You may not be able to name many internationally-renowned companies that originated in the Netherlands, but that is part of the appeal of this country as a business destination.
The Netherlands is a quiet and efficient hub with a very stable economy, largely divorced from the boom-and-bust cycles of some other nations.
If you’re looking for a European hub for your SME, ideally with a talented local workforce and straightforward business culture, The Netherlands is more than worth your consideration.
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Does the Netherlands welcome overseas businesses?
The Netherlands is a highly forward-thinking nation, and the authorities are pro-business. If you have a good idea that would benefit the country – or indeed, the world in general, as the Netherlands is a champion of sustainable and ecological futures – your business proposal will likely be welcomed.
What industries are most popular in the Netherlands?
The most prominent industries in the Netherlands are:
- Agriculture and food
- Energy, especially clean and sustainable solutions
- Chemicals
- Clothing, fashion, and textiles
- IT, especially cybersecurity and AI research
- Logistics
- Media and entertainment
- Metallurgy
- Tourism
Is it easy to set up a business in the Netherlands?
Setting up a new business venture in the Netherlands is not too tricky. Here is the process:
How to set up a business in the Netherlands
- Decide if you will be living in the Netherlands while running your business or doing so from overseas
If you wish to live in the Netherlands, you’ll need a gecombineerde vergunning voor verblijf en arbeid, or GVVA. This is a combined work permit and residence card
- Choose your business structure
See the section of this article about types of business entity in the Netherlands
- Name your business
And check with the Benelux Office for Intellectual Property, located in The Hague, that this moniker is available
- Secure a trading address in the Netherlands
This is essential, whether you will be living in the country or not
- Check if your business sector requires a license
Many in the Netherlands do and will be regulated by independent bodies
- Register your business
With the Kamer van Koophandel (KVK,) the Netherlands Chamber of Commerce
- Register with the Belastingdienst
This is the Dutch Tax and Customs Administration
- Get listed on the Handelsregister
The Dutch equivalent of Companies House, through the KVK
- Open a local bank account
You will need to set up a domestic business bank account in order to trade easily in the Netherlands
On paper, that’s it – but it’s worth taking time to familiarise yourself with Dutch employment law before hiring anybody and to learn about any tax breaks you may be entitled to as a small business owner.
Can I run a business in the Netherlands while living overseas?
Yes, you can open and run a business in the Netherlands without living in the country. You just need physical business premises located in the country.
It is also advisable to employ a local agent to act in your stead and consider hiring a Dutch tax and payroll company to ensure your financial affairs remain legally compliant.
Cultural considerations when running a business in the Netherlands
If you’re looking to do business in the Netherlands, you’ll need to adapt to some local customs and learn how the Dutch like to conduct their affairs. Considerations include:
- Meetings are popular in the Netherlands – expect to spend a lot of time in the boardroom. Everybody that attends these meetings will want to have their say, and if somebody cannot make one get-together, you may end up discussing the same matters again when they can.
- Time is money in the Netherlands, and being late for a meeting will reflect poorly on you. Your Dutch associates will arrive promptly and look to get the business underway and expect the same of you.
- Further to this, do not expect much small talk before a meeting starts. In the eyes of your Dutch associates, the more time they spend discussing the weather with you, the longer they need to wait to get home to their families. This is nothing personal – people in the Netherlands just value their personal time and work/life balance.
- Businesspeople in the Netherlands say what they mean and mean what they say. You will not need to read between the lines, decipher body language, or look for hidden meanings. No means no, and yes means that you can get straight down to brass tacks.
What business structures are supported in the Netherlands?
The most popular business structures for a new venture in The Netherlands are as follows.
| Type of Netherlands business entity | What is it? |
|---|---|
| Eenmanszaak | A sole trader or freelancer. You will pay income tax as an individual rather than a business tax and face some trading restrictions. |
| Besloten Vennootschap (BV) | A limited liability company with no share capital require beyond €0.01 and separation of your business and personal finances. |
| Naamloze Venootschap (NV) | A publicly traded company that is floated on the stock exchange. There is no minimum number of directors, but you need €450,000 in capital to open an NV |
| Nevenvestiging/Filiaal | Interchangeable terms for a branch of an overseas company set up in the Netherlands. This can be done in a single day. |
Taxation in the Netherlands
If you want to do business in the Netherlands, you must understand the taxation rules and regulations that will impact your bottom line.
What is the corporate tax rate in the Netherlands?
The standard corporate tax rate in the Netherlands is 25.8% (reduced to 15% for a business that posts an annual profit lower than €395,000.)
Small businesses are entitled to an entrepreneur’s allowance, known as an ondernemersaftrek, that allows some relief on taxes for small businesses. Known as the startersaftrek, or starter’s allowance, SMEs and start-ups can claim the startersaftrek up to three times in their first five years of trading.
The Netherlands has a double taxation treaty with the UK, so you will not be taxed twice.
What are the employee income tax brackets in the Netherlands?
All employees in the Netherlands must pay income tax. The contributions are as follows.
| Annual salary | Income tax |
|---|---|
| €35,409 or lower | 9.42% |
| €35,410 – €69,398 | 37.07% |
| €69,399 or higher | 49.5% |
Income taxes must be withheld from an employee’s salary when issuing payroll. Employees that earn €35,409 or less will also need to have 27.65% of their salary withheld and paid to the volksverzekeringen, the Dutch social security fund. As income taxes are higher for employees that earn more than this, they are exempt from making this contribution.
Foreign employees that move to the Netherlands to fulfil a particular job, and earn €50,568 or more PA, can apply for the 30% tax rule. This means the employee accepts a 30% pay cut but is entitled to this sum in tax-free benefits. These benefits can be used to pay for accommodation or any other outlay.
If you run your own business, you can apply for this perk by paying yourself a salary from your profits and taking the cut. Just ensure it makes sense to do so. If you pay yourself a wage of €50,568 and then take a cut of 30%, you’re on the brink of needing to pay social security contributions and may end up no better off.
How are taxes paid in the Netherlands?
The financial year in the Netherlands runs from January 1st to December 31st, with payments and a belastingaangifte (tax report) due to the Belastingdienst by March 31st of the following year.
Payroll and hiring employees in the Netherlands
Hiring the right talent can make or break a company. Ensure your Dutch business interests are staffed by the best possible talent.
Does the Netherlands welcome overseas talent?
The Netherlands welcomes international talent in a wide range of industries, assuming they will fulfil roles and services that the local labour force cannot.
Any application to import a new hire from abroad (outside the EU, EEA or Switzerland) must be approved by the relevant authorities. You will need to provide a compelling case for why this particular employee offers something that local hires cannot.
Who needs a visa or work permit to work in the Netherlands?
Any employee that does not hold an EU, EEA, or Swiss passport will need a visa and work permit to gain employment in the Netherlands.
Anybody without citizenship in one of these countries will need a verblijfsvergunning to stay in the Netherlands for longer than 90 days. In most cases, a GVVA will be issued.
What employee benefits are compulsory in the Netherlands?
All employees of a Dutch business are entitled to the following mandatory benefits.
- No less than 20 days of personal holiday – most companies offer 25.
- Contributions to the zorgverzekering (health insurance), arbeidsongeschiktheidsverzekering (disability insurance), kindgebonden (childcare budget) and werkloosheidswet (unemployment insurance) pubic funds.
- No less than 70% of a salary in sick pay for a minimum of two years when an employee cannot work through ill health.
- No less than 16 weeks of maternity leave on full pay.
- No less than 7 days of paternity leave on full pay.
A private pension is not mandatory, but most top employees will expect you to provide one. Equally, many companies in the Netherlands offer a “13th month” of salary, payable as a bonus on December’s payroll.
Employment law considerations in the Netherlands
The minimum wage in the Netherlands for employees over the age of 21 depends is €405.60 per week. The hourly rate for a full-time job, or voltijd, varies to ensure this total is reached. For example, an employee that works a 36-hour week must be paid a minimum of €11.20 per hour, while somebody working 40 hours per week in the same role must be paid no less than €10.14 per hour.
Employment law in the Netherlands is governed by the Burgerlijk Wetboek, or Civil Code. Employee rights are fiercely protected in the Netherlands, making it difficult to terminate underperforming employees. Any attempt to dismiss an employee must be approved by the Uitvoeringsinstituut Werknemersverzekeringen (Employee Insurance Agency) so choose your hires carefully.
Cultural considerations when hiring employees in the Netherlands
If you wish to run a business in the Netherlands that relies upon the local labour force, ensure you understand some of the nuances you will encounter. These include:
- Working from home has long been a part of Dutch business culture, and as of late 2022, the final steps are in place to make this a legal right for all employees of a Dutch business.
- There is no culture of presenteeism in offices in the Netherlands. Dutch employees prefer to work hard in their allocated hours but will look to leave on time – or even squeeze more achievements into their day so they can leave early and spend time with their families.
- When employees in the Netherlands are not at work, they do not expect to be bothered. Work/life balance and family time are sacred, and your employees are unlikely to field phone calls or emails while off the clock.
- People in the Netherlands tend to be quite blunt, including your employees. Do not mistake directness for rudeness. Whether it’s a subordinate saying you look tired and need to sleep more or stating they disagree with your view in a meeting, employees will say what’s on their mind while also following instructions and respecting hierarchy.
FAQs about setting up a business in the Netherlands
Still have questions or are seeking a swift answer to a basic query? Here are some of the most frequently asked questions about establishing a business in The Netherlands.
It’s pretty quick and painless to set up a BV in the Netherlands – you should be up and running within two weeks unless you encounter complications.
The most popular business structures in the Netherlands are a besloten vennootschap, or BV – a limited liability company – or a naamloze venootschap, or NV. This is a publicly-traded company. A sole trader in the Netherlands is known as an eenmanszaak.
The Pensioenwet (Pension Act) does not dictate that a business must provide a pension fund for employees outside the healthcare, port, and notary industries. Many companies choose to arrange a private pension to attract superior talent, though.
New businesses in the Netherlands can benefit from the ondernemersaftrek (entrepreneur allowance) and startersaftrek (start-up allowance.) If you qualify for the startersaftrek in 2022, you can remove €6.310 from your gross profits as a tax relief when filing your return. This allowance can be used three times in five years.
The 30% rule entitles overseas employees that move to the Netherlands for work to have their salary reduced by 30% and replaced by tax-free expense allowances of the same value. For example, an employee may accept a 30% wage cut but have their accommodation paid for by their employer. The 30% rule appeals to high earners (most employees will need to earn a minimum of €50,568 pre-reduction to qualify for the scheme) as it can reduce income tax contributions.
Employees in the Netherlands contribute 27.65% of their salary each month to the volksverzekeringen(general social security fund), to be withheld at payroll. Employees that earn above €35,409 do not make social security contributions as they pay more income tax.
Employers pay 8.55% for arbeidsongeschiktheidsverzekering (disability insurance), 5% for the kindgebonden(childcare) budget, 6.7% to the zorgverzekering (health insurance) and a scaled contribution for werkloosheidswet (unemployment insurance.) Contributions to the latter are made on a sliding scale between 2.94% to 7.95%, depending on the employee’s salary.
Probations for new employees are capped at two months in the Netherlands.
As employer contributions to social security are pretty low in the Netherlands, it only typically costs around 1.3 times an employee’s salary to make a hire. Consider any pension payments and a 13th month’s salary, though.
You can set up a BV in the Netherlands with just €0.01 of share capital. An NV, however, requires a capital investment of €45,000 (around £40,000.)
Yes, you will need a local business bank account to trade in the Netherlands.
Most employees in the Netherlands will expect to work 40 hours per week, divided into five 8-hour days between Monday and Friday.
As discussed previously, a private pension is not mandatory in the Netherlands but is considered a default supplementary benefit by many employees – you may struggle to attract hires without this perk. Many companies also offer an extra month of salary, payable in December.
No, the Netherlands does not recognise “at will” termination and employee rights are very well protected by law. Plan your hires carefully in the Netherlands, as it’s difficult to terminate an employee simply for underperformance.
By law, employees are entitled to a minimum of 20 days of personal holiday per year, though most companies offer 25.
Yes, you will be welcome to register a Dutch branch of an overseas business with the Handelsregister, the Netherlands’ answer to Companies House, via the KVK.
You can run your payroll from the office of your Netherlands-based business, team up with a Netherlands-based agency that will take care of your payroll and tax needs, or pay your employees from a UK company via a Dutch branch of your business.
Most employees that require a visa or work permit in the Netherlands will apply for a standard work visa. However, high earners in particular industries can apply as a “knowledge worker.” If you’re coming to the Netherlands to start a business, you can apply for a self-employed or start-up visa.