Important Note about Company Registration in Netherlands
Types of Companies in Netherlands
Netherland is considered to be one of the safest haven for foreign investment because of several tax benefits, simplified company incorporation procedures and business flexibilities. The best form of setting up a company in the Netherlands is the limited liability company, however there are other forms of business entities as given below:
- Limited Company
- Holding Company,
- IP Holding Company
- Cooperative Company
- Branch Company
- Representative Agent Company
With several options to incorporate the company, you need an experienced hand that can guide through the entire process successfully and help you choose the right form of setting up a company that best suits your business. AbroadBiz is one of the leading and trusted partner for several national and international customers offering consulting services on setting up foreign companies in the desired location.
Limited Liability Company (Besloten Vennootchap (BV)) in Netherland
The Limited Liability Company (LLC) is commonly known as the Besloten Vennootchap (BV) Company in Netherland. With the recent introduction of flexible BV company incorporation procedures in the year 2012, Netherland has become a safe and effective haven for foreign investors. Due to the recent development in the company formation process, the minimum limit of share capital, i.e. € 18,000, has been slashed to none. In such case there is no minimum limit of share capital needed to incorporate a BV company in Netherland. As per the standard developed, it is mandatory for the LLC companies to submit their audited financial and tax records to the Dutch Tax Authority. As resident company, the Dutch Tax offers an exemption of tax to all the companies which makes less than €200,000 annually.
Public Limited Company (Naamloze vennootschap (NV)) in Netherland
The Public Limited Company (PLC) is commonly known as Naamloze vennootschap (NV) as pronounced in the Dutch. As any other public limited company, the NV in Netherland is also a listed company on stock exchange. There are major difference between a NV company and BV company. So, in order to incorporate a NV in Netherland it takes more than 3 weeks. There is a standard requirement minimum share capital of €45,000 for incorporating a NV in Netherland. The company should also be registered with the local chamber of commerce in Dutch with complete details of annual financial statements and audit reports.
Offering a highly flexible and dynamic business environment to the foreign investors there are not much stringent exchange controls laid by the government Netherlands. However, any company which has transactions more than Euros 50,000 must be reported to the central bank. The payments made to other countries can be done in any currency as per the business requirements. Foreign companies are exempted from the EU and Dutch market rules and regulations laid by the EU/EEA countries.
Controlled Foreign Company (CFC)
As such there are no standard CFC rules followed by the government of Netherland, offering maximum benefits to the foreign investors. However, in certain cases, the subsidiary is valued as per the standard market depending on the following conditions:
(1) in case the shareholder of the company owns at least %25 the shares in the company
(2) in case the subsidiary is just for the sake of investment and offers genuine returns on the investment
(3) in case the subsidiary has lesser tax than 10%, and
(4) in case the majority (i.e. 90%) of the subsidiary is assets
Netherland being a highly flexible and safe haven for international investors, it has liberal policies, tax structure, lenient regulatory process and maximum foreign investments in each segment. Some of the foreign companies hold almost 100% of the holdings in the Dutch companies. It is simple and fast to borrow the money locally, invest internationally and make the maximum from the trade benefits.
The inter-corporation transactions are thoroughly monitored by the tax authorities because of which it is always recommended to avoid and prevent any kind of unnatural transactions. Using the actual or replacing it with the real market value is the right option.
Double Tax Treaty Relief
As Netherland has already signed the Double Tax Treaty (DTT) with many countries like India, Singapore, UK, China, etc. foreign investors have better chance to save their taxes by expanding their businesses to these countries.