Netherlands Global Rankings
- Human Development index: 4th
- Happiness index: 4th
- Global competitiveness index: 8th
- Freedom Index : 2nd
- Transparency index: 8th
- Press Freedom index: 2nd
- Democracy index: 4th
- E-government development index: 5th
- Logistics Performance Index: 2nd
- GDP per capita: 12th
- Networked readiness Index: 4th
- Access to broadband internet network: 6th
- Agricultural products export: 2nd
Although there are many reasons to choose the Netherlands to set up shop the main reason companies come here is for the business-climate. This climate can be characterized as business friendly, flexible tax- and legal-system, well-educated people, good connections and last but certainly not least as a founder-member part of the EU, which means a potential customer-base of 500 million. Some facts:
Some facts about the EU
The EU has established a single market across the territory of all its members. 18 member states have also joined a monetary union known as the Eurozone, which uses the Euro (€) as a single currency. In 2012, the EU had a combined GDP of 16.073 trillion dollars, a 20% share of the global gross domestic product (in terms of purchasing power parity). According to Credit Suisse Global Wealth Report 2012 (September), the EU owns the largest net wealth in the world; it is estimated to equal 30% of the $223 trillion global wealth.
Of the top 500 largest corporations measured by revenue (Fortune Global 500 in 2010), 161 have their headquarters in the EU. In 2007, unemployment in the EU stood at 7% while investment was at 21.4% of GDP, inflation at 2.2%, and current account balance at −0.9% of GDP (i.e., slightly more import than export). In 2012, unemployment in the EU stood, per August 2012, at 11.4%.
In other words 500 million customers are there and 500 large corporations went before you.
Another aspect of business friendliness is the ease with which you can set-up a business in the Netherlands. Whether you want to establish a branch of a foreign company or set-up a subsidiary, you’ll find it is simple and quick. This is due in large part to flexible legal system.
Another item to deal with is the tax-system, again this is pretty flexible and certainly before you establish a business in the Netherlands you’ll find that you arrange lots of specifics (APA & ARA) which we’ll get back to later on.
The population of the Netherlands is well educated and the majority speaks at least one foreign language, usually English.
The Netherlands is well connected to the rest of Europe and the world. Within Europe we have connections by water, rail, road and air. The inland waterways offer a direct connection to Germany, Belgium, Luxembourg and France. The railways offer connections throughout Europe, as do the road-system. The main airport of the Netherlands is Schiphol-Amsterdam airport.
The Netherlands borders Germany to the east and Belgium to the south. To the west is the North Sea. Approximately one quarter of the country is below sea-level. A number of rivers flow into the North Sea, such as the Rhine, Meuse, Scheldt and Ijssel. At the mouth of these rivers harbors were formed of which Rotterdam is the most important. The main function of the harbor is transit, both bulk- and packaged goods. The latter is nearly all containerized; the former comes in dry and wet variety, such as iron-ore and oil products.
The north and west of the country are the low lying parts; the soil here is mainly clay, sometimes with a top-layer of peat. The east and south are above sea-level, rising to approx. 300m. The soil here is sand or loss. A further aspect of the west is that here the history started of building dykes and with help of windmills to pump the water away in order to gain dry ground. After the big storm of 1953 a major project was started to protect the south-west from the sea. This was called the Delta-works which is worth a visit from a tourist point-of-view.
The early part of the Dutch history is shaped by geography. For the sake of this subject we will not go any further into this part but will look at the history after the Second World War. Suffice it to say that because of the fight against the water this period is seen as shaping for the ability to work together. An ability you’ll find is still available today.
In the fifties of the last century, after the country had been repaired with the aid of the Marshall-plan, prosperity quickly improved. This had two main reasons:
1. Industrialization finally took off
2. Lessons learned from the interbellum.
The high tariff barriers had been stifling economic development. From 1958 Belgium, the Netherlands and Luxembourg decided to co-operate in the economic union called the Benelux. In that same year the Netherlands was one of the 6 founding members of the European Economic Community, which in time grew into the European Union.
In 1953 the Netherlands was inundated because a combination of high tide and a very severe storm. This caused many casualties and therefore a plan was formed to prevent this in the future. This plan was called the Delta-plan. It took nearly 50 years to complete. It entailed raising dykes and closing estuaries. This has led to a large collective expertise, which combines knowledge of universities, engineering firms, and governmental agencies. The port of Rotterdam grew to be the largest of Europe and from 1962 till 2004 the largest of the world. Furthermore in this period oil and gas were discovered, first onshore and later offshore. This brought an increase in wealth, which lead to the start of the consumer society.
The Dutch population is just over 16 million and is expected to grow to just under 18 by 2040 according to the Dutch Statistical Office. Until the 1960’s the population grew at a rate of 13 per 1.000, now it has shrunk to a figure of 2 to 3. This is one explanation for the phenomenon that the Dutch call by the hair-color of older people, greying.
The Dutch are well-educated. On average people are under compulsory education till age 16. From 16 till 18 they are under an obligation to further their education but this is not policed. When they leave school they have at least a theoretical knowledge in a wide range of subjects. Most people can use at least two languages, Dutch and English.
As stated above Rotterdam is one of the largest harbors in the world. It serves Netherlands, Germany, Belgium and Luxembourg directly and the rest of Europe mostly indirectly. Main bulk cargoes are coal, oil and gas (LNG) and iron-ore. Containers arrive from all over the world and are transshipped by water, rail and road.
The city of Rotterdam has about 600K inhabitants. amongst these there are lots of nationalities present, approx. 46% are of foreign extraction.
The Netherlands has an open economy and as a result is a prosperous country. The economy can be described as trading nation with stable (trade-) relations, low inflation, a healthy financial policy and an important role in the European transport sector.
Most important industrial activities are food-processing, chemicals, oil-refineries and manufacturing of electrical and electronic goods.
Tax- and Legal-system
The tax-system has both direct and indirect aspects. Both will be touched upon but a word of warning is warranted. Within the scope of this web-site it is impossible to cover all aspects so please use this to get an impression but please get in touch for more detailed advice.
There are two forms of income tax, personal and corporate. Other taxes that should be mentioned are: VAT, Real Estate Transfer Tax and Withholding Tax Dividends. As mentioned earlier we have something called ARA and APA. The Dutch ruling team of the Revenue Service in Rotterdam is easily accessible and is open to negotiating Advance Pricing Agreements (APAs) and Advance Tax Rulings (ATRs). An APA is an agreement on transfer pricing methods, arm’s length results and in general for operating in conformity with the OECD Transfer Pricing Guidelines. An ATR confirms the tax aspects of certain fact patterns, such as the absence of a permanent establishment. APAs and ATRs are issued as “determination agreements” governed by Title 15 of Book 7 of the Dutch Civil Code. APAs and ATRs are granted for periods of four to five years, unless the facts of a specific case require a deviating term (for instance: for the substantial “Greenfield” investments, 10year rulings are common). Again, please do not hesitate to approach us for further information.
There are several forms to do business: branch, subsidiary, partnership, agent, and distributor as a foreign company.
For a branch it is simply a matter of the foreign head office should simply file certain documents and data with the Trade Register of the Chamber of Commerce. No prior governmental approval is required.
Subsidiary: Dutch law distinguishes two types of limited liability companies: the public limited
liability company (Naamloze Vennootschap or NV) and the private limited liability company (Besloten Vennootschap or BV).
The Dutch legal system has its origin in the Roman system, i.e. it is not a case-system. Especially in contract-law this gives maximum flexibility. Basically anything is possible as long as it is not illegal.
Corporate (BV) legal issues
Reporting and Auditing
The annual accounts contain a balance-sheet, a profit- and loss-account and the explanatory notes. Within 5 months of the end of the reporting period these accounts should be prepared by the managing directors, or board if applicable. The accounts should be prepared according to general accepted accounting principles and duly signed off. There are legal periods to publish the accounts and to file with the Chamber of Commerce.
Depending on the size of company and the way it is set up there are lots of details which we could mention but given the scope of the web-site we will not do.
Important to mention is that there are no requirements or limitations because of nationality.