Doing business in the Netherlands
Advantages and disadvantages at a glance
The Netherlands is known worldwide as a country with an attractive business climate for foreign entrepreneurs. The good infrastructure, open economy, stable market position and attractive tax advantages are cited as reasons to do business in and from the Netherlands. In this article we explain why it is attractive to do business in and with the Netherlands. But we also look at challenges that you may face as an international entrepreneur in the Netherlands.
Benefits for foreign entrepreneurs
Enterprising and punctual: it is a stereotypical, but largely accurate image of 'the Dutchman'. And that is reflected in the company culture. In the IMD World Digital Competitiveness Ranking 2022, the Netherlands ranks 6th in 2022: in the field of knowledge and technology, the Dutch are among the global top. The high technological and economic quality in the country makes doing business in the Netherlands pleasant.
In addition to a solid technological basis and a good digital infrastructure, the physical infrastructure in the Netherlands is also attractive for entrepreneurs. The port of Rotterdam is an important mainport to Europe with great international importance. In addition, Schiphol Airport is a central 'hub' for business transport and Utrecht train station will become a 'railport' where 55 million passengers board, transfer and disembark every year.
The Netherlands is known as a knowledge industry: on average, the Dutch are highly educated and, in addition to being enterprising, also innovative. In the field of water management, it is (by necessity) a forerunner worldwide. In addition, the Eindhoven region is known as a European 'Brainport'. Here, ASML, Phillips and DAF, among others, develop high-tech products and knowledge on a large scale. Finally, the agricultural sector and floriculture is traditionally very active in the Netherlands. There is a highly developed international market for Dutch (greenhouse) horticulture. The fertile polder landscape and mild climate are extremely suitable for large-scale agricultural production. Add to this the stable political-economic structures and a workforce that masters the English language well, and you have a appealing series of reasons to consider The Netherlands as an option to establish your business.
Politics and policy
The Netherlands is a constitutional democracy. In this system, several parties form a coalition, in which liberalism, socialism and confessional principles predominate. The liberalist basis in particular has led to various (tax) advantages being included in Dutch legislation and regulations to make the business and business climate attractive for entrepreneurs.
An example of a tax advantage that may be of interest to foreign entrepreneurs is the reduced VAT rate of 9% on various activities and products. For example, this reduced rate applies to activities that fall under the innovation box. The innovation box offers tax relief to encourage innovative research. In this article you can read more about the reduced VAT rate. And there is a large number of other schemes that can make doing business in the Netherlands fiscally attractive. Other tax benefits for entrepreneurs in income tax can be found in this overview. Is your company a partnership? Then you can read here which tax benefits you may be entitled to.
Challenges for doing business from the Netherlands
Although the Netherlands generally has a pleasant business climate for foreign entrepreneurs, there are also a number of challenges that you may have to deal with.
Down-to-earth and no-nonsense
The down-to-earth no-nonsense mentality on the Dutch market is often (wrongly) perceived as unfriendly by non-Dutch people. Successful foreign entrepreneurs quickly realize that this apparent disadvantage is often an advantage: The Dutch are generally honest and clear: What you see is what you get.
Employment law for employees
Legally speaking, employees have a relatively strong position in the Netherlands. This requires employers to apply good working conditions and that the employee often occupies a stronger position legally than the employer. In addition, you have to take into account that (especially by women) a lot of part-time work is done. In the case of hiring and dismissing staff, it is important that you are well advised about your rights and obligations. To prevent that you (especially as a smaller or starting company) have legal obligations towards staff that is too weighty for your business position, it is interesting to realize that the Netherlands has many self-employed people who can be hired with fewer obligations and on a project basis.
Complex laws and regulations
On the website business.gov.nl, the Dutch government tries to make it easy to find your way through the maze of Dutch laws and regulations. But the Dutch tax system is generally complex and contains numerous regulations, exceptions and benefits that you as an entrepreneur may or may not want to use. Knowing which legal and tax obligations, and advantages and disadvantages apply to your specific situation is time-consuming and often unclear. In addition to the aforementioned website, it is advisable to inform yourself well and, where necessary, to seek advice and (tax) support. In this article we explain which taxes you may have to deal with and how you can further orientate yourself fiscally towards entrepreneurship in the Netherlands
Further reading about doing business in the Netherlands
Would you like to know more about establishing a company or entrepreneurship in the Netherlands? The Dutch government has an extensive, English-language website with, among other things, checklists for entrepreneurs who want to establish their business in the Netherlands. Lexlupa wrote several articles on, for example, tax regulations and benefits for entrepreneurs in the Dutch income tax and corporate income tax. If you have any questions or would like tailor-made advice about doing business in, with or from the Netherlands, please feel free to contact us. Lupacompany has many years of experience in international accountancy. Our sister company Moneywood assists expats in settling down (fiscally and legally) and feeling at home in the Netherlands.
Lexlupa stands for a multidisciplinary deployment of tax, legal and economic expertise. We provide advice and guidance to companies, institutions and individuals at 'life events'; in case of important events on a business or personal level, Lexlupa helps to make well-informed choices and arrange things in the right way.