Disregarding a few, starting a business anywhere in the world where you’re a non-resident is challenging. The Netherlands is no exception. Despite being a part of the European Union (EU), the Netherlands is a stand-alone country that has its own rules and regulations around starting a new business.
This article will help you understand the requirements of setting up a new business in the tulips capital of the world, the Netherlands, being a non-resident.
Prerequisites to Start a Business in The Netherlands
Before you can start your operations in The Netherlands as an extension of your existing business or as a new one, a few things need your attention.
1. Permits and Visas
Several categories of permits and visas are allocated to non-residents. The more appropriate one for starting and sustaining a business in the Netherlands is the Work Permit (TWV). It allows you to stay in the country for more than 90 days as an entrepreneur or self-employed individual. It also is issued as a part of the residential permit and depends on how long you’re intending to stay.
You also need to register yourself as a business person in the Netherlands Chamber of Commerce (KVK). They help individuals run their businesses successfully in the Netherlands.
Furthermore, you’ll need a Citizenship Service Number (BSN) assigned to you for personal data keeping by the Dutch government. It can be used to get access to any government services in the country like healthcare and insurance.
2. Opening a Business Bank Account
To run a business in the Netherlands, you need to open a business account (IBAN). However, if you already have a business account in the Single Euro Payment Area (SEPA) Zone, you wouldn’t require one. Although not necessary, it’s recommended that you keep your business account separate from your personal account.
For individuals and businesses from outside the SEPA zone, you need to file an application for a business account with a bank in the Netherlands. The documents required to file the application are:
- Proof of identity: A passport or an identity card should suffice for this purpose.
- Proof of Address: Submit official tenancy agreements as proof of address.
- Your BSN number.
- You also need to submit your proof of income if you’re opening an IBAN account. Three consecutive income slips should suffice.
- A valid Dutch phone number.
- The bank will register you with the Central Credit Registry Agency (BKR) to instigate a credit history check.
However, all these documentation requirements come after you’ve filled out the Quick Scan form and submitted it to a Dutch bank for verification. Banks in the Netherlands work together to inform you if you’re eligible to open an IBAN account with a bank by reviewing your application while you’re in the process of registering with the KVK.
The quick scan process isn’t a fast-track method to quicken your application process. It just informs you about your eligibility to open an international business account. If you’re eligible, the Dutch bank will start with the regular account opening process.
Following that, you can set up a company in the Netherlands.
3. Finding a Business Location
Various regulations are in place as to where you can set up your business in the Netherlands. While the majority of industrial complexes including the ROMs, Port of Rotterdam, and Eindhoven Brainport are accessible to entrepreneurs, you can’t open a factory in the residential areas. You can find all the necessary industrial areas from this interactive map.
While choosing a business location, you need to consider a few factors such as:
- The economic situation of the region. Analyze whether there are enough resources like employees, water sources, and food places to sustain a business.
- Check if your area of preference is in line with the municipal zoning plan. The zoning plans dictate whether an area is suitable for your particular business model.
- Analyze if you can rent or purchase a house in that preferred location. For example, check the municipal regulations if you want to start a pub in your house.
- There also is data available on neighborhoods to check for competition if you’re trying to sell your product in a specific location.
- Check with the demand and supply data available with the location scan feature to understand whether it’s feasible to start your business in that specific location.
- Consider the costs of renting an office, hiring employees, and building a factory in a specific location. For example, the cost tends to be higher in the Randstad area than in any other location across the country.
4. Dutch Environmental Regulations
The Dutch government tends to take the environmental impacts of businesses quite seriously. As a non-residence, you need to apply for regulatory status to operate a business in the Netherlands.
The categories are as follows:
- No or negligible impact
Office-based farms like banks, care institutions, playgroups, etc. fall in this category. If you’re planning to operate such an institution, you don’t need to apply for the all-in-one physical aspects permit and can run your business without much effort.
- Substantial environmental impact
If your business has a substantial environmental impact, you must comply with the activities decree to operate your business. You also must notify the municipal authority when you change, set up, or expand your business. Moreover, you need to comply with wastewater management, agricultural activities, and other industrial norms.
- Extensive environmental impact
Businesses that have an extensive environmental impact, need an all-in-one permit of physical aspects. They also need to comply with all the necessary regulations in place.
5. Safety Regulations
Fire and chemical safety regulations are included in the all-in-one permit of physical aspects. If you want to run a business in the Netherlands, you must comply with the requirements.
Choosing the Business Structure
You’ve fulfilled all the necessary requirements to start a business in the Netherlands as a non-resident, yet you need to choose a business category to prepare your company’s legal structure. Here are the most common ones that you need to know:
1. Sole Proprietorship
As a sole proprietor, you’re responsible for all the liability, profits, and debts associated with your business. You also must do your finances as a part of company records to pay taxes and give the authorities an insight into your business’s financial position.
Freelancers are also required to enlist as sole proprietors in the Netherlands. An initial fee is required to register the business with a yearly fee between €500 – €1000.
2. General Partnership (VOF)
Where at least 2 persons are involved in the operations of the business, that’s considered a general partnership in the Netherlands. Each partner is personally liable for the debts associated with the business.
You must also draw up a partnership agreement to operate a VoF business structure. The fees to sustain a partnership is similar to a sole proprietorship.
3. Limited Partnership (CV)
In a limited partnership setup, at least a managing and a silent partner is required to operate the business on a day-to-day basis. The silent partner is liable for handling the finances of the business whereas the managing partner is responsible for all the necessary business decisions.
As a managing partner, you’re required to file your income taxes according to the share of your profit. However, the silent partner isn’t entitled to any tax benefits.
4. Private Limited Company (BV)
If you’re setting up a private limited company, the company is liable for any debts. You, as an individual, aren’t responsible for how the company performs in the financial aspects. It’s owned by the shareholders, who are the ultimate power, but directors run the day-to-day operations of the business.
If you’re a smaller BV, you may be the only shareholder and also the director. But, you can opt to have more directors to share the responsibilities.
The Bottom Line
Setting up and operating a business in the Netherlands requires you to find a business location, open a bank account, get permits, and comply with safety and environmental regulations. You also need to choose a legal structure for your business depending on your operation size and the number of shareholders.
It might be a challenge in the beginning but you’ll surely reap off the benefits of your business once it starts operating.