The Branch
Remember, a branch is not a legal entity
Establishing a branch in the Netherlands
If you have a company outside the Netherlands and you plan to expand in other markets and in order to operate on the Dutch market, you can open a branch in the Netherlands. It could be easy operation. You will not require a notary public or starting capital for opening a branch.
The legal identification rules also apply on setting up a branch of a foreign company. In order to open and register the branch in the Netherlands, many identification and other documents are required, both of the main office / plant and its management. Collecting the documents often takes lots of time. In addition to this administrative burden, there is the language barrier to deal with. All registration documents are to be submitted and signed in Dutch. This is why it is advisable and practical to hire the services of a Dutch advisor able to complete, translate and submit the documents for you, who is aware of the official requirements.
The Requirements
A branch is not a legal entity and is unable to enter contracts independently. The branch’s customers therefore actually enter into transactions with the main office / plant.
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Registering the main office / plant and the branch in the Chamber of Commerce’s Trade Register. This will officially establish your branch in the Netherlands. You will be issued a registration number by the Chamber of Commerce
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Registration of the branch with the Dutch Tax Department. You will be issued the tax numbers
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Opening a Dutch bank account
In terms of tax, the branch is treated the same as a company. They are subject to the same rules and obligations, i.e.:
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Pay tax in due course
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Submit the tax bills in due course
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Set up and update administrative records
In terms of tax, the branch is treated the same as a company
Make an appointment
with one of our experts
The Pro's & Con's
The main office / plant is severally liable for the tax liabilities of the branch. When we should summarize form the few of an experienced business advisor there are pro’s and con’s to this kind of establishment.
The disadvantages of a branch office are
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One of the biggest con’s is that the parent company is fully liable for the liabilities of the branch
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Also the branches representatives may be held jointly and severally liable for tax debts and other liabilities
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The issue of transparency as it comes to financial statements. The statements of the parent must be lodged (publicly at the Chamber) at the Companies Registry
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The branches obligations are the same as the parent, including filing VAT returns, employees returns and corporation tax returns, so there are few savings in administering a branch
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Banks and clients may prefer dealing with a Netherlands company rather than a foreign branch
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A branch is rarely ideal for substantial projects because the parent company runs the entire risk
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With the introduction of the European Company, there will be less need to establish branches
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Upon registration of a branch, evidence has to be provided of the legal existence of the parent
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Any public act by the branch, is likely to need ratification by the board of the foreign parent. A company that signs contracts in front of a notary on a regular basis, should incorporate for administrative ease
The advantages are:
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Less obligations to present accounts than with corporations
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Quicker established without much need of documents
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Requirements regarding the establishment of a board of directors, the distribution of profits or the organization of shareholders’ meetings are at a minimum by law
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An adequate instrument for low cost projects
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No intervention of a Dutch notary public is required
The main office / plant is severally liable for the tax liabilities of the branch.