Setting up a subsidiary company in the Netherlands offers businesses access to a strong economy, a strategic location in Europe, and a stable legal environment. The country provides attractive tax incentives, a highly skilled workforce, and a business-friendly regulatory framework, making it an ideal hub for global expansion within the European Union.

Types of Subsidiaries in the Netherlands

Subsidiaries in the Netherlands can take various ownership and operational structures depending on the parent company’s goals. Below are the main subsidiary structures and their key differences:

Type of Subsidiary Description Key Features Use Case
Wholly-Owned Subsidiary A subsidiary where the parent company owns 100% of the shares.
  • Complete control by the parent company.
  • Independent legal entity.
  • Limited liability for shareholders.
 Ideal for companies seeking full control over operations in the Netherlands.
Partially-Owned Subsidiary A subsidiary where the parent company owns 50% or more of the shares but not all.
  • Shared ownership with other investors or entities.
  • Parent retains majority control.
 Suitable for joint ventures or partnerships with local businesses or investors.
Joint Venture Subsidiary A subsidiary jointly owned by two or more companies, typically for a specific purpose.
  • Ownership and profits shared among partners.
  • Collaborative management structure.
 Common for projects requiring local expertise or shared resources between international firms.
Branch Office An extension of the parent company, not a separate legal entity.
  • Operates under the parent company’s legal structure and liability.
  • Limited operational scope.
 Best for companies testing the market or conducting limited activities like marketing or research.
Representative Office A non-commercial presence focused on market research or promotion.
  • Cannot engage in sales or generate income.
  • No liability protection as it is not a legal entity.
 Suitable for companies establishing a foothold in the market without direct commercial activity.

Step-by-Step Process to Setting Up a Subsidiary in the Netherlands

Following is a step-by-step procedure for setting up a subsidiary in the Netherlands:

  1. Choose the Business Structure: Decide on the type of subsidiary, such as a partnership, BV, or NV, based on your business needs.
  2. Select a Company Name: Ensure that the company name complies with Dutch naming conventions. The name must be approved by the Dutch Chamber of Commerce (Kamer van Koophandel, KvK).
  3. Draft the Articles of Association: Prepare the company’s Articles of Association, outlining the rules governing the company’s operations and management structure.
  4. Notary Public: For a BV or NV, the incorporation documents must be signed in the presence of a Dutch notary. A notary will also file the registration with the KvK.
  5. Register with the Chamber of Commerce (KvK): Submit the required documents to the KvK to register your subsidiary. This includes the company name, address, articles of association, and details of the directors.
  6. Obtain a Dutch Tax ID (RSIN): Register with the Dutch Tax and Customs Administration to obtain an RSIN (Rechtsvormen en Subsidiëren Identificatienummer), which is necessary for tax purposes.
  7. Set Up a Bank Account: Open a corporate bank account with a Dutch bank to manage the subsidiary’s financial transactions.
  8. Comply with Employment and Labor Laws: If hiring employees, register with the Dutch tax office for payroll taxes, comply with labor laws, and set up a social security system.
  9. Obtain Business Licenses (if applicable): Depending on the industry, you may need specific permits or licenses to operate in the Netherlands.

After reading the step-by-step process to setting up a subsidiary company in the Netherlands, it’s important to understand the key benefits of this decision.

Key Benefits of Establishing a Subsidiary in the Netherlands

Establishing a subsidiary in the Netherlands offers several key advantages that make it an attractive option for businesses looking to expand:

  • Strategic Location: Situated in the heart of Europe, the Netherlands provides easy access to the European Union and other international markets, making it an ideal base for regional operations.
  • Favorable Tax System: The Netherlands offers attractive tax incentives, including a competitive corporate tax rate, tax treaties, and a favorable regime for intellectual property (IP) and innovation through the Innovation Box.
  • Skilled Workforce: The Netherlands boasts a highly educated, multilingual workforce, with a strong focus on sectors like technology, finance, and engineering.
  • Stable Economy: Known for its strong and stable economy, the Netherlands offers a predictable business environment backed by a robust legal system and transparent regulations.
  • Business-Friendly Environment: The Netherlands has a pro-business regulatory environment, with ease of doing business, low administrative burdens, and efficient infrastructure.

