In this article, we'd like to focus on the most important considerations when initiating a startup or scale-up enterprise in The Netherlands. If you're commencing a new venture or expanding an existing one in the Netherlands as part of your growth strategy—increasing turnover—we refer to this as scaling up your business or startup in the Netherlands. (In general, we consider the ‘scale-up’ as a definition for companies that have grown their turnover (or FTE’s) with about 20%, of each of the last 3 years. Which could very well be your goal as a traditional SME company!)
Scaling up your activities implies that you're on the lookout for avenues to broaden your market presence and fuel growth - a common initiative for startups and scale-ups.
What are the advantages of setting up a business in The Netherlands for a scale-up company?
In order to scale-up your business, it’s all about infrastructure. To initiate a successful startup in the Netherlands, you require the right talent, efficient logistical processes and resources, access to funding, and a promising market opportunity. All this, while maintaining your enterprise undisturbed by excessive bureaucracy and exorbitant taxes.
Whether you are in IT services, recruiting staff, or into trading (import and export) of goods, The Netherlands offers a great entrepreneurial climate for you to scale your business.It’s very common for scaling companies to already have customers (or partners) in the region where they like to establish a company. You might have customers already in The Netherlands, or Germany, or even Belgium. If your customers currently only reside in Germany and Belgium, it's still a viable initiative to consider the Netherlands as your enterprise's point of entry. In fact, we have assisted dozens of entrepreneurs to start a business in The Netherlands, after they first contacted us to know more about setting up a business in a country like Germany.
As a successful startup or scale-up enterprise, it's likely that you're exploring multiple countries for potential expansion.
To explain you, why The Netherlands is interesting, it might be good to provide you a comparison with Germany.
Because an ‘entrepreneurial climate’ is a rather abstract definition, we can become more concrete when we look at the actual fact & figures of both countries.
Description | Netherlands | Germany |
Minimum Capital Deposit | No Required | minimum 50% of 25.000 EUR |
(Local) Bank Account requirement | No, bank account can be opened AFTER formation, and OUTSIDE Netherlands | Yes, the bank account must be opened BEFORE company formation, and INSIDE Germany |
Registered Office requirement | Not required during formation, but advised. Typically 50- 100 EUR pm | Yes, typically 120-150 EUR pm |
Formation Fees | € 1.500, including notary fees (based on standard Formation Deed) | € 2.000 including notary fees (based on standard Formation Deed) (< 3 shareholders/directors (non-corporate entities)) |
(Entrepreneurial) Diploma Required for Formation? | No | No |
Translation Required (of Formation Documents) | No, but preferred | Yes, unless the person speaks German. The notary might check if the shareholder understands the Formation Deed fully in its own language. |
Time Frame Formation | 2 weeks on average | 2-3 weeks |
Remote Formation Possible | Not possible | Not possible |
Corporate Taxes | 16% upto 200.000, 21% above 200.000 | Approx 30-35% depending on the 'State' in region |
Withholding Taxes | 0% on royalties, 15% on dividends, 0% on interest. Over 100 treaties applicable. | Withholding tax of 25%, plus 5.5% solidarity surcharge (giving an effective rate of 26.38%), is applied to dividend and interest payments. 15% plus solidarity surcharge on Royalties. |
Chamber of Commerce Contribution | 50 EUR per year | 150-200 EUR per year |
Requirement to understand the local language | No, everybody in Netherlands speaks English well, and the authorities/banks/notaries are very cooperative | Preferred, with the English language in Germany, its difficult to get the assistance of most authorities/banks/notaries |
Non Resident Director Allowed | Yes | Yes, however a work permit can be required before the formation of the company |
Non Resident Shareholder Allowed | Yes | Yes |
Tax Free Investments/Holding/Charity | Yes, possible (Dutch Foundation) | No |
Accounting Requirements | Bookkeeping Requirement, Filing of Annual Report, No Audit Requirement up to turnover of 8.8 million (or similar conditions) | Bookkeeping Requirement, Filing of Annual Report, No Audit Requirement up to turnover of 4.8 million (or similar conditions) |
Accounting/Bookkeeping Fees | 125 EUR per month, which includes 4 quarterly VAT Return, Annual Report, Corporate Tax Return (for startup company upto 100 transactions) | 210 EUR per month, which includes 4 quarterly VAT Return, Annual Report, Corporate Tax Return (for startup company upto 100 transactions), plus hourly charges for tax consulting when filing the tax return |
Your preferences for The Netherlands can be very personal, or depend on your type of business activities. In case you already are in contact with a professional sales manager in The Netherlands (or German…) or you have a family member in that country that will helping you establish the business, this might have a great influence on your choice.On the other side, if you see a great potential and product-market fit in a country, and you already recognise it’s early success, then it’s likely that you will also be able to overcome the local bureaucracies (even in Belgium…)
Important to know as scale-up in Netherlands
When you are planning to start a Dutch company to enter the Dutch market, or to use The Netherlands as a gateway to the rest of Europe, the following information can be useful for you:
#1 Finding a warehouse or logistics partner in a heartbeat
Finding the correct housing solutions in The Netherlands can be important for your business. Especially if you are involved in the trade of products. The Netherlands has a long history as logistics-hub, and as such you can find thousands of professional logistic service providers in The Netherlands.
The Netherlands is home to more distribution centres than anywhere else in Europe and has the largest inland shipping fleet in Europe.Finding a warehouse in The Netherlands is relatively easy, due to national online platforms( such as fundainbusiness.nl), and the assistance of government agencies and realtors. Houseofcompanies.io can connect you to the right realtor or government agency with the right expertise.The Netherlands is a highly innovative country, and this is also visible at our logistics companies. Fully automated fulfillment services, and profesional tracking systems will allow you to run your business smoothly, and ensure that your customers will receive your products.Your dedicated company officer at House of Companies can help you to find a good solution, and can also negotiate with the owner/landlord, and deal with the (legal) formalities of renting a warehouse in The Netherlands (or dealing with a logistics partner).In case your company is still in the startup phase, we can discuss the possibilities of handling your packages and shipments from HouseofCompanies.io’s office in Breda. House of Companies handles logistics affairs over several European companies in THe Netherlands.
#2 Finding great (multilingual) talent
In order to scale your business into the Netherlands, it can be very important to recruit staff in The Netherlands. The Netherlands offers scale-ups highly educated, skilled and English speaking talent, that is familiar in dealing in international business.
Although the salaries in The Netherlands are relatively high, compared to East and Southern Europe, very little time is lost to labor disputes. Aside from that, the Dutch staff provides a high return, due to it’s no 4 global ranking of its education and training system (WEF Global Competitiveness Index). As a whole the cost of labor in The Netherlands is highly competitive.
Finding talent or staff in The Netherlands can be done via online job recruitment sites, and Linkedin. There are numerous (online) recruiters which aim specifically on expats and international staff, in case you prefer a staff member that speaks your language.
Finding talent in The Netherlands is one of our Business Development services, and you can contact our team for more questions or assistance in this matter.#3 Getting connected in your Industry
A business is not an island. This is particularly true for scale-ups that are entering a new market. Connecting with the Dutch industry, in which you are planning to be active, can be very useful. There are a lot of branch organisations and business associations in The Netherlands, which are happy to connect you to potential customers, producers or business partners. They might also be able to inform you on license requirements, or they can help you on how to cope with these license requirements.
House of Companies can help you to get connected with industry leaders in The Netherlands.#4 Great infrastructure; highways, railroads and world’s biggest sea- and airports
The Netherlands has a great infrastructure, which allows you to build an efficient business structure and supply chain. Even across borders into German, Belgium, and the United Kingdom, The Netherlands allows you to covers (parts of) these markets without having to enter these markets with a physical representatives.
The great infrastructure of the Netherlands, allows businesses a smooth scale-up of their operations, while they don’t have to worry about logistical restrictions or delays. Or as Matt Althauser (General Manager of Optimizely EMEA) said:
“The number one reason we chose Amsterdam as our first location in Europe was its proximity to other markets. With Schiphol, we’re connected to our customers everywhere in EMEA, and there are daily flights back to our worldwide headquarters in San Francisco. That central location, and the multilingual nature of the people here, means that we can do business with anyone, anywhere.”
Aside from Optimizely, hundreds of multinationals have chosen to establish their operations in The Netherlands, due to the great infrastructure it has to offer.
#5 Low bureaucracy and administrative expenses (and taxes)
As an entrepreneur, there is no way around spending a lot of energy into affairs that are not part of your core business. This is especially true in case you would start a company in a highly bureaucratic country.The costs of bureaucracy can be enormous, considering that it requires your personal attention as an entrepreneur. It’s important that you have a good understanding of the legal and tax system of a country, because the potential liabilities could affect your company’s future. Entering a country, such as The Netherlands, which has relatively low bureaucracy, will allow you to have a smooth landing without spending a lot of time getting familiar with it’s local rules and regulations.
#6 A market with great potential
Disney recently launched its online channel especially in The Netherlands, before enrolling its service to other (EU) countries. Why the Netherlands? For global conglomerates seeking to test drive a new streaming service, this small country, in between Germany, Belgium and the North Sea, is almost ideal.
"We are small and densely populated and we have just around 7.5 million households in the whole country, so no matter how popular Disney+ is, Disney's servers won't get overloaded," says Sanne de Bruyckere, a market researcher with Dutch group Telecompaper. "And the technical infrastructure is great."
Broadband internet penetration in the Netherlands is 98 percent, compared to 82 percent in the U.S., meaning virtually everyone in the country could access and use the Disney+ trial.
And Disney(online streaming) is not the only company (industry) that recognises this potential of The Netherlands.If you are offering a new type of service or product, the Netherlands is a very interesting test market for you, because of our liberal and open mindset.This same mindset allows international companies to enter the market, without great difficulties. Potential Dutch customers or business partners typically speak English well, and don’t hesitate to do business with an international organisation, which is relatively new in The Netherlands.
All these great facilities and opportunities are concentrated in a small (let’s say metropolitan) region. Which is why you could say; If I can’t make it in The Netherlands, I can’t make it anywhere…. Making the Netherlands the best country to test to global expansion strategy.
Checklist for starting a business in the Netherlands as scale-up
To start a business in THe Netherlands as a scale-up, you can consider the information that we have described in the article ‘How to start a business in The Netherlands’.
The article will describe in more detail that you can consider the following checklist:
Select the legal Entity | |
Consider the formation requirements & timeline | |
Decide on a trade Name | |
Consider the costs of registration | |
Get a full understanding on the legal and administrative requirements | |
Formation of the Company and registration at the Chamber of Commerce | |
Apply for Tax ID’s |
What will it costs to start a Dutch business as a scale-up?
You can start a Dutch business for a relatively small budget. The most cost-efficient setup would get you started for about 750 EUR, plus the monthly fees to cover your flexi-desk (approx 50-100 EUR pm) and accounting fees (approx. 125 EUR per month, if your company is registered for VAT).
In case you decide to opt for the incorporation of a new legal entity, which will be registered for VAT, the budget for the first year of operation should be considered at around 5.000 EUR. Our team can help you to get a full cost estimation to register a Dutch business, based on your situation.
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