Guide to starting a business in the Netherlands
Process & Timeline
Incorporating a Dutch BV at the public notary
- Step 1: Introduction. After an introductory e-mail or call we will send you a personalised quote, based on the information provided to us.
- Step 2: Invoice + shared secure form. After we have established your needs and you have agreed to the price quote, an invoice will be sent to you for the first installment of the final price. This is already included in the price sent to you earlier and is usually 50% of the total sum. Once we have confirmation of the payment you will be invited to your secure form where we will collect all your documents.
- Step 3: Collecting the Documents. We will guide you through everything you will need to collect for the company incorporation
- Step 3 a: The shareholder(s) need to determine whether or not they want to have a shareholder’s agreement.
- Step 4: The Notary. After all the required documents have been collected and uploaded to your Google Drive folder, we will send these to our notary partner. After confirming that all documents are in order, the drafting of the deed of incorporation can start. This will take 1 week. An appointment will be made for the signing of the deed of incorporation.
- Step 5: Signing of the Deed of Incorporation. Afterwards you will receive a few documents from the notary: the Deed of Incorporation, Articles of Association (English translation) and a Chamber of Commerce Extract.
Incorporate in person or remotely
In person: You will come to the notary’s office to sign the deed.
- Advantages: The fastest way to incorporate the company. The company will be registered into the Chamber of Commerce within 24 hours of signing the deed.
- Disadvantages: An interpreter has to be present at the meeting if you do not speak Dutch.
Remotely (through Power of Attorney): The notary will sign the deed on your behalf, using the POA
- Advantages: You will not have to travel to the Netherlands to get your company incorporated. This will save on time and travel expenses. There is no need to hire an interpreter since you will not be present at the signing.
- Disadvantages: You will have to get your documents legalised which will add some time to the process.
Registration at the Chamber of Commerce
Within 24 hours after the incorporation your company will be automatically registered at the Chamber of Commerce. You do not have to do anything for this. You will be able to find you Chamber of Commerce number (kvk-nummer) in the KvK-database.
Registering for a VAT number
Your company will most likely need a VAT registration number. After the registration at the Chamber of Commerce, your company details will automatically be forwarded to the Dutch Tax Authorities (Belastingdienst). The Belastingdienst will first assess if you are an entrepreneur for VAT purposes. Afterwards they will send you your VAT number within 5 working days. In some cases the Belastingdienst will need some additional information from you before they hand out the VAT number. This information request is usually processed by mail and is sent to your new company’s address.
Opening a bank account
Around 24 hours after the incorporation, your company will be registered at the chamber of commerce. With this registration number (kvk-nummer) you can visit a bank to open a bank account. Some banks offer an online intake procedure. However, it is recommended to visit the bank in person.
To give you an idea on how long it will take to have an account number: If the company is completely Dutch (that means without a foreign entity being the sole shareholder) ING Bank usually gives you an account number that same day. They do not guarantee that they will give you the account number immediately. However, in our experience it is usually the case.
If ING cannot give you the account number right away (for example in case of a foreign corporate shareholder), it can take about two business weeks before you have an account number, because of the KYC process due diligence.
Please note: due to strict and constantly changing KYC-regulations, many banks require a company with real activity in the Netherlands and local presence, often in the form of a resident director.
The main banks are ING, ABN Amro and Rabobank. Rabobank is well-known for their local presence and local market knowledge. ABN AMRO is a traditional bank that has embraced modern technology is the last few years. Our preferred partner among the traditional bank is ING Bank. Contact us if you would like to set up an appointment at the bank.
These are banks that have taken your banking experience to the next level. They have the same banking license as the traditional banks. We recommend Bunq Bank as one of the best online banks in the Netherlands. Do expect a great online experience with excellent customer support. Do not expect more advanced services such as loans. You can find more about their offer on their website. An alternative online bank is KNAB.
After the company incorporation
Funding a BV
There are essentially two ways to finance your new BV company: by selling/issueing shares (equity financing) or by receiving a loan (debt financing).
This type of financing is the process of raising capital through the sale/issue of shares.
There are two ways to perform equity funding:
1. Share issue
If your bv will issue shares, this happens using a notarial deed from a notary. The issueing of shares can occur when incorporating the new company, or for example when you want to add an extra shareholder without selling existing shares to the new shareholder. The amount being issued is called the Issued Share Capital. A BV usually has a very low issued capital. We usually recommend clients to issue 120 shares of 1 euro (or even 0,01 euro). This makes for a share capital of 120 euros. We choose 120 shares because this number is easy to divide by 2, 3, 4, 5, 6 and so on.This issued capital is not really important for the actual company valuation. If you buy shares from a BV, you have to “pay up” these shares because of your obligation to deposit. That actually means that you have to pay the value of the shares to the BV. If you have issued 120 shares of 1 euro, your shareholder will have to pay up 120 euro to a business bank account. The issued capital must be on the company’s balance sheet, because it is part of the company’s assets. Issueing shares as described above is NOT a common method to increase share capital for a BV company. A Share Premium Contribution (or in Dutch: “Agio”) is the more logical way.
2. Share premium contribution (Agio)
This is most common way of equity funding of a BV company. This share premium is the amount paid up on the shares in excess of the nominal value of the shares. It costs much less time and less paperwork than issueing new shares. Share premium can be added to the company by transferring the amount to the company’s bank account. Remember to include a suitable description of the payment (capital deposit by shareholder) so it is clear how the payment should be qualified.
Taxes & equity funding
Share capital and share premium are both considered to be part of the equity of a BV and have the same effect on taxation: in the Netherlands there is no tax on equity funding (of course the return on equity, dividend, may be subject to taxation).
In this scenario the BV is funded by giving a loan to the company. This loan can be granted by a person or another company. This loan must be in the company’s interest. In order to comply with regulations from the tax authorities it It is very important that the loan is taken out under the usual business conditions. The most common loans are within a company structure. So for example a mother bv lending money to a daughter bv (or the other way around), or a main-shareholder/director lending money to the bv (or vice versa).
