise an association:
Establish the Deed of Association without the use of a notary and optionally sign-up with the Chamber of Commerce Trade Register. This will result in an association with limited legal rights.
Establish the Deed of Association with the use of a notary and register with the Chamber of Commerce Trade Register. This will result in an association with legal rights .
An association that may pay dividends to members.
REGISTERING A BUSINESS
Business registration is done through the Kamer van Koophandel (Dutch Chamber of Commerce), also known as the KvK. The Trade Register provides information about things such as a company’s capital, deposits with the KvK (Deponeringen), mergers or splits, whether a business is still an ongoing concern and who the authorised signatories are.
Any organisation that performs an activity for economic gain must register with the KvK in the district in which the business is located. This registration does not incorporate a business; it is part of the process of opening a business. There is a one-time €50 fee for registration.
A business should register within one week (before or after) the business is to commence trading. Registration by mail takes approximately a week, but registration in person takes about an hour (an appointment is required). Take valid personal identification and/or a resident’s permit if applicable.
Registrants may also need to provide a rental contract stating the business premises address for any rented premises. A registration number is assigned on registration, which must be printed on all future outgoing post.
Note: If there are no rented premises, the home address must be used as the business address. This address (and contact phone number) then becomes a matter of public record and is published online by the KvK. The KvK also sells this information to telemarketing companies and the like. Anyone wishing to keep their personal details private will need to arrange another address and phone number specifically for their business.
Registration forms are available from the KvK. Forms are in Dutch but English translations may be available or the KvK can help fill out the form during a registration appointment.
Any changes to company information must be registered with the Chamber of Commerce Trade Register.
A comprehensive brochure in English is published by the KvK on registering a business in the Netherlands (PDF)
Registration with the Tax Office
During the registration appointment, the KvK will register the new business with the Tax Office (Belastingdienst). The business owner will need to provide an approximate estimate of future yearly earnings during registration with the KvK and this information is supplied to the Tax Office. A week or so after the KvK registration appointment, the business owner will receive two letters a couple of days apart. One letter contains the Tax Registration Number and is the username for logging into the Tax Office website. The second letter contains the password, which can be changed on first login. It is important to keep this information in a secure place as it provides access to the administration area of the Tax Office website, where regular records must be submitted.
Permits and Diplomas
To enter into some lines of business, it is necessary to obtain required permits and certification from the local council and/or Chamber of Commerce. For example, teachers are required to obtain a Certificate of Good Conduct. It may also be necessary for foreign diplomas to be legalised. The Chamber of Commerce can be of assistance in determining these requirements.
For information on foreign credentials in the Netherlands, see the Internationale Diploma Waadering organisation
RUNNING A BUSINESS
Terms and Conditions
Drawing up standard company Terms and Conditions will be helpful when undertaking business transactions. They can be printed on invoices or quotations for efficiency in communication.
The Netherlands falls under EU rules for small businesses invoicing. This means that a debtor generally has 30 days to settle an invoice before a late fee is applicable (no reminders are necessary when invoicing another registered business).
More information on the rules on late payment in the EU is available on the Europa website.
When a business charges (or reverse-charges) VAT there are strict rules on what must be included on an invoice.
For those on government unemployment benefits, it may be possible to start a business while receiving benefits. Additionally, some benefits available to the full-time employed are also available to the self-employed (eg. parental leave)
More information on benefits while self-employed are available on the government website Business.gov.nl
A self-employed person is liable to pay all of their own insurance premiums. While none of these are compulsory (apart from basic medical insurance that all adults in the Netherlands must pay for), most small business owners take out some kind of liability insurance and often life insurance too. Disability insurance is extremely expensive in the Netherlands and the prohibitive cost makes this one of the least-bought insurance policies by business owners.
More information on business insurance is published on the Business government website.
It is very rare for a Dutch business to be able to hire staff members on a self-employed or freelance basis and employer responsibilities toward their staff are numerous.
More information from government website Business about obligations when hiring staff
The Dutch Tax and Customs Administration (Belastingdienst) will be notified by the KvK as soon as it is certain a company plans to start trading.
Business owners are legally required to keep records of all matters concerning the finances of their company. They are also legally required to keep all records relating to taxation for a minimum of seven years.
VAT is quite complex in the Netherlands with four brackets of VAT being levied. VAT-free, 0% VAT (not the same as VAT-free), 6% VAT and the full 21% VAT. Different occupations charge different levels of VAT, and sometimes more than one bracket is applied by the same business to different services.
Quarterly (or monthly) VAT statements must be submitted even if the business earned nothing in that reporting period.
If VAT statements are not submitted, a bill will be sent for the amount of VAT nominally estimated according to the income estimate given by the business owner at their KvK registration appointment. The bill will also contain a €50 fine in addition to the estimated VAT amount. This must be paid regardless of earnings.
The Dutch tax office works on accrual accounting system, not a cash-based one. This means that all reports must declare the income that was billed for the reporting period, not the funds received during that period. In practice, this often means paying the VAT charged on invoices before an invoice is settled by the debtor.
Note: It is illegal for the Dutch Tax Office to communicate in any other language but Dutch. This includes all reporting systems, letters, phone calls, and emails. Lack of knowledge of the Dutch language is not accepted by the authorities as a reason for mistakes in administration or payments. Business owners in the Netherlands are advised to either learn Dutch, retain the services of a local accountant, or have a trusted translator.