Weigh up the pros and cons of a Dutch entity set up versus using a global PEO partner when expanding your business into The Netherlands.
In order to do new business in a new country, such as The Netherlands, you will need to set up an in-country subsidiary or entity. The process of setting up an entity is incredibly complex and can become costly and time-consuming for businesses. Therefore, partnering with a PEO can be a more cost-effective and easier way to expand into the Netherlands. Read on as we discuss whether your business needs to set up a legal entity, how to establish a subsidiary in the Netherlands and how a PEO can help you expand in the Netherlands without a legal entity.
Who needs to set up a Dutch entity?
Essentially, any business that wishes to operate in the Netherlands needs to set up a legal entity. This is to ensure that liability, tax obligations and employment laws are followed.
If you are using contractors that are based in the Netherlands but are not conducting your business there, then you do not need a legal entity.
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What type of Dutch subsidiary do I need?
In the Netherlands there are business structures with and without corporate (legal) personality. The most common type of Dutch legal entity for expanding businesses is a private limited company (bv or besloten vennootschap) or in some cases a public limited company (nv or naamloze vennootschap).
You can find out more about Dutch business structures and which one suits your business on the Dutch government website.
How do I set up a subsidiary in the Netherlands?
The type of subsidiary you require will determine how you will apply. However, as a general rule to set up the most common Dutch entity - a private limited company (bv) - you will need to:
- Draw up the statutes in a notarial deed (incorporation)
- Register at the Dutch Tax and Customs Administration
- Making a deposit of €0.01 starting capital
- Registration in the KVK's Business Register (Handelsregister)
It is not possible for expanding businesses to set up a private limited company in the Netherlands. Instead, you must use a civil-law notary due to the complex legal requirements involved.
You can find out more about setting up a bv on the Dutch government website.
Dutch entity laws
In addition to ensuring the correct business entity is established, companies must also comply with Dutch laws on taxes, company accounts and social insurance. Meanwhile, any financial reports and accounts must be submitted to the Netherlands Chamber of Commerce (KVK) annually
As you can see, compliance with Dutch entity laws is an ongoing process. From the initial registering of your company and providing the correct documentation to completing regular accounts and tax records, Dutch entity laws require a vast amount of resource and time from expanding businesses. Meanwhile, non-compliance with Dutch entity laws causes an abundance of risk for your business including fines, penalties and even the possibility of being unable to operate in the Netherlands.
The benefits of setting up a Dutch entity
With thriving construction and technology sectors, the Netherlands is one of the most popular European locations for business expansion. Setting up a legal entity in the Netherlands establishes your company's intentions for a long-term, fruitful investment in the country. This is especially true of establishing a bv which is seen as one of the more 'serious' entities for an expanding business.
Meanwhile, legal subsidiaries in the Netherlands are subject to competitive corporate tax rates meaning your global business can reap the benefits of the Netherlands thriving industries and diverse business landscape without being penalised by harsh international tax laws.
Why use a PEO partner instead of setting up a legal entity?
Setting up a legal entity in the Netherlands is costly as well as risky. From the hiring of a civil-law notary to the recurring processing of tax and accounts reports, Dutch subsidiaries need to be able to dedicate repeated resource, budget and time to setting up an entity.
By outsourcing your Dutch business expansion to a PEO or an EOR, you can start reaping the benefits of the Netherland's thriving business network without the stress and financial burden of a legal entity. This provides more flexibility for expanding businesses as well as saving you much-needed time and resources. Opting for a PEO over a legal subsidiary doesn't mean your business is perceived as any less 'serious' in the Netherlands but rather lets you focus on the key aspects of business growth knowing that the legalities of tax, national insurance, onboarding employees, work permits and employment contracts are handled compliantly.
At Leap29, our Dutch PEO team have in-depth knowledge and first-hand experience of the Dutch business market meaning that they can be fully relied upon to navigate your expansion in the Netherlands taking into account relevant employment and subsidiary laws.
If you want to find out more about how our PEO Services in the Netherlands can support your global expansion, call our experts today on +31 20 890 8045 or email [email protected].
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"For the last few years, we have worked very closely with Simon and the team at Leap29 on a number of different projects in multiple countries across the globe. Leap29 have been a fantastic partner for us and are always willing to think with us to find the best solution. The communication with the team at Leap29 has always been excellent and Simon, in particular, is great to work with! They come highly recommended from us!"
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