The Netherlands is known for its progressive policies. The country is the first to make working from home a legal right. A leader in IT and telecommunications, the Netherlands stands out as one of the most dynamic economies in the European Union. With the 17th largest economy in the world, the country is home to over 17 million people.
Opening a subsidiary in the Netherlands can be a lengthy process, as employers and businesses need to understand the country’s rules and regulations. They also need to know the subsidiary laws and familiarize themselves with any specific requirements within the Dutch province where they intend to operate.
If you decide to open a Netherlands subsidiary of your business, know that a subsidiary is a legal entity on its own and retains all liabilities and responsibilities of an independent Netherlands company. Every Dutch company–subsidiary or otherwise–must register at the Dutch Chamber of Commerce (KVK) in the Business Register.
Here are the basic steps and obligations required for opening a Dutch subsidiary:
Check to make sure your trade name is not already in use
Notarize your Articles of Association
Register with the KVK
Register with the Trade Register and Tax Office
Open a corporate bank account
Pay employee insurance
Conduct a risk inventory and evaluation
Your subsidiary may also need to file Value Added Tax (VAT) and corporate income tax returns, depending on its legal structure. In addition, a subsidiary must submit annual income tax returns and financial statements to the KVK.
First and foremost, when it comes to Netherlands subsidiary laws and regulations, a foreign company or employer needs to know that the subsidiary is a separate legal entity from its parent company. Therefore, the parent company is not liable for any wrongdoings committed by its subsidiary.
Next, private limited liability companies are the most typically established type of Netherlands subsidiary, referred to as Besloten Vennootschap (BV). The other option is to incorporate as a public limited liability company (PLC), otherwise known as a Naamloze Vennootschap (NV).
A Dutch BV must be set up by a civil-law notary in the Netherlands, as they are legally required to draw up the notarial deed for incorporation, register the subsidiary with the KVK, and take care of registration at the Dutch Tax and Customs Administration. In this process, the employer is responsible for making a nominal deposit of starting capital.
A Dutch NV also needs to be set up by a civil-law notary, who draws up the notarial deed, articles of association and registers the NV in the Dutch Business Register with the KVK. The other stipulation that differs significantly from setting up a BV is that the employer or business must invest a minimum investment of 45,000 euros for starting capital.
And depending on whether you incorporate as a BV or an NV will determine which Netherlands subsidiary laws your business will have to adhere to, as they vary. Also, the Netherlands is divided into 12 provinces, and each province’s laws and regulations differ slightly, so maintaining compliance is important.
When deciding whether to set up a Netherlands subsidiary, it is good to consider the pros and cons.
There are many benefits to setting up a Netherlands subsidiary, such as being viewed as a legitimate company with the ability to hire employees, establish payroll, easily set up a bank account, and conduct official business. Setting up a subsidiary usually takes about a month, which can be viewed as both a pro and a con–much can be accomplished in one month, but that’s also four weeks of being unable to conduct any business.
Shareholders have limited liability
The parent company is not liable for the subsidiary
Intangible assets may be written off or reduced for tax purposes
Some Dutch nationals prefer to work with a subsidiary
It can be complicated and expensive to set up
Tax must be withheld on remitted earnings
Companies considered medium or large by Dutch standards are required to make financial statements public
By law, the subsidiary must appoint one director
You cannot hire employees until the subsidiary is completely set up
But, overall, establishing a subsidiary is the preferred approach for foreign businesses in most fields.
At this point, an employer or business should decide if they intend to handle all HR responsibilities to maintain compliance with Dutch laws and regulations or if they’d prefer to hand those tasks over.
A foreign business can decide to work with an Employer of Record (EOR) or a Professional Employer Organization (PEO), who would be responsible for payroll, taxes, and benefits. The difference between an EOR and a PEO is that an EOR takes full responsibility for compliance, and a PEO does not.
A foreign business must establish a Netherlands subsidiary to engage the services of a PEO. If the decision is not to establish a foreign subsidiary, then the company may work with an EOR, which acts as the local employer of Dutch employees.
Another option is to open a Netherlands subsidiary and handle all processes and compliance in-house without the assistance of a third-party EOR or PEO. But, again, the choice is individual and varies from business to business. All three options present advantages and disadvantages, but what it comes down to is what you want to be responsible for.
Many companies want to hire employees in the Netherlands, but are unsure of how to navigate the complex social security and payroll requirements. Via makes hiring Dutch talent and building your global team seamless. Our easy-to-use platform helps you manage the local HR processes for benefits, payroll, background checks, and more. We have a local team of lawyers and on-the-ground experts that understand compliance as you expand abroad.
As your employer-of-record/entity in the Netherlands, Via assumes responsibility for employment liability, so that you can focus on what matters: recruiting and managing your team.
With Via’s transparent pricing, you can pay full-time employees or contractors in the Netherlands with no hidden set-up fees, no foreign exchange or transaction fees, and no minimums–start with 1 employee and scale up at your own pace.
Setting up a Netherlands subsidiary requires numerous steps, including registering with the Dutch Chamber of Commerce, engaging the services of a notary, and determining if the subsidiary will be a private or public limited liability company.
A subsidiary is a company situated in a foreign country from its parent company and is its own separate legal entity. The parent company is not liable for the subsidiary.
There are many reasons a company may choose to incorporate in the Netherlands, such as tax benefits, a highly educated workforce, and effortless trade throughout the European Union (EU). Also, the Netherlands is a prime shipping hub for commerce.
A branch is not a legal entity; thus, it relies on its foreign home office. A branch must register with the Dutch Chamber of Commerce within the Business Register and operate with the same structure as its parent company.