Foreign companies that want to establish their presence in the Netherlands with low costs can establish a branch. This business form is not considered a legal entity but an extension of the foreign company so all the responsibilities for its actions are taken by the parent company abroad.
The actions of the branch in the Netherlands are assured by a representative that will act on behalf of the company based on a power of attorney. The Dutch branch will need to perform the same business activities as the parent company and have the same name. The laws governing its actions will be both Dutch laws but also the laws from the foreign company's country of residence.
The branch is a preferred business form because it provides a permanent establishment with lower costs than other types of companies in the Netherlands and has no requirements for a minimum capital.
Differences between a branch and a local company in the Netherlands
The most important difference between a Dutch branch and other form of business, like a subsidiary in the Netherlands, is that the branch is fully dependable on the parent company abroad. This means that the foreign company will be liable for the debts and obligations incurred by the branch in the Netherlands.
Although the company registration procedure is easier than for other types of companies, like the Dutch BV for example, the branch will need to observe the laws for employment and taxation. For example the law stipulates that the employees of a branch must be registered for the social insurance. If not, the representative of the branch may be personally liable for not paying the contributions. A branch opened in Netherlands is usually subject to the same financial obligations as the local companies.
A number of double tax treaties signed by the Netherlands and other countries can ease the tax burden on branches, provided that the branch qualifies for the reduced withholding tax rate for dividends, royalties or interest.
Branch registration in the Netherlands in 2021
Before starting the commercial activities, the branch must register at the local Chamber of Commerce in the Commercial Registry with the appropriate documents and information. The documents must be notarized in the country of origin and followed by an authorized Dutch translation.
The requested documents for incorporation may differ from case to case but in essence the following information is necessary:
- a proof of existence of the foreign company (an excerpt from the local trade register with the date of registration and details of the company),
- the certificate of registration of the parent company issued by the Trade Register in its home country,
- the name and the registered office in the foreign country of the parent company,
- the name and details regarding the board of directors and secretary (or any form of management),
- the minutes of the meeting when the decision to establish the branch was made,
- the branch name which must be the same as the parent company’s and its address in the Netherlands,
- the name of the appointed representative and the power of attorney which grants him or her authority to represent the foreign company,
- the powers of this representative and the activities which will be performed by the branch.
After the branch is registered, the Chamber of Commerce will release the certificate of registration with the unique number of recording. After this step, the branch must register at the tax authorities and at the social security funds. After all of these steps are complete the branch may begin its business activities in the country.
You can read about the steps for opening a branch in the Netherlands in the scheme below:
The steps for opening a branch in Netherlands are similar to those in other countries, however it is recommended to ask for specialized assistance as some jurisdictions may have other special requirements. For example, if you are interested in setting up a branch in Hong Kong, we can put you in touch with a team of specialists in company formation matters in Hong Kong.
The advantages of a branch in the Netherlands
Because the registration procedure is easierand less time consuming than for companies incorporated directly in the country, foreign corporations will sometimes choose to establish a branch. The lower costs for incorporation are also an advantage and so are the more relaxed reporting and accounting obligations for branches in 2021.
Why choose to create a branch office in the Netherlands in 2021
The Dutch branch is one of the most suitable options for those who want to expand their operation in this part of Europe in 2021. Apart from enabling the parent company to have full control of the operations of the Netherlands-based business, it will also help it incorporate this type of entity faster compared to other ones.
After the decline registered in 2020, the Dutch economy is expected to recover in 2021 and increase by 1.8% which is why setting up a branch here will be to the benefit of foreign companies.
If you need help in registering a Dutch branch in 2021, do not hesitate to ask for the support of our agents.
FAQ on branch office registration in the Netherlands
Is it hard to register a branch office in the Netherlands?
No, the incorporation of a Dutch branch office can go smoothly if all the documents are correctly prepared and filed.
Does the branch office need a local director?
The branch office does need a local director.
Can the branch office offer any type of services or sell any kind of goods?
The branch office’s activities will be limited to those of the parent company, meaning that it cannot sell any other goods or provide any other services than the parent company.
How long does it take to register a branch office?
The registration process of a branch office can take up to 2 weeks, depending on how soon the parent company prepares all the documents for incorporation.
How is a branch office taxed in the Netherlands?
The branch office will be taxed on its profits earned in the Netherlands. The current corporate tax rates in the Netherlands are 20% and 25% and are levied based on specific income thresholds.
If you have any other questions on branch registration requirements in 2021, our Dutch specialists will answer them.
We invite you to watch a short video about opening a branch in the Netherlands: