The Netherlands is one of the friendliest countries in Europe when it comes to the adoption of new financial technology. One of these technologies refers to the use of cryptocurrencies when performing purchases. However, investors can set up various types of businesses in the financial sector, including small and medium-sized enterprises (SMEs) which usually need funds for starting operating. This is also the case of Dutch startup companies. In order to meet these types of companies’ needs crowd funding platforms have started to emerge everywhere in the world, the Netherlands included.

Investors who want to open crowd funding platforms in the Netherlands must first register a company in this country. Our Dutch company formation consultants can assist with the registration of the business.

Legislation related to crowd funding in the Netherlands

One of the greatest advantages of setting up a crowd funding business in the Netherlands is that the government has created a legal framework which sets out the regulations under which these companies can carry out their activities.

According to the regulations imposed by the Dutch Financial Market Authority and the National Bank, there are four types of crowd funding companies which can be set up:

- equity-based platforms;
- loan-based platforms;
- donation-based platforms;
- reward-based platforms.

Dutch equity and loan-based crowd funding companies must obtain operating licenses from the Financial Market Authority.

Our company registration agents in the Netherlands can offer information on these licenses.

Company registration for starting a Dutch crowd funding business

In the last 4 years, crowd funding has become quite an important part of the alternative financing methods found by Dutch startups.

When deciding to open a crowd funding platform, an investor must first register a company with the Dutch Trade Register. The incorporation will be completed in accordance with the provisions of the Company Law and implies:

choosing a suitable type of structure (the limited liability company is one of the most suitable entities for such activities);
preparing and filing the incorporation documents with the Companies Registrar in the Netherlands;
registering with the tax authorities in the Netherlands (VAT registration is not a mandatory requirements from the start of the activity);
obtaining the authorization from the Dutch Financial Market Authority in the case of equity and loan-based platforms.

The creation of a Dutch crowd funding platform does not imply additional steps than the creation of a business in another industry, however, once it starts its activities, there are specific regulations that must be respected.

Our company registration advisors in the Netherlands can help foreign investors incorporate a legal entity under which they can set up crowd funding companies.

Licensing regulations for crowd funding platforms in the Netherlands

Once a Dutch company is registered with the Trade Register, it must apply for a license with the Financial Market Authority (AFM). For this purpose, it must comply with various regulations. Among these, non-transferable loan platforms can benefit from exemption when it comes to the licensing requirements, however, equity and loan-based platforms must apply for the license if they engage in transmitting orders or if they take the role of placing agents.

The creation of a crowd funding company also implies drafting a prospectus, just like in the case of Dutch investment funds. The former must comply with the following requirements:

- the total offering maximum cannot exceed 2,5 million euros per year when issuing shares or bonds;
- the Alternative Investment Fund Manager Directive (AIFMD) does not apply to crowd funding platforms in the Netherlands;
- start-up companies are not regarded as Alternative Investment Funds, therefore they do not need a license in this sense;
- project companies, on the other hand, can require an AFM authorization;
- all crowd funding companies must display warning banners on the risks associated with the investments.

Such companies can also fall under other Dutch laws, among which:

- the Dutch Civil Code in terms of the contracts signed by the platform;
- the Personal Data Protection Law with respect to the data collected from the investors and participants;
- the Telecommunications Law and the Consumer Protection Act;
- the Money Laundering and Terrorist Financing Prevention Law.

Also, with respect to the money transfer that may occur from the platform to the companies requesting financing, the crowd funding platform can be considered to provide a money remittance service which requires AFM authorization. It is required for such platform to work with payment institutions or banks, case in which mediation in payment account or electronic money licenses are required.

If you want to open a company in the Netherlands and operate in the financial sector, our local consultants can help you.

Foreign crowdfunding platforms in the Netherlands

It is possible for foreign companies owning crowd funding platforms to operate in the Netherlands provided that they respect the Dutch legislation. If the platform has obtained a foreign license under the Markets in Financial Instruments Directive (MiFID), it can operate in Netherlands without applying for additional licenses with the Dutch authorities. Moreover, it does not require to have a physical presence in the Netherlands, as the EU passporting rights apply just like in the case of investment funds established in EU countries.

The main regulations that need to be respected by foreign crowd funding companies are related to money laundering.

It is also useful to note that starting with 2018, the Netherlands has a Crowdfunding Association that has created a set of regulations that need to be respected by all platforms.

Why open a crowd funding company in the Netherlands?

Foreign investors who want to set up Dutch crowd funding platforms should know that apart from the types of companies they can register in this area, the country was an European leader on the crowd funding market in 2016. This Dutch industry gathered 128 million euros for local startups in 2015. The investment limits for equity and loan-based crowd funding were raised to 40,000 euros, respectively 80,000 euros last year which made possible for Dutch companies developing sustainable projects to thrive.

Recent statistics on crowd funding indicate that:

- in 2017 and 2018, crowd funding platforms raised 223 million euros, respectively 329 million euros;
- in the first half of 2019, there were more than 6,000 crowd funding campaigns in the Netherlands;
- these campaigns have generated a total of 203 million euros during the same period of time;
- 90% of the funds was awarded to companies.

If you are interested in starting a crowd funding company in this country and need assistance, please contact our company formation advisors in the Netherlands.

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