Debt funding & tax
There is a tax advantage to having a loan. If you lend money to your private limited company, the commercial interest that the private limited company pays to you as a business expense is deductible in corporation tax.
Choosing the Right Legal Entity and Structure
When starting a new company, founders should first select the preferred legal business structure: 1. sole proprietorship/partnership or a 2. private limited (BV) company). Most foreign entrepreneurs choose a BV. Besides these entities exists the NV, comparable to a public liability company (or US Corporation). This is a very rare legal form in the Netherlands.
Requirements to incorporation of a BV company:
Incorporating a BV is a fairly straight-forward process. Basically everyone can open their own Dutch private limited. Take the following requirements into account:
- The BV needs to hold a valid and unique business name.*
- 0,01 euro (so only 1 eurocent) minimum share capital.
- The Articles of Association and a Deed of Incorporation (in Dutch) must be drafted before a public notary.
- The notary needs to be sure you understand what you are signing. Therefore, if you do not master the Dutch language, a translation or translator is required.
- A registered address in the Netherlands. This can be a residential, office or other type of address. We do recommend you to make sure that the business’ address reflects the nature and scale of the business.
*Choosing a Business/Trade name
The name you select for your company has to be unique in the sector and geographical region you are operating in. Furthermore, the name of your business (for example “Legalee BV”) cannot already be registered in the Chamber of Commerce register. You can find the register at kvk.nl and search if your business name is still available. The Kamer van Koophandel charges EUR 50 for the registration. This a one-off payment. If you incorporate a BV company, the notary will take care of the registration but the fee will be charged to your company after the incorporation.
If your trade name is essential to your business it is recommended to register it as a trade mark in the Benelux (Belgium, the Netherlands and Luxembourg). You can search the database of the Benelux Office for Intellectual Property to see if yours is already taken. If your main focus area lies within several other countries within the European Union (EU) you can consider registering your trade name as a EU Trade Mark. In case your company will actively conduct business outside The Netherlands, Belgium and Luxembourg, you can additionally register your name/mark at the World Intellectual Property Organization (WIPO).
Requirements to trading with a BV company
To incorporate the company at the notary, meeting the criteria mentioned above is sufficient. However, your new company will need to meet some requirements to effectively run it: to obtain a VAT-number and open a bank account. Those requirements are called the substance requirements. These regulations are not strict laws, but they are increasingly important. These requirements include, but are not limited to, the following:
- At least half of the directors of the company should be resident of the Netherlands.
- The bookkeeping of the company must take place in the Netherlands.
- The company must comply with all its tax obligations in the Netherlands and is not treated as a tax resident of another country.
- The business address of the company is in the Netherlands.
- The Dutch resident directors should have the professional knowledge and skills to properly perform their duties. These duties at least include the decision making process regarding the company’s transactions and follow-up.
- The company will have adequate support to run its business.
- The (most important) board decisions of the company are made in the Netherlands.
- The main bank accounts of the company are maintained from the Netherlands.
- The bookkeeping of the company must take place in the Netherlands.
- The company runs a real risk with respect to its financing, licensing or leasing activities. The company has an equity at risk that corresponds to the functions performed.
A Dutch private limited (BV) company can be structured in roughly two ways:
- A BV with a natural person or company as the shareholder.
- A BV holding structure consisting of a holding company that owns (part) of the shares in another bv, the operating BV.
BV Holding Structure
The Dutch BV holding structure can save you money and provide a safer way to do business. A holding structure consists of at least two companies: the operating company where the business activity takes place and a personal holding company that holds shares in the operating company. From a legal perspective there is only one type of BV. ‘Holding BV’ and ‘Operating BV’ are no legal terms.
How does the setup of a simple holding structure work?
Two Dutch BV Companies are incorporated at the notary. The Operating BV company is used for the company’s operations. The other BV company is a personal holding company with, in most cases, very little activity. The business owner owns the shares of the Holding BV. The Holding BV owns the shares of the Operating BV. In case not one but two equal shareholders (A & B) starting up one ‘active’ company, the most common scenario is as follows: One operating BV with real business activity is incorporated at the notary. Above the operating company, two Holding BV’s are incorporated. Both holdings own 50% of the Working BV. Holding BV 1 is owned 100% by shareholder A, Holding BV 2 is owned 100% by shareholder B.
Why a Dutch BV holding structure?
There are two main reasons why entrepreneurs choose to structure their business as a Dutch holding structure: less tax and less risk. First, there can be tax advantages to a holding structure. The most important one is the participation exemption (in Dutch: deelnemingsvrijstelling). For example, profits made from the sale of the company that are transferred to your holding BV will not be subjected to profit tax. Secondly, you have less risk when you operate from a Dutch holding company structure. The holding company functions as an extra layer between you, personally, and the business’ activity. Your BV’s can be structured in such a way that it will protect the company’s equity. Your can build up pension provisions or profits that will be shielded from your business’ risks.
When is a Dutch BV holding structure suited for my company?
Most Dutch tax advisors will tell you that “one BV is no BV”. In most cases the setting up of a holding structure is more advantageous than a simple bv with the business owner as the personal shareholder. There are certain situations in which we would always recommend a holding structure. For example if you are operating in a more risky industry. A holding bv puts up an extra shield between you personally and the business’ activity. Another good reason to consider a holding structure is when there is a good chance that you will sell your company in the future. The profit you will make from selling your business can be transferred to your holding company tax free. This is called the ‘deelnemingsvrijstelling’ (see below).
Practical advantages of a Dutch holding structure
- You sell (a part of) your shares in the operating bv. The profit you make in this sale will be transferred to your holding bv. A holding bv is exempt from tax on a realized profit on the sale of shares in the operating company. You could use these resources in the holding bv to reinvest in a business or to provide a pension for your old age. If you have not set up a holding structure but you are personally holding shares in the operating company, you will have to pay corporate income tax on the profit.
- If your holding BV has a stake in multiple BV companies you do not have to pay out a salary from each of the stakes. This will save you in your income tax and administrative burden and fees.
- In case the holding bv has at least 95% of the shares of the operating bv, these bv companies can apply at the tax authorities to be considered a fiscal unit. This ensures that you can easily settle costs between both companies and thus gain an advantage in your tax return. The holding BV (parent company) and operating company (subsidiary) are then treated as a single taxpayer. So you will only have to do one tax filing for two bv companies.
- By placing profit reserves and shares (and for example: real estate, a company car or pensions savings) in a separate Holding BV, you protect losing your accumulated gains in case of bankruptcy of the operating company.
Deelnemingsvrijstelling (participation exemption)
Both the operating bv and the holding bv have to pay taxes on their income. However, no tax will be charged twice on the same profit. This is due to a measure called the participation exemption: dividends/profits from the operating company can be paid to the holding company without a dividend tax and corporate income tax charge. The most important condition for making use of this measure is that the holding company holds at least 5% of the shares in the operating company.
In a fiscal entity, the results of the subsidiary (s) are attributed to the parent company. The subsidiary does not cease to exist, not even for tax purposes, but is no longer independently obliged to submit a corporate income tax return. An advantage of a fiscal unity is that you can offset the losses of one company against the profits of another company that is included in the same fiscal unity.
In order to form a fiscal unity, the parent company must:
- own a minimum of 95% of the shares in the subsidiary
- be entitled to at least 95% of the profit and at least 95% of the assets of the subsidiary
- have at least 95% voting rights in the subsidiary
- be a BV, NV, mutual insurance company, cooperative, foundation, or association that acts as a housing corporation, or has a foreign legal form that is comparable
The subsidiary must:
- be a BV or NV, or have a similar foreign legal form
In addition, the parent and subsidiary must:
- use the same financial years and profit determination
- be actually located in the Netherlands
Choosing a sole proprietorship or partnership
For some small businesses a self propriertorship (in Dutch: Eenmanszaak) or a general partnership (in Dutch: VOF) can be considered. The setup is simple and affordable, but depending on the business the tax and liability is often less attractive. Below you will find a comparison of the three legal entities: sole proprietorship (eenmanszaak), general partnership (venootschap onder firma or vof) and private limited (BV).
Advantages of a sole proprietorship or partnership
- Low-threshold. Registration at the Chamber of Commerce is cheap (€ 50, -) and no starting capital is required. You do not need an office, but you need at least an address. This may be residential.
- Flexible. Easy to start a business with several partners by drawing up a form-free company contract.
- Tax advantages for small businesses. Although income tax that you will have to pay as a partner is higher than the corporate income tax rate of 16.5-25%, if the profit is relatively low it is still better to have a partnership (liability is another issue). This is mostly due to a couple of tax benefits. In case you have a 50/50 percent partnership, each partner will have to add 50% of the profits to his personal income tax. Some of the tax benefits are the following: You can qualify for ‘Zelfstandigenaftrek’ of over 7030 euros. As a starter you will qualify for ‘Startersaftrek’, an additional discount of 2123 during the first three years of the partnership or sole proprietorship. MKB-winstvrijstelling takes 14% of your taxable profit (after you have deducted the ‘Zelfstandigenaftrek’ and the ‘Startersaftrek’.
Disadvantages of a sole proprietorship or partnership
- Liability. As the owner of a sole proprietorship you are personally liable for all matters of the company. In a partnership each partner is liable with his / her private assets for all debts of the VOF, regardless of whether the debts have been caused by this partner.
- Higher taxes. In many cases a sole proprietorship or a general partnership pays more taxes than a Dutch private limited (BV) company.
- A BSN (national social security number) is required to set up a one-man company or general partnership.
Choosing a BV or a NV
There are two types of limited liability companies in the Netherlands. Which type of entity should you incorporate: a BV or a NV? Most likely the answer is a BV but it is worth taking a look at what exactly the differences are. The BV is an LLC; a limited liability company. One of the main purposes is keeping liability for the owner limited. It is broadly comparable with the private limited liability company in the United Kingdom, the German Gesellschaft mit beschrankter Haftung (GmbH) and the French société a responsabilité limitée (SARL). Next to the BV, Dutch Companies can also be a ‘naamloze vennootschap’, or NV. The NV is comparable to the American ‘Corporation’. The legal entity of companies traded at stock exchanges is NV. This legal entity is also comparable to the British public liability company (plc), the Aktiengesellschaft (AG) in Germany and the French Société Anonyme (SA).
The BV can only issue registered shares. This in contrast to the NV, which can issue registered AND bearer shares. NV shares are freely transferable, for example through the stock exchange. Since 2012 (introduction flex BV) shares of a BV are freely transferable as well. Whether or not you can transfer BV shares freely depends on what rules are drafted in articles of association. Often transfer restrictions limit shareholders in this freedom. If so, a shareholder cannot transfer shares without the consent of the other shareholder(s). They have a first (pre-emptive) right to buy the shares from the selling shareholder. A BV has become an even more attractive business entity since 2012 when the flex BV was introduced. There is no minimum share capital required to set up a BV limited liability company anymore. From a legal perspective the NV and BV do not differ a lot. For most small and medium sized companies a BV structure is the best solution.
Closing Down a BV company
Step 1: Assess the financial position
- Identify your debtors and creditors;
- Determine whether the B.V. still has property;
- Make an overview of all contracts and all (future) obligations;
- Check if your B.V. still has shares in another company;
- Find out which tax obligations still have to be met.
Step 2: Dissolution decision
The resolution to dissolve is taken by the general meeting of shareholders. Determine during the meeting who is the liquidator of the B.V. is appointed where and with whom the administration will be kept and whether the board is discharged. A termination decision must always be entered in the KvK Trade Register. You do this through the “form 17A”. Are you the only shareholder of the B.V.? Then you can take the decision to dissolve without an official general meeting of shareholders.
Please note: when a decision to dissolve comes into effect, you cannot simply revoke or withdraw without the intervention of a judge. This follows from Article 2:19 paragraph 4 of the Dutch Civil Code B.V. immediately ceases to exist in the event of a turbo liquidation of a petition with the court. When the two months expire without opposition set up, the liquidator may proceed with payment according to the distribution plan.
To start up the incorporation process, you will only need to provide the following documents:
- Passport copy of all directors/shareholders of the Dutch company
- Proof of residence of shareholders and directors. For example a bank/utility/phone bill (no older than 2 months).
- Rental agreement of the office address the company will be registered at. (Not necessary if the company will be registered at residential address of (one of) the shareholders).
- If the shareholder is a company, additionally required is a document that shows the name, address and registration number of the incorporating company.
Below an overview of all required documents per incorporation scenario:
|In person in Amsterdam||Power of attorney||Corporate Shareholder|
|Power of Attorney||✕||✓||✓|
|Proof of residence||✓||✓||✓|
Legalisation and apostille
The holder of a document with an apostille stamp no longer needs to legalize this document by an embassy or consulate. This applies only to countries that have signed the Apostille Convention.
The apostille is stamped on the document itself or on an extension. The size of the apostille is at least 9 centimeters in the square and the inscription ‘Apostille (Convention de La Haye du 5 octobre 1961)’ must be in French. The rest of the data may be in the official language of the authority that places the apostle stamp.
If a notary declares that the person in question has indeed put his signature under a particular document, it is called single legalization. If a notary declares that a copy of a particular document indeed corresponds to the original document, it is called a certified copy.
Some agencies want to make sure that the signature of the notary under that declaration is indeed the notary’s signature and that the notary is authorized to issue the statement. Usually, the authorities abroad require this.
The statement about the notary’s competence is called apostille. The apostille is actually the legalization of the notary’s signature. In the Netherlands, these are issued by the court.
An apostille is valid only for countries that are part of the “Apostille Convention” (Convention for the abolition of the requirement of legalization of foreign public acts)
Below you will find a list of countries that have not signed the Convention. Please note that this list might not be up-to date and that there are disputes in the recognition of apostilles between some countries that have signed the convention.
Taxes and the BV
When doing business in the Netherlands your BV company and you will be subjected to several taxes, most prominently:
- Corporate income tax (in Dutch: Vennootschapsbelasting, Vpb)
- VAT (BTW)
- Personal Income Tax (Inkomstenbelasting, or IB)
Tax rates in 2021 and beyond
Personal Income Tax Rates
|Personal Income Tax (IB)||Taxable income||Tax percentage|
|Bracket 1||Up to €68.508||37,10%|
|Bracket 2||From €68.508||49,5 %|
Corporate income tax rates in the Netherlands per year
The Netherlands applies one of the lowest tax rates to corporate profits in Europe. This rate applies for BV and NV companies.
|16,5% (profits up to €200.000)||15% (profits up to €245.000)||15% (up to €395.000)|
|25% (profits exceeding €200.000)||25% (profits exceeding €245.000)||25% (profits exceeding €395.000)|
Income from substantial interest
If you own 5 percent or more in a BV, you have a substantial interest. From any potential income from that substantial interest you will pay 26,91 percent tax. This means in effect that if you pay out a dividend to yourself personally or sell your shares and receive the profits from this sale of shares to yourself, you will have to pay these taxes. Compared to other western countries, this is very attractive. Paying out a dividend instead of a salary is therefore very beneficial. Note: when paying out a dividend or the profits of a share sale to another company (most likely a personal holding), you do not owe these taxes. Taxes on income from substantial interest becomes relevant once you start paying out to a natural person.
VAT is called ‘BTW’ in Dutch. The standard rate for most goods and services is 21%. This is a below-average rate within Europe. Many goods have a lower VAT of 6% or even 0%. For example: books and shoe repair have a 6% VAT. Most businesses pay a quarterly VAT return. You usually submit and pay the VAT tax one month after the end of every quarter. We offer bookkeeping and tax services so you can use your time on building your business instead of spending hours on administration and tax filings.
One of the main advantages of running a BV or sole proprietorship/partnership is that there is a vast amount of deductable goods and services. In the table below you can find the various goods/services of which you can deduct. Deductibles are the tax-deductible expenses subtracted from adjusted gross income. Deductibles reduce taxable income and thereby reduce the tax liability.
|Costs||Which part is deductible?||Notes|
|Home workspace||0% (some exceptions apply)|
|Food, drink, stimulants||A threshold of € 4,600 applies.|
Instead of this threshold, entrepreneurs working as sole proprietor or in a partnership are allowed to deduct 80% of these costs and entrepreneurs for corporation tax (bv) 73.5%.
|The item 'food' includes business lunches and dinners (including tips).|
Think of 'drink' to coffee, tea, milk and soft drinks.
With 'stimulants' you should think of, among other things, cigarettes and cigars.
|Representation, congresses, seminars, study trips|
(including travel and accommodation costs)
|Instead of this threshold, entrepreneurs working as sole proprietor or in a partnership are allowed to deduct 80% of these costs and entrepreneurs for corporation tax (bv) 73.5%.||'Representation' includes the costs of receptions. Promotional gifts also generally fall under 'representation'|
You may deduct a maximum of € 1,500 for the travel and accommodation costs. Was it necessary for your work to attend a conference and the like? Then this maximum does not apply.
|Telephone subscription at home||0%|
|Business phone calls at home||100%|
|Workwear||100%||Work clothing is clothing that you can wear (almost) exclusively within the framework of your company. This must be evident from the appearance of the clothing, for example: a uniform or overall. Is the clothing also suitable for wearing outside of your company? The clothing must then be provided with a logo with a surface area of at least 70 cm2. The logo must refer to your company.|
|Clothing (no work clothes)||0%|
|Briefcases and similar||100%|
|Equipment and instruments that do not|
belong to the business assets
|Business costs of private car||A fixed amount of € 0.19 per kilometer.|
|Business travel costs public transport, taxi and plane||100% of the costs actually incurred||You must be able to prove that you actually incurred these costs. For example, save your train ticket. Are you traveling with an OV chip card? Then make a print out of your journeys.|
|Vessels for representative purposes||0%|
One of the most used tax advantages is the so-called deelnemingsvrijstelling. In short, this is a Dutch tax regulation that exempts an entity that has a stake of at least 5% in another entity to pay tax over the profit paid out to the receiving entity. This tax-regulation is often applied with mother and daughter companies.
Mother BV has a 100% stake in Daughter BV. Daughter BV makes €100 profit and pays €15 in corporate income tax (15%). Daughter BV pays out the €85 as dividend to the 100% shareholder, Mother BV. The €83,50 that Mother BV receives is exempt from corporate income tax. So the total taxation for this structure is 15%. If this ‘deelnemingsvrijstelling’ was not in place, the total taxation would amount to another €12,75 (15% of the €85 dividend) which would make the total tax rate 27,75% and the taxes to be paid €27,75.
This is advantageous for the mother company in case of a profit-turnout. Additionally it could save a lot of money when the mother company decides to sell the daughter company. The entire profit from the sale of the daughter company will flow tax-free to the mother company. The daughter company has already paid corporate income tax over the value increase of the company (the profit) in the years prior to the sale. Taxing the profit again when the daughter company is being sold would mean double taxation of the profits.
The deelnemingsvrijstelling gives internationally operating companies an extra advantage if the daughter company is located in a country with lower corporate income tax than the rate in the Netherlands. This means that the profit of the daughter company will be taxed at the low rate of the foreign country. Afterwards the post-tax profit can be channeled to the Dutch mother company. The amount that flows to the mother company will then NOT be taxed in the Netherlands.
In 2017 a new advantage for startups took effect. Since then the director / major shareholder (DGA) of an R&D-focused private limited liability company (BV) is allowed to only earn (pay himself) the legal minimum wage (€1551 gross per month) in the first 3 years after the start of the company. Let’s say a company makes a healthy profit and the director/shareholder decides to pay himself an extremely low salary or no salary at all and live off the dividend. He will then only have to pay the, very low, corporate income tax. To make sure everyone pays their fair share and to avoid tax avoidance, director/major-shareholders are supposed to pay out a salary to themselves of +/- €46.000. The amount paid out to the director/shareholder is taxed with the higher income tax. This is the general rule and there are many exceptions to it. You can argue at the Tax Authorities (Belastingdienst) that you do not have the means to pay out such a salary. This startup scheme can be used without first consulting the tax authority. The idea is that the company will have more money available aimed at growth. For a private company, the minimum wage is generally €46.000 gross per year (exceptions exist). The DGA can use this scheme without first consulting the tax authority. As a result, the company has more money available for business growth. The measure is aimed at a director-major shareholder (DGA) of a BV doing research and development and is part of the effort to reduce taxation on R&D.
Innovation Box: 7% tax
All the profit your BV makes with the development of innovative activities are taxed in the so-called Innovation Box. The corporate income tax tariff on those profits for 2017 is only 7%.
Officially the 30% facility for incoming employees. This tax benefit gives employers the possibility to give an incoming employee from abroad to the Netherlands a tax free refund of the expenses the employee has made in making the transfer. Also, and more importantly, as an employer you can give your employee 30% of the wage including the reimbursement, completely tax free. Furthermore, for the latter you do not have to prove that you have actually made those costs. Both employer and employee have to submit an application to qualify for this facility.
There are many sector specific incentives and benefits. The most important benefits are listed below:
- One of the lowest corporate income tax rates in Europe.
- Participation exemption. No taxation of intercompany dividend payouts.
- The 30%-ruling. This gives a 30% tax break on wages in certain cases.
- Lower corporate tax rate for innovative businesses (Innovation Box)..
- In the top of countries with most bilateral tax treaties to avoid double taxation.
- WBSO R&D tax credit. Innovative businesses who obtain this tax credit pay less wage tax and national insurance contributions.
- The Energy Investment Allowance (EIA) lets qualifiying companies deduct 45% of the investment costs from the taxable profit on top of the usual depreciation.
- MIA & VAMIL schemes. The MIA lets qualifying companies deduct a maximum of 36 percent of the investmens costs for environmentally firendly investments on top of the company’s regular investment deductions. The Vamil gives qualifying companies the opportunity to decide when to write off 75 percent of your investment costs, which gives advantages both in liquidity and interest.
- Fiscal unity system that provides tax consolidation within a group (holding and operating BV).
If you have any questions on this, please request a quote for more information.
Administration and tax
A BV company has a few administrative and taxation obligations:
- Administration. You are required to set up and maintain an organized administration and keep your books for 7 years.
- Tax filings and returns:
- Corporate income tax (Vpb). You are required to submit a corporate income tax filing.
- You are required to submit a VAT return after every quarter.
- Personal income tax. As a director-shareholder you usually have to file for income tax. Dividend tax. In some cases you will have to pay dividend dax.
- Annual financial statements filing. Your BV has to draft and file its annual reports and accounts with the Chamber of Commerce (Kamer van Koophandel, KVK). The size of your company determines exactly which information you’ll need to file. Legalee and its partners can arrange all administration and tax obligations for you or help you to minimize your administration effort. Please contact us for more information.
Permits and licenses
Depending on the type of business you will run, certain permits, licenses or other documentation may be required.
For trading companies that conduct import and/or export activities a EORI-number is often required. With the EORI number Customs identifies economic operators in the same way in all Member States. This yields efficiency benefits for those economic operators and customs alike. (EORI-number = Economic Operators Registration and Identification number.) You can apply for an EORI-number at the website of the Dutch Tax and Customs Authorities (Belastingdienst).
