Establishing a company in the Netherlands
If you want to do business in the Netherlands you have to choose the company form from a range of legal forms. The ultimate choice must depend on a number of factors, including the intended or actual company structure, the position of the shareholder / shareholders, the country of the shareholder’s residence or registered seat and the activities in the Netherlands. Don’t forget to take the tax treaty into consideration. In our link, types of legal forms, we already mentioned and described them. Shortly, the most prevalent legal forms in the Netherlands are the BV (Besloten Vennootschap, a private limited liability company) and the NV (Naamloze Vennootschap, a public limited liability company). Both legal entities may be established by a single shareholder. In certain situations, you may alternatively choose to establish a Cooperation. A Cooperation must have at least two members.
Setting up a subsidiary (company) has the following advandeges:
The subsidiary and the parent company are distinct legal entities. Therefore the parent / main plant company is not exposed to any liabilities of its subsidiary. The liability of the Dutch subsidiary is limited to its own assets
From a much more practical and commercial point of view, you and your client are going to deal with a Dutch (or European) company rather than a foreign company. For trust and continuance reasons clients in the Netherlands mostly prefer to do business with a company which is set up according to Dutch law. A BV may look more trustworthy to them compared to a foreign Ltd. The same will be the case with your business partners (ex. your bank, suppliers, ed.).
That a subsidiary might get some tax advantages depending branch and sector is also a pro
For subsidiaries the annual tax filing requirements are less stringent than for branches. As we explained, a branch’s annual filing will reveal financial information about the parent / main plant. Mostly this kind of information want to be kept confidential
It is furthermore mostly required for opening a bank account (in some cases), signing contracts with organizations (suppliers, rentals), that a subsidiary in the Netherlands set up under Dutch law
Branch or Company?
After founding the company, it should be registered in the Chamber of Commerce’s Trade Register. The notary public generally completes the registration process. The company is registered with the Tax Department via the Chamber of Commerce. The Tax Department registers the company for the various taxes and sends the relevant tax numbers to the company.
Are you in a hurry for whatever reason it might be with doing business? Perhaps a deal you don’t want to miss? You may already act on behalf of your to be established BV, including signing contracts, before the BV is fully established. This is possible if you register the BV in the trade register with the addition ‘i.o.’ (in oprichting - being established) and you are to act in the name of the BV i.o. Take in to consideration that that the actions of the BV i.o. are confirmed upon completion of the incorporation process, as the persons representing the BV i.o. are severally liable for all actions up to the moment of confirmation.