The Netherlands ranks among the countries most highly regarded by businesses when considering a location to establish a headquarters for international operations or a holding structure. For over 30 years the country has built a solid reputation among corporations and other business entities in establishing international holdings, and today several of the world’s major companies reliably maintain holdings in the Netherlands. Discussion throughout the EU and elsewhere has created many views and also a lot of misinformation. With this website we want to present you with the facts in order to support you in making an informed decision on how to best structure your international operations or holdings.
The history of the Netherlands has played an important role in the development of the country’s current standards for international holdings. The country itself holds limited natural resources and has needed to fi nd alternative ways to create wealth for its people. The main reason it has become an international business hub is due to its vast ocean coastline. Along with several major rivers that lead throughout Europe; it is geographically well situated for the development of international trade. The Netherlands has a deep history as a location where goods from all over the world could be distributed throughout Europe.
By taking advantage of this “natural resource”, the country has effectively generated wealth for itself and historically contributed to the development of many regions worldwide, such as North America (New York was first established as New Amsterdam), South Africa and Asia. Leveraging the strength of this longstanding Dutch trade network, several companies, including multinationals Philips, AKZO and KLM, have been able to establish themselves as leading international companies. This focus on international trade has had a great influence on the establishment of the Dutch legal and tax systems, on the attitudes of its citizens, and its culture of openness and acceptance of diversity.
Not a tax haven
Although the Netherlands may often be referred to as a “tax haven” in reality this is not the case. A tax haven is identified on three criteria: Lack of transparency, Low tax rates, Individual tax agreements.
The Netherlands is an open tax country within the EU. This means that requests received from foreign tax departments are fulfilled in general. So, you cannot use the Netherlands to hide taxable equity or revenue.
With a tax rate of 20% up to 200,000 euro and a rate of 25% on anything above, tax rates in the country stand on average with most developed nations.
And although the Dutch tax administration allows for great flexibility on tax rulings, it is neither standard practice nor legal to make special arrangements with the Dutch government. All agreements are based on existing tax law and they apply equally to all companies under the same circumstances.
Yet, if the Netherlands is not a corporate tax haven, then why have so many companies chosen to establish their holding structure or head office in the Netherlands?
With its longstanding position in international trade, the Netherlands was able to fully profit from the advantages that came with the establishment of the euro. It was an easy decision for the country to replace its own currency with the euro. As a result, conducting business throughout the EU from the Netherlands creates no currency risk.
In the Netherlands it is understood and accepted that you want to optimize your corporate structure to improve efficiency on three main aspects (operational, financial and fiscal) and there are several options available that allow for layered, multiple entity holding structures. However, the Dutch government has mandated that these structures do not generate a higher tax burden through creation of a participation exemption. Once a business entity has paid tax earlier on in the chain of profit, moving revenues within a holding structure does not result in additional taxation. Naturally, there are certain rules that apply to ensure there exists an actual controlling interest between the companies, but due to the participation exemption you will have much flexibility in setting up your holding structure.
The development of the Netherlands as trade nation within a closed market situation required extensive governmental negotiation in order to establish â€œtrade rulesâ€ between each individual country. It was only fair that both countries shared the benefi ts of each other’s legal and tax systems. Over the course of many years over 90 tax treaties were negotiated. As a result, all involved countries can profit from the advantages of the Dutch tax system as well as the tax systems of each “treaty”-country. There is a good chance that your current and future operating countries will be covered by a Dutch tax treaty.
Known to your international business partners
Whereas so many companies are choosing the Netherlands for setting up their international structure they are familiar with the Netherlands. By following within the same legal environment as most other companies, transactions become significantly less complicated: only one legal system is involved, instead of two, three or more.
English as a second language
There are several countries where either Dutch or a similar language is spoken, but you will not travel the world using Dutch as your main language. So people in the Netherlands had to learn at least one other language, and in most cases two or three. The Dutch have adopted English as their second language.
Flexible in business administration demands
Aside from for EU-prescribed processes, the Dutch legal systems places low administrative demand on companies. For example, the notary who incorporates your company can also list it in the chamber of commerce company register, in addition to handling the registration of your company with the tax office, providing the convenience of “one-stop shopping” for the incorporation of your company. Companies are free to hold board and shareholder meetings at any location in the Netherlands, and they are granted the flexibility to arrive at final board decisions outside of the actual meeting.
And these are just a few examples of the flexibility of doing business in the Netherlands.
Travelling to and through the Netherlands
Flying to the Netherlands is also convenient, with Amsterdam Airport Schiphol serving as one of Europe’s main travel hubs providing direct connections to almost every major city in Europe and many worldwide. The country’s small geographic size puts you in reach of every one of its major cities within two hours or less from Schiphol by car. For instance, you can reach the city of Leeuwarden, in the northernmost region of the country, in about an hour and twenty minutes.
And we also have some specialties
The Dutch Private notary
Although there are more countries that know public or private notaries the set up in the Netherlands is different from most other countries. The Dutch notary is always bound by the Dutch Notary law. This law combines the public and private notary into one position. Even if you engage a notary as your partner in a transaction the minute he starts performing his “public” tasks he is restricted to the obligations and his independent role under the notary law. And because of that both parties can be sure of the fact that nothing illegal is done. The notary can also hold funds or documents on behalf of each of the involved parties. After the transaction only the ownership of documents and money changes whilst they physically remain in the same place at the office of the notary. Execution of complex multi-party and multi-step transactions becomes very easy. The involvement of the notary makes enforcement of your agreements quite easy. His involvement creates a legal deed that can be executed without the involvement of the court. Of course you do not want to do that, but it is good to know you can.
Shares of listed companies are traded on the financial market and registered by banks. But that is not the case for non listed companies. The set up in the Netherlands gives you a very high level of security about the ownership of shares in non listed companies. Shares in non listed companies are registered at the chamber of commerce. If you start a company or want to transfer the shares this can only be done through a notary. The notary takes care of the registration at the chamber of commerce after the transaction. He will also check the ownership and transaction details as part of the transfer.
A company can be appointed as a board member
In the Netherlands any natural person or legal entity can be a board member in a company. In the representation of such a legal entity the normal company representation rules will apply.