Registration for employers
If you are employing personnel for the first time, you must register as an employer with the Dutch Tax and Customs Administration. You will then receive the necessary forms to meet your payroll tax obligations.
Other special or industry specific permits and licenses may be required. For example for the food, transport or pharma industry.
Salary and employees
Director/Major-shareholder (DGA) salary
The general rule is that a Director/Major-shareholder (DGA) in a BV should receive a salary. This salary is set at €47.000 in 2021. The minimum DGA salary has been put into place to prevent BV’s from avoiding paying income tax, by paying out dividends that are much lower taxed and paying out very little to no salary.
However, this seen as a legal fiction: in many cases DGA’s do not have to pay out that amount of salary. Many clients want to reinvest every euro they make back into the company, not pay it out as salary. In practice we see that the tax authorities are not that strict when it comes to this rule. If there is nothing to pay out, it cannot be paid out either. On the other hand, if the means are available you are supposed to pay out a certain minimum wage.
When will I considered a Director/Major-shareholder (DGA)?
- You have at least 5% of the shares in a BV and,
- You are working in your own private limited BV company.
This means that if you have less than 5% of the shares in a BV, you will not be forced to pay out a salary.
So how do I avoid paying such a salary when I am starting up a BV in the Netherlands?
The general rule is that you should pay out a salary if you can. So rather than avoiding paying out a salary completely (which is often not possible), you should focus on decreasing the amount of salary.
There are a few options:
- Demonstrate that the salaries in the most comparable employment are less than €46.000. The argument that a comparable position in another country has a lower salary is not valid.
- Demonstrate that your company make structural losses and such a salary would jeopardize the company.
- If you work part-time or you have not worked a part of the year, this might be taken into consideration in the determination of the minimum salary.
- If you are in the start-up phase of your company, you can demonstrate that you have to make many investments and you have little income yet.
How do I apply for a lower BV salary?
After incorporation you do one of the following two things:
- Send a request to the tax authorities
- Reporting a zero wages declaration
Our tax partner can help you with this.
What you should NOT do:
- Pay out dividend before you have paid out €46.000 in salary to the director/major-shareholder.
- Extend a loan from the BV to the director/major-shareholder for personal expenses. Such a loan would mean that you are able to pay it out as salary.
How does this work for a BV holding structure?
If you have incorporated a holding BV together with an operating BV, the DGA salary rules apply only to the holding. In most cases, the holding BV is a manager in the operating BV. The holding company invoices the operating company for management services. You are personally a director and shareholder in the holding BV and therefore employed in the holding BV. You will (if possible) pay out a salary from the holding BV to yourself personally.
Salary for Employees
Below you will find two examples of salary calculations for employees of a Dutch company. One table explains the salary for a minimum wage employee, the other for the average wage in the Netherlands. Both are estimations, based on a flexible contract.
These tables are meant to be an esstimated, no rights can be derived from this
Minimum salary 2020
Gross monthly average wage (> 21 years old)
Gross annual wages
Healthcare insurance contribution
Extra labor costs compared to gross wages
Average salary 2020
Gross monthly average wage (> 21 years old)
Gross annual wages
Healthcare insurance contribution
Extra labor costs compared to gross wages
We often use this online tool to calculate the amount of gross and net income and social contributions.
Arrange contracts and legal compliance
Contracts for the BV
A shareholders’ agreement contains the agreements between the shareholders in a private limited company (BV). In the contract you lay down the agreements about the decision-making and protection of shareholders. The agreements from a shareholders’ agreement are binding on the shareholders and supplement the statutes of your BV. A shareholder agreement is not required by law. If the BV has several shareholders, it is highly recommended to enter into a shareholder agreement. If there is a BV with only one shareholder, a shareholder agreement is not necessary.
The director of a BV is also called a manager. This manager can be both a natural person, but is very often another BV company. The manager does not have a labor contract, but uses a Management Agreement. This agreement contains agreements about the duration, the reimbursement and the work to be performed. A manager does not receive a salary, but a management fee. He sends a monthly invoice to the company for this. The company does not have to withhold wage taxes from the management fee.
Even if you borrow money from your own company, or if your operating company borrows money from your holding, it is important to record this well. For example when the company needs a bridge loan and you provide this from your personal account. But also when you have a personal bill paid by the BV. You do this with a current account agreement. The Tax Authorities only accept this if the agreements remain ‘business-like’, meaning that your company could also give this loan to someone else on these terms.
With an employment contract for a director (major shareholder) you determine the agreements between a director (who is also a shareholder) and the director’s company. For example, the salary, the number of vacation days and much more. You can also prepare a management agreement for the director, however this is only possible if the director has a so-called holding company.
General terms & conditions
The Terms & Conditions (in Dutch: algemene voorwaarden) describe your company’s general legal terms such as delivery and payment terms. Other words for terms and conditions are terms and conditions, delivery conditions, service conditions, promotional conditions etc. So legally speaking it makes little difference how you call your conditions. The general terms and conditions for services are suitable for multiple use, which is useful, because you do not have to draw up new conditions for every agreement. To use the general terms and conditions, you only have to declare them applicable and hand them over (this can also be done by e-mail) to the person with whom you are entering into the agreement.
If your company shares personal data (and almost every company does) you will need to have your GDPR documents in order. Since 2018, the “General Data Protection Regulation” (GDPR) applies throughout the European Union. This new privacy law contains rules in the field of privacy protection. Customers and consumers get more rights; companies more obligations. If you do not comply with this, you risk hefty fines. These can amount to 4% of your annual turnover. Make your company GDPR-proof with our GDPR documents.
Other business-specific agreements
Based on your specific type of business or industry, there may be other agreements that you should consider arranging. Find a few examples below:
- E-commerce terms and conditions (B2B/B2C). Make sure you comply with Dutch law when operating a webshop in the Netherlands.
