Dutch Tax Tips: Starting a business in the Netherlands
Whether as a foreign company or a private individual, you may be toying with the idea of starting a business in the Netherlands. This is the first of a series of three articles that will discuss the possibilities open to you.
This first article will examine starting up a new business or Dutch branch of your existing business, including indicating which tax obligations apply. The subsequent articles will cover becoming self-employed and starting a company while maintaining the 30 per cent ruling.
Starting a company / branch in the Netherlands
If you are planning to start a business in the Netherlands, there are a number of formalities you must attend to.
In the Netherlands there are several business types, but the most common are the Besloten Vennootschap (BV), which is comparable to a Limited Liability Company, and the VOF / Eenmanszaak (Partnership / Sole Tradership).
Registering your business
If you are establishing a Dutch branch of your business or are starting up a business, you must register your business at the Chamber of Commerce (Kamer van Koophandel).
For this you will need the appropriate application forms, available from the Chamber of Commerce, which must be completed in Dutch.
You can also register a Dutch branch of your business as a foreign legal business (Ltd, GmbH or SA) or you may register it as a BV. The choice is up to you: there is no requirement to select the Dutch legal entity.
Starting up a BV (subsidiary)
Opting for the BV structure means you create a separate entity for the Dutch business operations, where all liabilities and risks are undertaken by the Dutch entity.
The organisation will be treated as a Dutch company owned by you or by an established parent (holding) company. Establishing a business structure with a holding company at the head has several benefits as compared to a sole BV structure.
Starting up a branch organisation
If you choose to organise your business as a Dutch branch with a head office outside the Netherlands, then the foreign company will be the main player in the structure. Liabilities will shift from the Dutch entity to the foreign company.
You must, however, have an office space in the Netherlands where the branch is permanently established. This will then be the second establishment of the foreign company.
When you start up a business in the Netherlands you are, of course, liable for Dutch taxes. The taxes you will most likely have to pay include:
› Corporate income tax
› Payroll tax
› Value-added tax
After registering with the Chamber of Commerce, your details will automatically be forwarded to the tax office. The tax authorities will then assess the taxes you will be required to file.
If you register the business as a partnership or sole tradership, you will have to deal with personal income tax. The consequences for income tax will be discussed in the third in this series of articles.
Corporate income tax
If you run a profit in the Netherlands, you must pay corporate income tax over the profits.
The rates (in 2013) for corporate income tax are as follows:
› 20 per cent for profits up to 200.000 euros
› 25 per cent for profits over 200.000 euros
The tax year is the same as the calendar year: from January 1 to December 31. Corporate income tax returns must be filed with the tax office before July 1 of the following year. For example, the 2013 tax return must be filed before July 1, 2014.
If your company employs staff in the Netherlands, then Dutch payroll tax will be withheld from their wages. This must then be paid to the tax office through a Dutch payroll system. If the salary is determined under foreign tax rules, then the salary will be recalculated to Dutch standards.
The payroll tax return must be submitted electronically each month. If the tax return is not submitted on time or the tax is not paid, fines and penalties will be imposed.
After you have established your company in the Netherlands, you may have to calculate VAT on your income and expenditure. The reporting periods are monthly, quarterly and yearly.
The tax office will determine which reporting period you have. The tax return must be submitted electronically, unless the tax office sends you a tax return form.
The VAT return must be filed and paid before the end of the month following the month which the VAT return covers (e.g. the July VAT return must be filed and paid before August 31). If payment is late or the return is not filed on time, fines and penalties will be imposed by the tax office.
This is a broad description of the options open to you when starting a business in the Netherlands and the consequences your choice of structure might have.
Of course, there are more options than discussed here, but these are dependent on your particular situation. It is always advisable to to consult a trustworthy tax advisor to save time and money.