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The Company

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Establishing a company in the Netherlands

Mostly, it takes a few weeks for a company to be established and fully operational. The time of setting up Dutch company depends on the chosen legal form and structure. Such as in every project, you have to calculate some delay. The delay factor often is collecting the necessary identification documents of the founders and opening a Dutch bank account. The Netherlands applies legal identification rules that are strictly enforced. The service providers involved (notary public, financial advisors) may not start any work before full compliance with these identification rules. This is also the reason why opening a Dutch bank account could be a lengthy process. This is why we recommend you to open a Dutch bank account through your own local bank. But once again, the completeness of the provided documents and the relationship which you build with the future bank is important for the procedure.

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.

The Requirements

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Other than setting up a branch, if you want to set up a (subsidiary) company, you will need the services of a notary public for establishing any legal entity. Additionally, you should supply various identification documents for the person / persons establishing the company. The Netherlands apply legal identification rules that are strictly enforced. The service providers involved (notary public, financial advisors) may not start any work before full compliance with these identification rules. Collecting these documents should preferably take place at an early stage. These documents will also be required for opening a Dutch bank account together with the registration documents with the Chamber of Commerce.

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?

If you should compare having a legal entity in a different country, the main legal disadvantage of a branch relates to liability. The shareholders of a legal entity are generally liable only up to a maximum of their investment in the Netherlands. In the case of a branch, the main office / plant is jointly liable for the branch’s contracts and debts. Limited liability of a company is often the reason of choosing a company. If you have to choose between operating via a company or via a branch, you should also factor in the taxation system in both countries.

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.

It takes usally a few weeks for a company to be established and fully operational.
Maxol Finance Services
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