- Freelance agreement (in Dutch: Opdrachtovereenkomst). If you are a contractor you will need to establish your relationship with the principal in an agreement.
Business Insurance in the Netherlands
In many cases it is advisable to insure yourself against possible risks, whether you are operating a Dutch BV company, a self proprietorship or any other type of company form. In the Netherlands, insurance is taken out with private insurance companies.
The type of insurance you should take out depends for a large part on the type of profession you practice or the type of business your run. For example a company that is active in a more high-risk industry or environment will often need different type of insurance than a marketing consultant.
Type of business insurances
Business liability insurance
Provides liability coverage for damage you or an employee do to items or people. For example, damage from knocking over a cup of coffee over a customer’s laptop or someone who stumbles through you and breaks a leg.
Legal expenses insurance
Provides legal assistance in conflicts, for example with a customer or supplier. Such as a conflict about a contract or a product / service that you provide.
Professional liability insurance
Provides cover in the event of a mistake in your work or advice from you or your employees, and your customer suffers financial loss as a result. For example, giving incorrect advice, or making an incorrect calculation or incorrect software code.
Provides an income if you can no longer work partly or not at all due to incapacity for work.
Sick leave insurance
Provides compensation for the payment of salary to sick employees. Such as one or more employees who are unable to work due to illness, and where you as an entrepreneur must continue to pay their salary.
Cyber risk insurance
Provides cover in the event of damage due to, for example, hacking of your systems and / or data loss. For example, hostage taking of your website, a system crash due to a hack or your liability for loss of data.
Inventory / Goods insurance
Provides coverage for damage to your company inventory and / or goods. Think of damage to your goods or inventory due to fire, water, burglary or theft.
Computer and / or Electronics insurance
Provides coverage for damage to your computer (s) and / or electronics. For example, a laptop that has fallen and has stopped working.
Business interruption insurance
Provides cover for turnover loss due to a fire or malfunction. For example, due to a fire in your business premises, which means you can no longer make any turnover, but your fixed costs will continue
Business travel insurance
Provides coverage for damage to you (and your employees) during business trips. Such as loss of luggage, medical costs or replacement transport.
Crowdsurance (no insurance, but risk sharing)
Offers a temporary income (max. 2 years) through risk-sharing with other entrepreneurs if you can no longer work in part or at all due to disability. For example, if you can no longer work due to an accident or illness.
Company Car Insurance
Provides coverage for damage to others and / or your business car. For example, due to an accident on the road where you cause damage to someone else.
CAR (Construction All Risk)
Provides coverage for material damage caused during the construction or assembly of buildings, roads, bridges and installations. For example, due to an error that causes damage to a neighboring building.
What type of insurance do I need while doing business in the Netherlands?
The most commonly taken out business insurances are the Business Liability Insurance and the Legal Expenses Insurance. However, every company has its own needs and preferences. A building/construction company should most likely consider a Construction All Risk Insurance, whereas a law firm should protect itself against the the consequences of a mistake in an advice from one of its lawyers.
Why the Netherlands?
The Netherlands has a very business-friendly climate.
The World Economic Forum ranks the Netherlands as the 4th most competitive and innovative economy in the world. There are two other European countries, Switzerland and Germany, in the list. So why not choose them? The simple reasons are that Switzerland is not a member of the EU, does not use the euro currency and is one of the most expensive nations in the world. Germany generally has a very solid economy, but is less business-friendly than the Netherlands. For example: Germany has a corporate income tax rate that is over 10% higher than the Netherlands.
Beneficial tax regulations for international companies and expats
The Netherlands have one of the lowest corporate income tax rates in Europe. Let us compare some of the corporate tax rates across Europe:
|Country||Corporate Income Tax Rate|
|Netherlands||15 - 25%|
|Germany||30 - 33%|
|United Kingdom||19 - 20%|
Furthermore, expats are treated very friendly with tax incentives such as the 30%-ruling. Then there is the holding company-regime that makes for a flexible way to handle your profits or the sale of your business.
The Netherlands is a part of the EU
The Netherlands has always been a trading nation. Because of this our country has built up a very good relationship with most countries abroad. The Netherlands was one of the founding members of the European Union. As an international operating your business in the Netherlands you will find the many advantages of being part of this ‘family of countries’. Probably the main advantage is the so-called European Single Market. This guarantees free movement of goods, capital, services and labour within the EU countries. As a business this means that you can, for example, easily and freely import and export throughout the EU and employ nationals from other countries in the Union.
The Netherlands is a logistical hub
The ‘mainports’ of Schiphol and the international sea harbour of Rotterdam are two of the most important corridors in goods flowing through Europe. If you are an international trading company the proximity to Rotterdam can truly be an advantage. Schiphol is in the top 3 of biggest airports in the world. The airport is located only 10 minutes from Amsterdam’s city centre and offers direct flights to all continents.
Population & Workforce
The Netherlands has a well-educated population. Most Dutch citizens speak English very well. Labor laws have become increasingly flexible, which benefits potential employers.
Do you need more reasons why the Netherlands is your next business destination? Check out this page.
Visa & Residency in the Netherlands
You do not need to be a Dutch resident or citizen to start a business here. In most cases you would like to live in the Netherlands. EU/EEA-citizens can live, work and do business in the Netherlands without any hassle. If you are from another part of the world, other rules could apply. To avoid issues, please visit the Dutch Immigration website or check out the Visa page on this website.
Am I eligible for a Dutch Visa?
In order to secure a Dutch (entry and) residence permit as a self-employed person, start-up company or limited liability company the Dutch Immigration Authorities (IND) requires that the applicant meets certain conditions. Activities of the company are scored by the Netherlands Enterprise Agency (RVO) on their innovative nature, and their added value to the Dutch economy. The RVO bases their score on:
- Added value for the Netherlands (creating of jobs and innovation)
- The experience of the person applying for a permit (work experience and/or experience as an entrepreneur)
- The Business plan (financing, marketing etc.)