Essential Documents Required for Registering a Subsidiary in the Netherlands

When learning how to establish a subsidiary company in the Netherlands, you must know that several essential documents are required for legal and operational purposes:

Company Related

  • Company Name: A unique name for the subsidiary, ensuring it complies with Dutch naming conventions.
  • Articles of Association: A legal document that defines the company’s structure, purpose, and operational rules. This must be signed in front of a Dutch notary.
  • Registered Address: Proof of a physical address in the Netherlands for the subsidiary.
  • Notary Deed: A notarial deed of incorporation for a BV or NV, which includes the articles of association and registration details.
  • Chamber of Commerce Registration Form: Completed form for registering the subsidiary with the KvK.
  • Parent Company’s Certificate of Incorporation: If the parent company is a foreign entity, a certificate of incorporation or proof of legal status may be required.
  • Bank Statement: A bank statement confirming the minimum capital requirement has been deposited.
  • Tax Identification Number: The RSIN for tax purposes.

Directors and Shareholders Related Documents

  • Proof of Identity: Passport copies of the directors and shareholders involved in the subsidiary.
  • Residency and Address Proof: If applicable, proof of residency or address for directors may be required, especially if they are non-EU citizens.

Legal Structures Available for Subsidiaries in the Netherlands

When setting up a subsidiary company in the Netherlands, businesses can choose from various legal structures, each offering different benefits and obligations:

  • Sole Proprietorship (Eenmanszaak): This is the simplest form of business, where the owner has full control but an unlimited personal liability.
  • Partnership or Vennootschap Onder Firma (VOF): A partnership involving two or more individuals who share ownership and liability. Each partner is jointly and severally liable for the company’s debts.
  • Private Limited Liability Company or Besloten Vennootschap (BV): Offers limited liability protection to shareholders, with a minimum share capital requirement of €0.01. It is the most common form of subsidiary due to its flexibility and liability protection.
  • Public Limited Company or Naamloze Vennootschap (NV): Suitable for large-scale operations, allowing public trading of shares. It requires a minimum share capital of €45,000.
  • Limited Liability Partnership or Commanditaire Vennootschap (CV): Involves two types of partners: limited partners with limited liability and general partners with unlimited liability.

Whether you’re setting up a subsidiary company in the Netherlands or figuring out how to create a subsidiary company in the Netherlands, Commenda ensures you can manage legal complexities, comply with local regulations, and make informed decisions to maximize your business potential. To learn more, click here.

Taxation Rules and Incentives for Subsidiaries in the Netherlands

When setting up a subsidiary company in the Netherlands, it’s crucial to understand the tax rules and available incentives that could impact your business. Here are key points to consider:

  • Corporate Tax Rate: The standard corporate tax rate in the Netherlands is 25.8% for profits over €395,000. For profits below this threshold, a reduced rate of 15% applies on the first €395,000 (as of 2024).
  • Participation Exemption: The Netherlands offers a participation exemption, which allows subsidiaries to exempt certain income from foreign subsidiaries (e.g., dividends and capital gains) from Dutch taxation, provided specific conditions are met.
  • Innovation Box Regime: Companies involved in innovative activities (such as R&D) can benefit from the Innovation Box, which allows profits from qualifying intellectual property (IP) to be taxed at reduced rates.
  • Tax Treaties: The Netherlands has an extensive network of double taxation treaties, which can help reduce withholding taxes on cross-border dividends, interest, and royalties, making it attractive for international businesses.
  • VAT: The Netherlands applies a 21% VAT on most goods and services. However, there are reduced rates of 9% for certain goods and services (such as food, medicines, and books). Companies must register for VAT if their taxable turnover exceeds the registration threshold.
  • Transfer Pricing Rules: Subsidiaries must adhere to the OECD guidelines on transfer pricing, ensuring that transactions between the subsidiary and the parent company are conducted at arm’s length. This is to avoid tax avoidance or shifting profits.
  • Loss Carryforward and Carryback: Dutch tax law allows subsidiaries to carry forward tax losses for up to 9 years or carry them back for 1 year, which can reduce taxable income in profitable years.
  • Research and Development (R&D) Tax Incentives: The Dutch government provides tax credits for R&D activities. Companies can benefit from the WBSO scheme (R&D tax credit), which reduces wage costs related to R&D activities.

Do You Need a Physical Address for a Subsidiary in the Netherlands?

Yes, if you plan on setting up a subsidiary company in the Netherlands, then the subsidiary must have a physical address. This address is required for the company’s registration with the Dutch Chamber of Commerce (KvK) and for official correspondence. The address must be within the Netherlands and can be either a commercial office or a registered office.

Operational Setup for a Subsidiary in the Netherlands

While learning how to form a subsidiary in the Netherlands, you need to choose the legal structure, register with the KvK, open a corporate bank account, and register for taxes. Secure office space, comply with employment laws, set up accounting systems, and ensure regulatory compliance.

