The Netherlands, known for its skilled workforce and strong work ethic, is a popular destination for startups.
It鈥檚 no surprise that due to its location, infrastructure and hard-working population, entrepreneurs are drawn to its business-friendly environment and high quality of life.
However, needs careful consideration. Here, we look at everything you need to know before .
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Things To Consider Before Moving To The Netherlands
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Before you pack your bags and head to the Netherlands to start your business, it is important to know what you are getting yourself in for. For example:
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The Cost of Living
The cost of living in the Netherlands, especially in cities like Amsterdam, Rotterdam, and The Hague, is high. In fact, to put this into perspective, Amsterdam is the tenth most expensive city in Europe.
It鈥檚 worth looking at housing, transportation and other expenses to see if the move is viable. This involves both personal and business expenses, both of which can be high.
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Business Culture
Dutch business culture is known for being straightforward and to the point. Understanding cultural nuances in business is important if you are looking to build strong working relationships with Dutch partners and employees.
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Economic Environment
The Dutch economy is currently experiencing slower growth than usual. According to the IMF, growth in 2023 was minimal, registering only 0.1%.
This slowdown has been likely caused by factors like increased inflation, which peaked at nearly 12% in 2022 and the ongoing war in Ukraine.
However, there are signs of recovery on the horizon. Economists are optimistic about growth for 2025, projected to sit at 0.8% and 1.5%. This is expected to be driven by wage increases as a result of government policies like higher minimum wages.
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Residency
If you want to live in the Netherlands while running your business, you may need a residence permit. However, it鈥檚 worth noting that you do not need Dutch citizenship when you start a business in the Netherlands.
The move for EU and EFTA citizens is much easier, whilst non-EU citizens must apply for a temporary or permanent residence permit from The Dutch Immigration and Naturalisation Service.
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What Are The Steps To Starting A Business In The Netherlands?
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Starting a business in the Netherlands isn鈥檛 difficult, as long as you follow the right steps. Here, we take you through everything you need to know and consider鈥�
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1. Choose A Legal Structure For Your Business
The first step is to decide on what type of business structure best suits your needs. Some options in The Netherlands include:
- Sole Trader (Eenmanszaak): A business owned or set up by a single person. It鈥檚 relatively simple to set up but comes with personal liability, with the person being responsible for all financial and legal obligations.
- General Partnership (VOF): Formed by two or more people or entities who come together to start a business. They share profits, losses, and liabilities.
- Private Limited Company (BV 鈥� Besloten Vennootschap): A legal business that is liable for all legal and financial obligations, rather than an individual.
- Public Limited Company (NV 鈥� Naamloze Vennootschap): A larger version of a BV, usually with several directors.
- Cooperative (Co枚peratie): Formed by members who can easily join or leave.
- Association (vereniging): A not-for-profit organisation, usually formed for social good.
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2. Choose A Business Name And Address
Your company name needs to be approved by Dutch standard, which have certain limitations. For example, words like 鈥渂ank鈥� or 鈥渦niversity鈥� can鈥檛 be used without permission.
You must also have a business address, which will act as the location to get legal documents for your company.
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3. Register With The Dutch Chamber of Commerce (KVK)
All businesses in the Netherlands must register with the KVK. You need to make an appointment to get a unique number and then have the following information ready for your appointment:
- Valid ID
- Copy of a signed lease, rental, or sales contract for your Dutch business address (if relevant)
- Business contact details
- A description of your company鈥檚 activities
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The sector in which you will be active 鈥� depending on your business type, you might need additional licences or permits. It鈥檚 important to check what these might be so you have everything you need when registering.
You should ensure that you register no later than 1 week after starting business activities to ensure you are operating legally.
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4. Open a Business Bank Account
While you don鈥檛 need听a bank account for opening a business in the Netherlands, having one can be helpful when taking payments and making trades.
Dutch banks usually offer corporate accounts for new companies, though businesses can also open accounts online if easier.
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5. Register For Taxes
Before kicking off operations, your company needs to register for corporate income tax (CIT), value-added tax (VAT). It鈥檚 important to note that whilst you don鈥檛 have a legal requirement in The Netherlands to hire a tax advisor, it鈥檚 probably best to speak to a professional
For companies with profits below 鈧�395,000, the CIT rate is 19%. Those with profits above 鈧�395,000 are taxed at 25.8%.
The VAT rate is 21%, however lower percentages exist for essential items like food, transport and healthcare.
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Hiring And Managing Employees In The Netherlands
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If you are planning to hire employees to work in your business, it鈥檚 important to be up to date with the latest labour laws.
These include:
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Employment Contracts
Contracts in the Netherlands can be verbal or written but must include specific terms such as: names, job description, type of contract (fixed-term or indefinite), salary, work location, and probation period.
- Note: fixed term contract have a set end date, whereas open-ended contracts do not.
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Minimum Wage And Working Hours
The minimum wage is adjusted bi-annually and currently sits at 鈧�1,995 per month for adults over 21. Working hours are capped at an average of 48 hours per week (roughly 9 hours per day) across 6 weeks. This must include overtime.
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Annual Leave and Sick Leave
Employees are entitled to annual leave. For hourly contracts, this is calculated as weekly working hours times four. For full-time employees this works out at 20 days per year.
When it comes to sick leave, Employees are entitled to 70% of their salary for up to two years if they cannot work due to illness.
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Maternity Leave
Women receive 16 weeks of maternity leave with full pay.
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Firing Employees
The Netherlands has specific laws when it comes to dismissing employees, ensuring businesses act fairly. If you are looking to let go of workers, consult a professional to ensure you are acting according to employment laws.
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Should You Start A Business In The Netherlands?
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Starting a business in the Netherlands is a great idea if you are looking for a location in Europe that has a hard working population and a good level of bureaucracy. However, it鈥檚 important you consider all the elements before diving in, including taxes, the cost of living and strict employment laws.
