Starting a Business in the Netherlands
Categories: career & jobs
What is more satisfying than being your own boss? Honestly, many people think nothing. Of course, there are stresses, hardships, and concerns, but the joy and passion of owning and operating your own business is one too few get to experience.
If this is your dream, then the points below for starting a business in the Netherlands are important ones. It can be a difficult process for a native, let alone for an international! Luckily, we spoke to Blue Umbrella to help guide you through this process.
Things to Consider When Starting your Own Business
When starting a business there are several items you will need to consider. Many entrepreneurs face administrative, legal and fiscal hurdles especially given that all the paperwork is in Dutch. There are also a few questions you should ask yourself before you get started, namely:
- Do I need a business plan?
- Am I legally recognized in my profession?
- Which legal form is most appropriate for my business?
- Which taxes do I need to report and pay?
- What expenses are tax-deductible?
- Do I need insurance?
Without further delay, here’s what you’ll need to do to get started!
Make a Business Plan
It is advised that you should have a business plan. Having a business plan helps you keep yourself organized and focused on what your business is and what services you offer. Not to mention, a business plan provides the ever-important road map toward growth. For that reason alone, it is important, especially when pitching to potential investors.
Other reasons why having a proper business plan is important when you start a business in the Netherlands:
- It allows you to assess critical issues and make key decisions toward a successful business launch
- Allows for you to take a holistic view of your business
- Provides an understanding of the impact of starting a business
- Identifies the strengths and weaknesses of your business
- It is, in many cases, a requirement for regulation and financing purposes
Legally Recognized Profession
Like virtually every country, the Netherlands holds several highly regulated professions. These include medical, legal, financial, and scientific fields of employment. In order to be recognized legally as a representative of such professions, potential business owners must hold the appropriate qualifications as stated by Dutch law. To have your qualifications recognized (for example: if you hold a diploma in a sector from outside the Netherlands), you will have to contact the appropriate sector authority.
Note: Outside of the 52 regulated professions in the public or health fields, if you want to work in the Netherlands temporarily/occasionally, you do not have to apply for recognition of your qualifications. You must, however, inform the appropriate sector authority.
Determine the Correct Legal Form for your Business
There are various legal forms your company may take. This can be anything from a foundation to a public LLC. Below are a number of available options. Each form will have their accompanying paperwork. Remember, though, once you determine the appropriate form, your business will still have to be registered with the KvK (Kamer van Koophandel).
- General partnership (VOF)
- Professional partnership (Maatschap)
- Limited partnership (CV)
- Limited liability
- Private LLC (B.V.)
- Public LLC (N.V.)
- Sole trader (eenmanszaak)
- Foundation (Stichting)
- Association (Vereniging)
- Cooperative (Coöperatie)
Note: Non-Dutch entities are also recognized by Dutch law and can be registered with the Chamber of Commerce (KVK).
The eenmanszaak is the most common form that pertains starting a business in the Netherlands. It is relatively easy to set up and also allows a sole trader to employ staff. Though basic bookkeeping is required, the eenmanszaak does not require a contribution towards the national social insurance. It does, however, require voluntary private insurance for unemployment and sick leave. With the eenmanszaak, the sole trader is privately liable for business risks, while their business tax results are equal to their personal tax results.
The VOF (or general partnership), defines a business as one run with equal partners, where you and your partners are associates. Each partner contributes their respective share to the business and carries their personal business results. Each partner is personally liable for the entire general partnership, is personally taxed, and privately insured.
A major difference with the eenmanszaak is that a B.V. is a legal entity in its own right. The person filling out the B.V. form is merely a representative of the business. This representative is not liable for business activities. In fact, the business is legally separated from its representatives, rather, issuing shares of capital ownership. As a shareholder, the B.V. then becomes tradeable. The B.V. does require separate financial administration and tax registration.
Determine and Report Corporate & Business Taxes
When setting up a business in the Netherlands, taxes are very important to consider, and there are a few of them. The most important, and frequent, tax is the 21% Value Added Tax (VAT), which, most of the time, will require quarterly declarations. From there, businesses will need to provide their income tax (inkomstbelasting), payroll tax (loonheffing), and/or corporate tax (vennootschapsbelasting).
- Value Added Tax (VAT)
- Various reporting periods apply
- Different VAT rates apply
- VAT exempted services
- VAT can be waived in some situations
- Income Tax
- Corporate Tax (if an incorporated business)
- Payroll Tax (if employing)
Note: There are several tax benefits or deductions available for self-employed. These are applicable provided certain eligibility criteria are met.
Understand Which Expenses are Deductible
There are several business-related costs that can be deducted from your income tax as a self-employed person. Below is a breakdown of some of the more common costs, which generally include materials, equipment, travel, workspace, and study.
Tax Deductible Items:
- Business Car
- Pending administration deductibles can include business-related car travel and related costs (ie. fuel, maintenance, insurance premium, taxes)
- Personal Car (if also used as a business car)
- €0.19 per km for business usage
- Public Transport
- No separate VAT receipt required (9% VAT)
- Expenses up to 4600 annually are not deductible, after that can be deducted up to 100%. Alternatively, 73,5% – 80% of actual expenses can be deducted per employer choice.
- Incl. food, drinks, business lunches, dinners (+ tips)
- Conferences and study trips
Note: VAT paid on expenses outside the Netherlands can only be reclaimed in the respective country or will be deducted as a business expense in the Netherlands from your Dutch administration.
Investigate Which Insurance(s) you Will Need
Business owners have several additional/alternative liabilities than employees or private citizens. In these cases, it is important to consider the kind of insurance that you are taking on for your business. This is not just for the protection of your employees, but also for yourself should any circumstances arise.
Such circumstances could include:
- Parental leave
- (Your) Pension
Types of business owner insurance (Professional/Personal):
- Health (Personal)
- Accident (Personal)
- Maternity Leave (Personal)
- Invalidity (Personal)
- Pension/Annuity (Personal)
- Professional Liability (Professional)
- Legal Expenses (Professional)
- Property (Professional)
- Credit (Professional)
- Transport (Professional)
- Computer (Professional)
- Partner/Associate (Professional)
- Loss of Profit (Professional)
Note: Aside from the mentioned insurances, it is also good business practice to set your companies terms and conditions. Terms and conditions protect business owners from liability claims and certain conflicts.
To learn more about how to start a business in the Netherlands, sign up online at www.blueumbrella.nl. If you have questions about their questionnaire, expat taxes in general, or are a small business owner looking for support, email the Blue Umbrella team at [email protected] or give them a call at +31 (06) 20 468 7560.