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A subsidiary in the Netherlands is a regular Dutch company with full legal personality, characterized by the fact that its share capital is fully or partially owned by a foreign company. This distinction is very useful in opposition to a Dutch branch which is an entity much more linked to the foreign parent company.
The foreign company abroad is able to control its Dutch subsidiary but, unlike in the case of the branch, it is not fully liable for its actions, debts and liabilities in the country. The subsidiary is not limited to perform the same business activities as the parent company, it may register with the relevant authorities to perform more business activities in the country if needed. This, combined with the lack of liability for the foreign company are two of the most important advantages of the subsidiary.
When establishing a subsidiary in the Netherlands, the founders may choose between two most common forms: the private limited liability companies and the public limited liability companies.
The legal forms of subsidiaries in the Netherlands
The private limited company (the Dutch BV) is a form of business adopted especially by smaller and medium business. No mandatory minimum share capital is required by law to incorporatea subsidiary in Netherlands in the form of a BV company. This company can be incorporated with as little as 1 Euro. The share capital must be divided into registered shares, which are non-transferable. The liability of the shareholders is limited by their contribution to the company's capital and the management of Dutch type of business is assured by at least one director. There are many methods on how to establish a BV company, methods which ensure the privacy of shareholders and directors, tax minimization, holding structures designed for international businesses and BV companies owned by other special structures such as Dutch Foundations.
An entrepreneur can also establish a subsidiary in the Netherlands in the form of a public limited company (NV company), which is formed with a minimum share capital of 45.000 EUR, divided into registered and bearer shares. This type of business can issue a certificate of shares for bearer shares, unlike the private limited liability company. The shares may be also transferable to the public. The liability of the shareholders is also limited by capital injected in the company. Unlike the private one, the public limited liability company can be listed on the Stock Exchange.
After establishing a subsidiary in the Netherlands, the management must be assured by at least two managers from a board of management. A supervisory body may also be appointed in order to check the management's activities. Large corporations, usually the NV, will have more demanding requirements for annual accounting, reporting and auditing.
We have also created a scheme with the procedure of opening a Dutch subsidiary:
The registration procedure of a subsidiary in the Netherlands
The founders must also make sure that the chosen name is unique and before registration, it must be checked at the Chamber of Commerce. A confirmation regarding the validity of the name is received through email and according to that answer the subsidiary may start the registration process.
A "declaration of non-objection" from the Ministry of Justice must be obtained prior to registration at the Chamber of Commerce, in order to establish a subsidiary in the Netherlands. The investor must submit an application for obtaining a declaration of non-objection and he must also pay the required fees.
The articles of association, the application for establishing a subsidiary in the Netherlands and the foundation deeds must be notarized. The documentation mentioned above must then be submitted to the Chamber of Commerce, along with the certificate of deposit and the "declaration of non-objection".
Documents needed to open a subsidiary in the Netherlands
- information about the parent company, which must include the address in the foreign country;
- an extract issue by the Trade Register in the parent company’s country confirming the existence of foreign business;
- the articles of association of the subsidiary which must be notarized by a Dutch public notary;
- a declaration through which a local representative is assigned to the subsidiary;
- the above-mentioned declaration of no objection issued by the Dutch Ministry of Justice.
Subsidiary taxation in the Netherlands
As long as a subsidiary is registered in the Netherlands it is considered a resident company and it must pay the same corporate taxes as any other Dutch company. For this purpose, registration with the tax authorities is mandatory. At the same time, the registration at the social security authorities must be performed when hiring employees in the Netherlands.
The Dutch corporate income tax is 20% on the first 200,000 EUR and 25% on profits exceeding this amount. Resident companies are taxed on their worldwide income. Because the Netherlands is a member of the European Union, the EU Parent-Subsidiary Directive applies to subsidiaries of foreign companies incorporated here. This directive, together with the double tax treaties signed between the Netherlands and other countries provide important tax benefits and tax relief.
Other corporate taxes in the Netherlands include the real property tax, the social security contribution, and a transfer tax. The tax year is usually the same as the calendar year and Dutch subsidiaries must observe the accounting and reporting principles. Failure to comply with the existing filing requirements results in penalties and fines.
The Dutch business registration procedure for a subsidiary in Netherlands is straightforward and lasts for about eight working days.
You can also watch our video on how to open a Dutch subsidiary: