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Dutch Legislation related to Foreign Investments

Updated on Wednesday 14th August 2019

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Dutch_legislation_related_to_foreign_investments.jpgForeign investments are welcomed in the Netherlands and the Dutch legislation is very permissive with foreign companies. Netherlands’ foreign direct investments policy and tax benefits attract foreign investors. Domestic and foreign companies are treated equally under Dutch law.

The Netherlands has an open investment policy and also one that encourages trade activities. The country’s Government observes the European foreign investment policies and also those set forth by the OECD. The country is an important recipient of foreign direct investments and these types of activities are not only encouraged by a favorable policy but also by a good geographical location in Europe.

With a vast knowledge in the Dutch company formation field, our local consultants can explain the legislation which favors foreign direct investments in this country. You can also rely on us for assistance in registering a business in the Netherlands.

What makes the Netherlands an appealing country for foreigners?

The Netherlands does not have a specific law providing for foreign direct investments (FDIs); however, all the other national laws contain provisions about the participation of international investors in many industries of this country.

Despite not having a special foreign investment legislation, the Netherlands remains one of the most appealing destinations in Europe from this point of view because:

  1. it has a great geographical location which provides for important investment opportunities in sectors like logistics and transportation;
  2. the Port of Rotterdam is the largest port in Europe and an important transportation hub;
  3. many companies from foreign countries use the Netherlands for their regional headquarters in Europe;
  4. for year now, the Netherlands is one of the largest foreign investment recipients in the world (occupying the 10th position at the level of 2014);
  5. according to the World Bank, the Netherlands has one of the most effective governments in the world;
  6. the Netherlands has one of the fairest and most transparent legal systems in Europe.

As seen above, the Netherlands is by far one of the most attractive countries in the world when it comes to foreign investors, which is why if you are interested in setting up a business here you can rely on our specialized services.

Our company registration advisors in the Netherlands can guide you through the entire incorporation procedure. We can also help you apply for the necessary licenses based on the activities undertaken by your company.

Benefits for foreign investors

The laws for foreign direct investments are unbiased. Health, safety regulations and environmental rules apply to both local and foreign investors. Immigrants are allowed to live and work in the country. The corporate income tax rate is 20% on the first 200,000 Euros and 15% on profits that exceed 200,000 Euros.

The Netherlands have signed treaties with over 90 countries in order to avoid double taxation on income and capital. Withholding taxes on dividends, interest and royalties are thus reduced. In some cases, taxes are reduced to 0% for interest and royalties. Moreover, there are no withholding taxes on interest and royalty payments.

The Dutch tax law stipulates that the following are exempt from Dutch corporate income tax:

  • - cash dividends;
  • - dividends-in-kind;
  • - bonus shares;
  • - capital gains.


Investors can also benefit from a 30% tax reduction for highly qualified foreign employees.

Some of the most attractive investment sectors for foreign investors in the Netherlands include trade, imports and/or exports, communications, transport and distribution, real estate, computer software and hardware services and others.

Entrepreneurs are allowed to purchase and/or rent office space, buildings, and homes just like any Dutch national. New businesses can benefit from investment aid in the form of investment incentives.

Investment-based residency in the Netherlands

One of the latest laws which provides for special conditions for foreign investors refers to a residency by investment scheme under which foreign citizens can relocate to the Netherlands based on specific conditions.

Those interested in relocating to the Netherlands as foreign businesspersons must invest at least 1.25 million euros a Dutch company or in an investment fund acknowledge by the Ministry for Economic Affairs.

The investment must also bring value to the Dutch economy through the creation of at least 10 jobs in a period of 5 years. The investment must also have a significant contribution in the innovation sector of the company the investment was made in.

The investment scheme is supervised by the Dutch Immigration and Naturalization Service.

Our company formation specialists in the Netherlands can offer more information on the residency by investment scheme.

Support from the Foreign Investment Agency in the Netherlands

Foreign investors who want to open companies in the Netherlands can obtain support from the Foreign Investment Agency which was created with the purpose of assisting companies expanding their operations in the Netherlands or investors seeking to start new companies here. The Agency is in charge with organizing industry-specific meetings which help investors network, organizing various missions which help entrepreneurs find out about investment opportunities and training session on government and licensing procedures.

You can rely on our local consultants for assistance in registering any type of company in the Netherlands.

Find out details about the laws governing foreign investments and information about starting a business in the Netherlands from this video: 

 

Sectors restricted for foreign investment 

Foreign investment is not allowed in publicly owned and controlled sectors. Public monopolies exist in the following sectors:

  • - national high-voltage electricity grid (but electricity production and distribution are open to foreign investments);
  • - water grids;
  • - railway passenger services;
  • - the national airport;
  • - the Netherlands Central Bank.


With some exceptions, postal services and public transportation can be open for foreign investments. Business sectors like defense and security, public media and broadcasting are subject to more limitations or conditions for foreign investments.

The Netherlands welcome and encourage foreign investments. The country’s political stability, rapidly growing economy and pro-business policies make it very attractive for foreign investors. Moreover, its geographical position and excellent infrastructure make Holland an attractive country for investors.

The most attractive investment sectors in the Netherlands

Just like any other country, the Netherlands has certain sectors which attract foreign investors more than others. The latest figures date from 2017 and refer to the following investment industries:

  • - the financial and insurance services sector attracted 80.8% of the FDIs;
  • - manufacturing accounted for 12% of the total FDIs;
  • - wholesale and retail attracted 2.4% of the FDI stocks;
  • - real estate and ICT represented 1.2%, respectively 0.6% of the entire FDIs stock.

There are also other industries which appeal to foreign investors coming to the Netherlands and if you are interested in a specific area, you can rely on our company registration agents for incorporating a business in any of them.

Dutch foreign direct investments in numbers

The Netherlands is by far one of the most appealing EU countries, considering that:

  • - it offers access to a 500 million consumer market in Western Europe;
  • - there are more than 6,300 foreign companies operating here;
  • - these companies established 8,110 operations in the Netherlands;
  • - it ranks 36th in the 2019 Doing Business Report issued by the World Bank;
  • - the most important investment partner of the Netherlands is the USA (it held 20.5% of the Netherlands’ FDI stock at the level of 2017).

If you are looking to establish your business operations in Holland, our company formation agents can help you open a company in the Netherlands.

 

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Our specialists in Dutch company formation will help you incorporate a company in the Netherlands as soon as possible.

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