Set Up a Permanent Establishment in the Netherlands

Foreign companies have several types of structures at their disposal if they want to expand their activities on the Dutch market. Apart from the subsidiary and the branch office which are by far the most common ones, there is also the permanent establishment which can be registered under the Company Law in the Netherlands.

Below, our company formation in the Netherlands explain the main characteristics of the permanent establishment and the requirements to set one up. We can also help those who want to open a permanent establishment in the Netherlands.

The Dutch permanent establishment – main features

The permanent establishment is mainly defined by the Netherlands’ double tax treaties under which such a structure can take various forms. Nevertheless, the Dutch permanent establishment is usually set up by foreign companies seeking to have business premises in this country. These premises must offer the foreign company the possibility of operating as an independent company. The permanent establishment is usually employed to service or sell goods to clients in the Netherlands.

The representatives of foreign companies can register permanent establishments with the help of our Dutch company formation specialists.

Forms of the permanent establishment in the Netherlands

A Dutch permanent establishment can take various forms, among which:

• - a store or any other sales facility through which Dutch clients are served with goods or services;
• - a workshop or a factory, however, these premises must also have offices in order to be considered permanent establishments;
• - warehouses and depots can also be registered as permanent establishments in the Netherlands;
• - offices which are involved in support activities, research and development, and advertising can also be deemed as permanent establishments;
• - real estate properties can be considered permanent establishments as long as they are intended for specific uses, such as rentals.

The permanent establishment is usually created as an extension of a foreign or local company which is also known as a branch office in the Netherlands.

As mentioned above, the term ‘permanent establishment’ is usually used in Dutch double taxation conventions in order to determine how a foreign company will be taxed in the Netherlands and/or in its home country with the intention of avoiding the double imposition of certain taxes.

With a vast experience in taxation matters, our local consultants can help foreign investors determine if they are running their operations in the Netherlands through permanent establishments or not.

Steps for registering a permanent establishment in the Netherlands

The procedure of setting up a Dutch permanent establishment implies registering it with the Trade Register. The incorporation procedure will imply following the same steps as for any other company in the Netherlands:

1. preparing the necessary documents which need to be filed with the Companies Register in the Netherlands;
2. registering with the tax authorities in the Netherlands and obtaining a tax identification and VAT number;
3. registering as an employer, if the permanent establishment will hire employees, no matter if locals or foreigners;
4. keeping and filing accounting documents with the Dutch tax authorities, as requested by the law;
5. obtaining specific licenses with the authorities, if the activities undertaken by establishment require it.

Our company registration advisors in the Netherlands can help you register a permanent establishment here.

Taxation of permanent establishments in the Netherlands

One of the most key aspects of setting up a permanent establishment in the Netherlands is that the income generated by the entity will be taxed here alone. Under the Netherlands’ double tax treaties, the following types of incomes generated by a permanent establishment are liable for taxation in the Netherlands:

• - activities of sportsmen, artists and musicians carried out in the Netherlands by non-residents;
• - income derived from the exploitation of real estate and natural resources by foreign companies in the Netherlands;
• - activities completed in the Dutch North Sea for a minimum period of 30 days.

According to the European Commission, the Dutch economy:

• - is expected to register a 1.6% increase in the Gross Domestic Product by the end of the year 2019;
• - 2020 is predicted to bring the same annual GDP increase of 1.6% to the Dutch economy;
• - the unemployment rate is expected to drop to 3.5% by the end of 2019;
• - in 2020, the unemployment rate is predicted to decrease to 3.6%.

For assistance in setting up a permanent establishment in the Netherlands, please contact our consultants.