Once the operational setup is in place, the next step is to establish a business bank account to manage your subsidiary’s financial transactions in the Netherlands.

How do you Open a Business Bank Account for a Subsidiary in the Netherlands?

If you need to learn about how to set up a parent company with subsidiaries in the Netherlands, then you need to create a bank account, for which you need to follow these steps:

  1. Choose a Bank: Research banks that offer corporate accounts suited to your subsidiary’s needs.
  2. Gather Required Documents:
    • Company registration details (KvK registration).
    • Proof of identity for the company directors and shareholders.
    • Proof of address for the business.
    • Articles of association.
    • Tax identification number (RSIN).
  3. Complete the Bank Application: Fill out the bank’s business account application forms.
  4. Deposit Initial Funds: Most banks require an initial deposit to activate the account.
  5. Sign Account Agreements: Ensure the proper individuals sign the necessary documents to authorize account management.

Is an Operating Agreement Necessary for a Subsidiary in the Netherlands?

An operating agreement is not legally required for setting up a subsidiary company in the Netherlands. However, it is advisable to have one, especially for Private Limited Companies (BV). This document can help clarify the management structure, decision-making processes, and profit distribution among shareholders, preventing future disputes and ensuring smooth operations. It is not mandatory, but it provides legal clarity and operational efficiency.

Opening a Branch vs. a Subsidiary in the Netherlands

The following table outlines the key differences when deciding between opening a branch or a subsidiary in the Netherlands.

Aspect Branch Subsidiary
Legal Structure Extension of the parent company. A separate legal entity from the parent company.
Control Fully controlled by the parent company. Operates independently with parent oversight.
Liability Parent company liable for debts and actions. Subsidiary has limited liability.
Taxation Subject to Dutch tax laws, including VAT (21%) and corporate tax (25.8% on profits above €395,000). Subject to Dutch tax laws, including VAT and corporate tax.
Setup Complexity Simpler to set up. More complex setup, requires incorporation.
Operational Scope Direct extension of the parent company in the Netherlands. Independent operations in the Netherlands.
Regulatory Compliance Must comply with Dutch regulations but limited to parent company’s activities. Must comply with both local and federal Dutch laws.
Market Perception Often seen as a foreign entity. Seen as a local presence, enhancing credibility.

How can Commenda Help you Expand in the Netherlands?

In conclusion, whether you choose to open a branch or establish a subsidiary in the Netherlands, understanding the legal, operational, and financial factors is essential for successful market entry. Both options offer unique advantages and challenges, with branches providing a simpler setup and subsidiaries offering greater operational independence and limited liability. The right choice will depend on your business goals, ownership preferences, and long-term strategy in the Dutch market.

Commenda can help your business expand into the Netherlands by guiding you through the entire process of setting up a subsidiary. From choosing the right legal structure to navigating regulatory requirements and ensuring tax compliance, Commenda provides expert support. They streamline the setup process, ensuring your business complies with Dutch laws and operates efficiently, making your expansion into the Netherlands smooth and successful? Schedule a free demo today.

FAQs

Q. How much does it cost to set up a subsidiary in the Netherlands?

The cost typically ranges from €1,500 to €5,000, depending on the type of subsidiary, with additional costs for licensing, office rent, legal services, and other regulatory expenses.

Q. How long does it take to register a subsidiary in the Netherlands?

The registration process usually takes 1 to 3 weeks, depending on the business type and document submission.

Q. Can a foreigner fully own a subsidiary in the Netherlands?

Yes, foreigners can fully own a subsidiary in the Netherlands, especially if it is set up as a BV (Private Limited Company) or in a free zone.

Q. What are the common challenges when opening a subsidiary in the Netherlands?

Common challenges include navigating local regulations, understanding tax and labor laws, and securing office space.

Q. Do subsidiaries in the Netherlands need a local director or representative?

For a BV, at least one director must be a resident of the Netherlands.

Q. What are the annual compliance requirements for subsidiaries in the Netherlands?

Subsidiaries must file annual returns, submit audited financial statements, and comply with VAT and corporate tax regulations.

Q. Can a subsidiary hire employees directly in the Netherlands?

Yes, a subsidiary can hire employees directly and must comply with Dutch labor laws, including contracts, wages, and social security contributions.

Q. What happens if a subsidiary fails to meet compliance rules in the Netherlands?

Failure to comply can result in penalties, fines, or suspension of operations, affecting the subsidiary’s reputation and ability to operate.