There are various reasons why companies prefer the Netherlands as their location for their businesses. Apart from corporate tax benefits in the EU, the presence of a large talent pool and hassle free company incorporation are also attractive reasons why the Netherlands is turning out to be a location of choice.
A company formation in Netherlands can be done by one or more members. If one member becomes incapacitated due to some reason or the other, for instance, the other members can take over the management of the company.
A co-operative is made up of members of staff who can leave without threatening its existence. This is different from a commercial partnership (vof) where partners aren’t allowed to leave.
The control of a co-operative in Netherlands is the responsibility of the general meeting of members (GMM) or the Algemene Ledenvergadering (ALV) in Dutch. One of the roles of the ALV is to appoint a board to manage the company’s affairs.
How to Start a Company in Netherlands
When you start a company in Netherlands with one or more members, you will get a civil-law notary to draft a deed for setting up the company. The notary will be required to register the company in the Dutch Business Register (Handelsregister).
Keep in mind that all partners will be required to get registered in the business register. But if you’re acting on behalf of the company before it gets registered, note that you’re personally liable.
Maybe you run a company in the Netherlands or you would like to have a company re-domiciliation to the Netherlands. If you intend to do the latter, you may assume that you need to register the company at the Netherlands chamber of commerce (KVK). However, that’s not necessary for a branch because the foreign legal structure is recognized in the Netherlands.
If you‘d like to have an independent subsidiary of your foreign company, you’ll be required to register a Dutch legal structure at KVK.
Complying With the Foreign and Dutch Law
When registering businesses in Netherlands, note that the incorporation principle applies. That means that a foreign company must abide by the Dutch law and the law of its home country. Foreign law helps with the determination of the following:
- Liability
- The rules of incorporation
- The rules of representation
- The rules of terminating a business
- The structure of the partnership like the duties and rights of directors
Thus, it’s important that you check the foreign rules with an expert in a foreign country such as a civil-law notary or the government. In this case, the Dutch law determines the rules that a company must adhere to in their operations.
The Requirements for Formally Foreign Companies
Do you operate a foreign company outside the European Economic Area? Could it also be that you have no real connection with the county the company was founded in?
Do you only do businesses in Netherlands? If that’s the case, apart from the information provided to the business register when registering a company in Netherlands, you must also comply with the formal foreign companies act. This law determines that your company must file the following documents each year with the Netherlands chamber of commerce:
- An extract from the foreign register
- Yearly accounts under the Dutch law
- Yearly accounts under the foreign law
Benefits of Utilizing the Foreign Legal Structure
- Foreign legal institutions are sometimes easy and cheap to set up. That’s when compared to the Dutch legal structures where you’ll need the services of a civil-law notary.
- It gives you the knowledge needed to abide by company laws in your country of incorporation
- A lot of foreign companies get accepted as legal institutions in Netherlands by the chamber of commerce.
Costs Of Doing Businesses in Netherlands
If you register a company in Netherlands, you’ll be required to pay notary costs. A one-time registration fee at the Netherlands chamber of commerce and administration will need to be paid as notary costs. The costs for a civil-law notary range between $486.82 and $ 973.64.
There are also the costs for keeping records that you’ll be required to pay. A company must file annual accounts and deposit with the Netherlands chamber of commerce. The information for submission will be dependent on the size of the company. As for the annual administration costs, they will range between $584.42 and $1,752.89.
Taxes
Your company’s profits will consist of two parts. The first part is accredited to the activities of the members. Members with a sole proprietorship are required to pay an income tax on the profit received from the company.
The Dutch Tax and Customs Administration only considers an entrepreneur if they have clients. If the proportion to the activities of the members (Verlengstuk Winst) is paid to those who participate within a bv, the company will have to pay corporate income tax.
If the Dutch Tax and Customs Administration considers you as an entrepreneur for income tax, you will be entitled to an SME profit exemption. If you meet the hours criterion, you will be entitled to even more corporate tax benefits. The benefits include the private business ownership allowance and retirement reserve.
Liability
A co-operative is a legal entity. This means that its committee members are not liable for any debts. But there are exemptions to this rule such as mismanagement, negligence, or failure to list the company in the Dutch Business Register.
You can agree upon establishment if the committee members are to be held liable. There are three options for you to choose from:
- A cooperative with excluded liability. A company with excluded liability is where members are not held liable for any debts.
- A limited liability cooperative. This is a company where members are liable for debts up to the agreed amount.
- A cooperative with legal liability. This is a company where members are equal and jointly liable for the company’s shortcomings.
When you register a company in the Netherlands, you’re supposed to arrange the liability of the members. Do you, for instance, prefer a company with excluded liability? If that’s the case, you must record it in the articles of association.
If you choose a cooperative with legal liability or a limited liability company, either of the company’s board will have to provide a list of members to the Netherlands chamber of commerce each year. This will enable creditors to know who to get their money from.
Conclusion
You may be interested in the benefits that come with working as a collective, such as pooling your marketing efforts. In that case, the options will be to create a legal entity in the form of a co-operative. Here, members will be able to enter or leave the co-operative without jeopardizing its continued existence.
A co-operative society also offers great benefits compared to a private or public limited company. One of the benefits is the flexibility that comes with co-operatives as they are not bound by a lot of mandatory law provisions. This makes it possible to shape the co-operative in a way that suits your business.
The Netherlands is a choice of registering and running a successful business venture for many due to the multitude of benefits the country offers. This article has outlined the various corporate laws in the Netherlands and hopefully helps your decision to create a successful business there.
