With its open economy, the Netherlands is renowned as one of the world’s leading financial centers and a jurisdiction that hosts a sizable international business community. The country boasts sophisticated infrastructure and a well-educated populace that is widely considered to be pragmatic, tolerant and open-minded. In addition to an attractive tax climate, these features make the Netherlands one of the most open economies in the world for entrepreneurs, starts ups international corporations. The Netherlands offers a wide tax treaty network, a competitive corporate income tax rate, a full participation exemption for capital gains and dividends from qualifying participations and branches, and beneficial measures for highly skilled migrants.
The country’s competitive fiscal climate and friendly business environment make it an attractive location for Egyptian start-ups, corporations and asset- and -fund managers to establish their legal structures and to place their European or global headquarters.
Companies in the Netherlands will be required to register their ultimate beneficial owner (UBO). In short, the UBO of the company is the natural person who holds a direct or indirect ownership of more than 25% of all shares, voting rights or ownership interest, including bearer shares. In case no UBO can be designated based on abovementioned criteria, or if there is any doubt as to whether the individual designated as the UBO is the ultimate owner or ultimately controls the entity, the ultimate beneficial owner will be each natural person that is part of the higher management personnel of the company (also referred to as ‘pseudo-UBO’).
Business activities can be undertaken in the Netherlands through a company or partnership or by an individual. A Dutch company can generally be incorporated in a few days. A foreign person (individual or legal person) can also perform business activities. The Netherlands does not levy capital tax or stamp duty on the incorporation of an entity or on capital contributions thereafter.
There are two types of corporations in the Netherlands. The more common and used by many Egyptian start-ups and corporations is a private limited liability company (BV). The capital of a BV is divided into shares. There are practically no minimum capital requirements (i.e., €0.01 is sufficient). The founders of the BV will determine the issued capital (at least one share) and required paid-up capital. The shares of a BV are privately owned. Different types of shares are possible to vary the voting rights of shareholders and/or to vary their dividend rights.
The other type of corporation is a public limited liability company (NV). The capital of a NV should amount to at least €45,000 and is divided into shares. In principle, the shares are freely transferable and cannot be issued without voting rights or profit rights. The NV is mainly used for corporations that are very large and/or will be listed on the stock exchange.
Both the NV and the BV are incorporated by the execution of a notarial deed, and the liability of the shareholders is in principle limited to the capital contributed. The NV and BV are also both subject to corporate income tax and their dividend distributions are subject to dividend withholding tax.
Steps for Incorporating in the Netherlands
Starting a business in The Netherlands is a relatively straightforward process and can typically be completed within a few days. The most common types of business entities when entering the Dutch market include a private company with limited liability (BV) and a public limited liability company (NV), among other types. For a BV, no initial minimum capital investment is required at the time of incorporation. Shareholders and directors can be Dutch or non-Dutch or even corporate entities.
The required steps for incorporating a corporation in the Netherlands are as follows:
- In the case of a public limited liability company (NV), depositing the minimum capital required in the bank
- Checking the company name for appropriateness and validity on the website of the Netherlands Chamber of Commerce (KvK)
- Drafting and signing the company’s deed of incorporation, including the company’s Articles of Association, executed by a civil law notary
- Registering the company in the commercial registry at the local Chamber of Commerce, and obtaining a registration number
- Registration with the local tax authorities and the social security authorities
Opening a Bank Account
As in many jurisdictions, opening of a bank account in the Netherlands is necessary for conducting business in the country, but can present challenges. To conduct business in the Netherlands, an IBAN, or international bank account number, is required. If a relationship with a bank in the Netherlands already exists, opening a bank account may be less complex; however, if there’s not yet a relationship, it can take anywhere from a few weeks to up to two months to open an account, as banks may scrutinize an applicant’s funding sources and business plans. As an alternative, a bank account can be opened with one of the various Netherlands-based fintech banks. We have cooperated with a number of fintech banks and can assist in fulfilling the client acceptance process.
For companies operating in the Netherlands it’s essential to keep up with changing regulatory requirements and take the necessary steps to stay fully compliant.
Eldib & Co helps international companies comply with Dutch compliance requirements with a full suite of services In addition to our global portfolio of services; we provide extra support, tailored to specific local requirements.
Contact us at firstname.lastname@example.org to find out how we can help establish or grow your business.