Top Challenges of Doing Business in the Netherlands

Top Challenges of Doing Business in the Netherlands

19 February 2018

The Netherlands is home to a competitive fiscal climate and friendly business environment in the heart of Europe, but navigating the complex tax, legal and regulatory hurdles can be difficult without local help on board.

Disclaimer: This article was accurate at the time of publishing. To obtain the most up-to-date information, please get in touch with our local experts.

Thanks to a central geographic position and excellent connectivity, The Netherlands provides a strategic location to serve markets within Europe, the Middle East and Africa. Combined with modern infrastructure, The Netherlands has developed into an ideal base for European, American and Asian firms looking to establish a global presence. What’s more, the competitive fiscal climate and friendly business environment allow businesses to expand with relative ease.

With an open innovation approach and well organised public-private partnerships, there are also endless opportunities for companies looking to innovate and expand. A solid workforce and an international business environment add to the dynamic corporate conditions on offer in The Netherlands, but with several complicated regulatory and tax requirements, expanding businesses can struggle to grow without local help on board.

Starting a Business
Starting a business in The Netherlands is a relatively standard procedure, although there are various steps which may trip up newly formed companies. After capital is deposited in a bank and the company name is checked for appropriateness and validity, a deed of incorporation must be drawn up and the company has to be registered at the local chamber of commerce. Registration with local tax authorities is also required in the initial formation of the business.

Dealing with Construction Permits
It takes over 150 days to deal with construction permits because of the 14 different procedures that have to be trawled through. Many requirements for property construction are unique to The Netherlands, such as obtaining reports on the soil conditions and notifying various government bodies on matters such as heating installation.

Getting Electricity
Getting electricity is a similarly time consuming process, taking well over 100 days to complete. The procedures are carried out with Liander, which will conduct an external inspection and complete the works. The company is then required to sign a contract with an electrical supplier before the meter can be installed.

Registering Property
Businesses will require a notary when registering property to conduct a title search at the Land Registry and conduct a search on the representation of the parties. Transfer and registration of the deed is then required, and registration with the tax authority must also be completed.

Getting Credit
The Netherlands is home to a robust financial environment, but there is no public registry coverage, which can make getting credit a little tricky.

Protecting Investors
The World Bank and International Finance Corporation (IFC) rank The Netherlands in 117th place (out of 185 economies) in the world for investor protection, with relatively weak scores shown across all indices.

Paying Taxes
There are nine corporate tax payments to be made each year which take an average of 127 company hours to file. Health insurance contributions are the most time consuming fiscal responsibility, and there are many other tax payments which can be confusing for businesses new to the fiscal environment.

Trading Across Borders
The cost of trading across borders is relatively cheap compared to the OECD average. It takes just under a week to both export and import, with four documents to prepare each way.

Enforcing Contracts and Resolving Insolvency
Enforcing contracts takes 514 days to complete and requires the navigation of 26 procedures. Resolving insolvency is much more streamlined, although it can still take over a year to complete.

The Dutch appreciate plain speaking above all else, so avoid diplomacy and subtle indications. There is a much more equal corporate structure, and the manager may often call upon the collective firm to make decisions, rather than operating in a strictly hierarchical structure. Businesses should also keep in mind that The Netherlands is quite a conservative society, and change is only accepted and embraced after much deliberation and discussion.

TMF Group
We have the local knowledge to help you navigate these minefields. Whether you want to set up in The Netherlands or just want to streamline your Dutch operations, talk to us.

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