The IND requires start up applicants to work with an IND approved facilitator, sort of a business mentor. The facilitator must have experience in guiding innovative start-ups. These facilitators are companies that provide support, a business network, an incubator, help with operational management, marketing, research and investment acquisition for setting up an innovative business.
Depending on the facilitator, it may be that they provide sufficient support for the clients to feel that they can complete the application form themselves. The list of the facilitators can be found here.
Furthermore, the RVO requires that the Start-up:
- Offers a product or service that is innovative;
- Has a step-by-step plan to develop their idea into a business;
- And the facilitator are registered in the Trade Register of the Chamber of Commerce (Kamer van Koophandel);
- Has sufficient financial resources to reside and live in the Netherlands for one year.
This is the commonly used regular work and residence permit for applicants who will run their business (self-employed or limited liability company) in the Netherlands. The applicant will need to prove that the business activities will serve an essential Dutch interest by means of an elaborate and sound business plan and third party financial prospects. Financial evidence supporting the application must be checked by a certified external expert (a chartered accountant, an accounting consultant, an accountant or a financial advisor). Simplified procedures are applicable for US and Japanese nationals under this category
Investor Visa/ Wealthy Foreign Investor
The wealthy foreign investor’s immigration category, introduced in 2013, allows foreign wealthy investors to receive Dutch residency rights by investing in the Dutch economy under certain conditions. The application itself will be assessed by the RVO, who will review the application on several grounds (e.g. business plan, innovative plan etc.). In general, all investments will be assessed on whether there is any added value for the Dutch economy in order for the wealthy investor to receive a Dutch residence status.
- Individual invests at least 1,250,000 EUR in an entity/ company in the Netherlands
- Money transferred to a Dutch or EU bank
- The investment is of relevance to the Dutch economy
- The origin of the money/ investment is not malafide (i.e. not from illegal activities)
- Individual has sufficient and steady means/ income
Other Services to Consider
Find an investor or loan in the Netherlands
- ‘Traditional’ financing. The traditional banks still play a large role in ‘fuelling’ small and medium-sized enterprise in the Netherlands. Since interest rates are still relatively low it is a relatively cheap and accessible way to gain access to capital. Although some bank do finance on a business plan alone, it is always much easier to obtain a loan when you can guarantee for it. For example a property, house, cash or other personal assets. Your professional experience and level of education also weigh in on the decision whether or not to hand a loan to you. The main Dutch banks provide loans to businesses: ABN AMRO, ING, Rabobank, Triodos.
- Micro loan. Qredits Microcredit / SME-loan If you are not eligible for a business loan at the big banks, you can turn to Qredits. This is a financing institution partially financed by the government and the banks. To get a loan at Qredits you need to have a rejection from one of the big banks first. Qredits gives out ‘Microcredits’ up to €50.000 and SME-loans up to €250.000. The procedure is relatively simple. However, the interest rate on your loan could be a bit more harsh (+/- 9%).
- Direct Investment. Another possibility is to get a direct investment. The Netherlands has a fairly well developed Venture Capital market with plenty of access to capital. We can help you finding the right partner or investor.
- Crowdfunding. Over the last few years we also notice a growing popularity in new ways of raising money. Crowdsourcing has increasingly become a reliable source of funding for many startups and even established businesses. Crowdfunding comes in many forms and sizes. The main types are a loan, a convertible loan, pre-sale and donation. Platforms like Collin Crowdfund have made it increasingly easy get your funding done. You can always contact our tax advisors to make sure that you pick the type of crowdfunding that suits you and your business’ needs best.
Contact us to bring you in touch with investor and lenders.
Phone number / landline
Having a Dutch phone number is not a requirement but having it will make you and your business come across as more trustworthy. Most customers prefer calling a Dutch landline number instead of a mobile phone number. Legalee partners with a VOIP provider specialized in setting up a landline phone number and redirecting it to your mobile phone number.
Website & marketing
At Legalee we have many years of experience in helping foreign entrepreneurs setting up their businesses in the Netherlands. Working with a wide array of clients from all over the world, we have acquired thorough knowledge of their wants and needs. One of the main challenges when starting up your Dutch enterprise is to get noticed online. We can help you with your online presence in the Dutch and European market. Contact us for more information.
Checklist: Everything you should arrange to set up and manage your BV company
|Single BV: |
Shareholder is a Person/Company
holding bv + operating bv
|Deed of incorporation||✔ Required||✔ Required|
|Translation of documents||✔ Required||✔ Required|
|Shareholders agreement||★ Recommended (if multiple shareholders involved)||★ Recommended (if multiple shareholders involved)|
|Chamber of commerce registration (KvK)||✔ Required||✔ Required|
|VAT registration||✔ Required||✔ Required|
|Legal contracts & compliance|
|Management agreement||Optional||★ Recommended|
|Current-account agreement||Optional||★ Recommended|
|Employment contract main shareholder-director||★ Recommended||★ Recommended|
|GDPR Compliance||★ Recommended||★ Recommended|
|Tax & Accounting|
|Bookkeeping||✔ Required||✔ Required|
|Quarterly VAT return filing||✔ Required||✔ Required|
|Annual financial report||✔ Required||✔ Required|
|Corporate tax return||✔ Required||✔ Required|
|Address & Office|
|Registered address||✔ Required||✔ Required|
|Physical office space||Optional||Optional|
|Mail forwarding service||Optional||Optional|
|Dutch phone number||★ Recommended||★ Recommended|
|Banking & Insurance|
|Bank account||✔ Required||✔ Required|
|Company insurance||★ Recommended||Optional|
*Compliance with Wtt. Legalee can assist in finding a solution for tax and office for their client through third parties. However, Legalee does not provide this service themselves and therefore is not part of the service of incorporation of a company in the Netherlands. These services are optional services carried out by a third party provider. Providing such services in-house would require a license according to the Wtt (Wet toezicht trustkantoren). Legalee does not possess such license since company formation is the core service of Legalee.