for entrepreneurs and corporates
We service the varied needs of companies and financial institutions, helping them set up and manage structures, enter new markets and navigate an increasingly complex international regulatory environment. A foreign entity can set up business in The Netherlands in two different ways. Below you will find a short overview of these possibilities. If you also want to take advantage of the Dutch business climate, for example to achieve tax benefits, it is best to contact a friendly representative of our office. We take extensive time for you to understand the possibilities, so that you can make the best choices. In addition, we can notarize the incorporation, keep your administration and carry out all necessary tax returns and other legal acts on behalf of your company. Full-service, to ensure that you can continue to focus on your business!
Incorporation of a legal entity (subsidiary)
A legal entity can only be incorporated trough a notary. Once incorporated, the legal entity will be registered with the trade register. In the incorporation deed, the incorporators list the scope of the business, who will be appointed as the first directors, and who will be the shareholders. Different types of shares can be issued in order to expand or limit the shareholder’s authorizations or entitlements.
The legal entity has a limited liability. Therefore, the shareholders are only liable for debts to the extent of their investment. However, in case of severe mismanagement the directors can be held responsible and become personally liable.
Depending on the activities of the legal entity, it will be subject to corporate tax, payroll tax and sales tax. For all these taxes the regular tax rules apply. The corporate tax rate is 20% for the first 200K profit and 25% for the surplus.
The net profit of the legal entity can be paid out to the shareholders as a dividend. Depending on the tax treaty between the Netherlands and the country where the shareholders are located, the withholding tax rate will be between 0% and 15%. Of course, it is important to check how the country where the shareholders reside taxes the foreign dividend.
Registration of a branch office
A branch office is, legally, part of the head office. A branch office is formed by taking care of the mandatory registration with the Dutch trade register. A branch office needs to have a Dutch office address but does not need to have a Dutch based director.
Since the branch office is a remote part of the head office, the head office is fully liable for all obligations of the branch office.
Depending on the activities, the branch office will be subject to corporate tax, payroll tax and sales tax. For these taxes the regular tax rules apply, there aren’t any specific rules or rates for branch offices. The corporate tax rate is 20% for the first 200K profit and 25% on the surplus.
The net profit of the branch office can be transferred to the head office without any Dutch tax consequences. There is no withholding tax at source on distributed profits.
It is important to check the treatment of profits from a branch office in the country where the head office is located. In general, the results of the branch office will be considered as foreign business profit in the annuals of the head office, on which the country where the branch is located has the right to levy, and the country where the head office is located will credit for foreign taxes paid or exempt foreign profits. It is important to determine how the home country treats the corporate tax that has been paid in The Netherlands.
Leave no tax benefits unused, use Expat Service to optimise your taxes. We can file all type of tax returns, i.e. both private income tax returns and tax returns for entrepreneurs. We submit your tax returns digitally to the Dutch Tax Authorities (Belastingdienst) using the appropriate C form, M form or the regular P form.
We will inform you about all tax regulations, including the Dutch 30% rule, if you have any questions. The application of the 30% ruling for you or your staff will be completely taken out of your hands. We also solve the correction of mistakes in the application of the 30% ruling.