Would you like to start a business in the Netherlands? Nargiz Yusifova from AZ Legal will let you know what the process is like, including the pros and cons of specific business structures in the Netherlands.
Some people may think that they need Dutch citizenship or a permanent residence permit to set up a new company in the Netherlands. However, you can start your own business from abroad regardless of your nationality and if you plan to come to the Netherlands on a business basis.
start your own business
The process of setting up a company in the Netherlands has several stages and may seem long and complicated. However, by breaking these steps down into smaller components and working with an experienced team, you can achieve a streamlined incorporation process.
1. Select a name
You can start the process by first choosing a suitable name for your company and then creating a business plan. A business plan is a fundamental document for any new business that highlights the business’s main activities, objectives, and mission roadmap for achieving goals.
2. Conduct market research
However, before making a plan, it is important to conduct market research and structure your plan to address key questions such as:
- What products and services do you offer?
- Who will your customers be?
- How do you secure funding?
- Is there a demand for your product or service in the Dutch market?
It is also important to understand how well your services are adapted to the specific demands of the Dutch market and facilitate entry into the Netherlands.
3. Choose a legal structure
One of the main points to define before forming a company is choosing the appropriate legal structure.Is it business? without it Corporation (Corporation) or Business Operator and Legal personality?
Businesses without legal personality include:
- Sole proprietor or sole proprietor (Ownership)
- General partnership (partnership)
- Public partnership (partnership)
- Joint stock company (limited partnership)
- Shipping company (Shipping company)
On the other hand, the legal structure with legal personality is:
- Private Limited Company (BV)
- Public limited company (NV)
- Association (association)
- Foundation (Founded)
- religious society (sect)
The main difference between these two structures relates to the responsibility aspect. If you choose an unincorporated business structure, you will be personally responsible for the obligations and debts of your business. However, if you choose the other option (corporation), your personal assets will be separated from the company’s debts.
Ownership and B.V.
Since then, Ownership and BV are the most preferred options in each category. The main features from a Dutch perspective are:
Advantage of Ownership
First, if you choose to incorporate your BV structure, you will need to hire a notary to execute the deed of incorporation. This process can be time consuming and involve some cost. However, a sole trader can register with the Chamber of Commerce and Industry (KVK) for her one-time registration fee.
Second, control of the company may be shared with other shareholders if you establish a BV with them or if new shareholders are expected to join in the future. This means shareholders may receive dividends and have voting rights in important decision-making processes. However, if you want to maintain full control, Ownership This will be the recommended option for you.
The final advantage is Ownership That means that after setting up your company in the Netherlands, you will need to complete certain services, including accounting, legal and tax matters. This can result in significant expenses. However, in addition to lower set-up costs, as a sole trader you also spend less money running your business compared to a BV.
Benefits of BV
If you plan to obtain a residence permit based on your business in the Netherlands, establishing a BV is a highly preferred option. BV creates a more professional image when various government agencies review residence permit applications. Additionally, this image will help you when presenting your business to potential partners and investors.
BV ensures that personal liability does not affect business operations. The BV owns a separate capital and is only liable for this capital in the event of failure to fulfill its obligations (provided, of course, that there is no obvious negligence on the part of management).
For example, if you plan to run a complex business that involves more risk and external funding, a BV may be preferable. This structure allows multiple investors, including individuals such as family members, to invest in your company and help you grow your business.
If, in addition to attracting private investors, you want to effectively spread risk and obtain tax benefits, you can consider establishing a holding company that is part of a BV structure.
Dutch holding company
A holding company is a type of financial organization that can own 100% of its subsidiaries or control other subsidiaries (operating companies).
One of the main benefits of running a business through a holding company is that it provides an additional layer of protection, especially if you are involved in a high-risk business. For example, if one of the operating companies experiences financial problems or goes bankrupt, the holding company is not affected by the losses.
Another important reason why a holding company is useful is that if you want to sell stock in an operating company in the future, you can transfer the proceeds from that sale to the holding company without paying taxes.This is known as Exemption from participation (Exemption from participation). Furthermore, the ownership structure allows for centralized control over the subsidiary.
However, like any business structure, holding companies have disadvantages. Its structure can be complex, leading to increased operating costs. Additionally, maintaining day-to-day control over operating companies can be difficult and achieving synergies between subsidiaries can also be a challenge.
Talk to an advisor
In addition to considering these points mentioned above, you will also need to register your physical or virtual address before forming your company. Additionally, if you plan to build an organization that requires notary incorporation, you should consult an appropriate notary/tax advisor or ask a professional to work with you on your behalf.
Starting your own business in the Netherlands as a foreigner can be complicated. However, AZ Legal can simplify the process for you to have a smooth and enjoyable journey into entrepreneurship.
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