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Company Formation in Netherland

Overview :

The Netherlands’ strategic location within Europe, a population with strong language and entrepreneurial skills, quality infrastructure, and an open and outward looking economy combine to make it an attractive “Gateway to Europe” for outsiders. Dutch prosperity is based on efficient industry, restructured in the 1980s, natural gas, rich and intensively farmed land and trade; around 60% of GDP consists of exports and imports, making the Netherlands one of the most trade-dependent economies in Europe. Chemicals, electronics and food-processing are prominent. The Airport region of Amsterdam, the Seaport region of Rotterdam and the Brain port region of Eindhoven are considered to be the three pillars of the Dutch economy.

Advantages of Incorporating a Business in Netherlands
  • The Netherlands provides a strategic location to serve markets within the current and future European Union, the Middle East and Africa
  • The Netherlands is also classified as one of the most ‘wired’ countries in the world, a dynamic force in electronic commerce, communications and outsourcing leading towards superior logistics and technology infrastructure.
  • The Netherlands features one of the most highly educated, flexible and motivated workforces in Europe.
  • Quality of life of Netherlands is proud to have a high standard of living, while maintaining an affordable life for its residents.
  • Netherland has a favourable fiscal climate. 
  • Favourable direct and indirect tax system for Corporates.
Tax Regime
  • Double taxation relief through the Royal Decree for the Avoidance of Double taxation, which may be applicable in the absence of a tax treaty.
  • The participation exemption, which makes that all benefits related to a qualifying shareholding, including cash dividends, dividends-in-kind, bonus shares, hidden profit distributions and capital gains are exempt from Dutch corporate income tax.
  • The 30% ruling, that allows a tax-free reimbursement of 30% of the employees’ salary, provided that the employee has been recruited or assigned from abroad and if, in addition, the employee has specific expertise which is scarce in the Dutch labour market.
  • The ability to carry forward losses indefinitely and to carry them backward for three years.
  • Based on the new legislation a company may calculate its profits in the functional currency, whereby, taxation of effectively unrealized profits can be avoided.
Types of entities

Sole Trader :

A sole trader is the only owner of a business, though there may be employees. Income tax is paid on profits made. Sole traders can be personally liable for business obligations, as can their spouse.

Partnership :

Partnerships are generally created between certain professionals, such as attorneys and GPs. For tax purposes the partners are considered self-employed entrepreneurs.

General Partnership :

A general partnership is a business run by more than one person. Partnership agreements will determine contributions, liability and entitlement.

Limited Partnership :

A limited partnership is a business run by more than one person. It has two kinds of partners: active and limited. The limited partner tends to be the financial backer for the company, and often enters into a partnership with a sole trader who needs financial backing.

Private Limited Company :

A Private LLC is a private limited liability company and is considered to be a legal entity, which limits the risks to the owner(s). Shareholders are only liable for their own capital contribution.

Public Limited Liability Corporation :

May be a subsidiary of a foreign company. An Pub. LLC is owned by shareholders and shares may be traded on the public stock market, though shares are not held in any private person’s name.

Branch office :

A company incorporated in a foreign country may engage in business in the Netherlands through a branch office. Easier to establish than a subsidiary, a branch, unlike a subsidiary, is not considered a separate legal entity, so the associated foreign head office is liable for branch obligations.

Association :

A non-profit organisation with a goal that has voting members who are generally each allocated one vote. Associations may earn money, but the money must be used for the association goal and may not be distributed to members.

Time required

It usually takes 5 days to incorporate a business in Netherlands.