By Eduard Bezusca, Client Relationship Manager, the Netherlands
In the world of global business, choosing the right location for expansion is a pivotal decision, requiring careful consideration of regulatory frameworks, logistical advantages and economic landscapes. The Netherlands, strategically situated at the heart of Europe, stands out as more than a geographical choice – it is a dynamic hub, offering significant logistical and tax-related benefits among others.
Apart from its diverse cultural landscape and high standard of living, the Netherlands offers businesses exceptional access to markets, a skilled, well-educated and English-speaking workforce, a highly developed financial sector and a supportive regulatory and fiscal climate. It serves as a transformative catalyst, providing companies with a gateway to global growth.
With the biggest port and the third-largest air cargo gateway in Europe, the Netherlands grants access to an estimated 170 million consumers within a radius of 500km (300 miles). With such accessibility, the Netherlands represents one of the world’s best logistics and distribution hubs, making it well suited to facilitating your business expansion into the European market.
Navigating fiscal frontiers: VAT, corporate income tax and other benefits
The traditional use of the Netherlands for international trade and commerce is also reflected in the practical value added tax (VAT) legislation. There are three VAT rates: 0%, 9%, and the standard VAT rate of 21%. The applicable rate depends on the goods and services offered.
Deferment licence
To optimise your cash flow and avoid the risk of VAT loss, Dutch legal entities can apply for a special deferment licence (also referred to as an Article 23 licence). With this licence, businesses can import goods into the Netherlands from countries outside of the EU without paying VAT at the point of entry. Instead, licensed organisations can defer the payment when they file their regular VAT return.
Should you subsequently sell the goods to customers outside of the EU, the export is typically zero-rated for VAT purposes. This means that the sale is subject to VAT at a rate of 0%, effectively relieving the business from charging VAT on the sale and unlocking the possibility of using the Netherlands as a global strategic logistics hub.
One-stop shop
For B2C sales across the EU, a One Stop Shop (OSS) system has been introduced. This facilitates cross-border e-commerce activities and simplifies VAT treatment across Europe. Essentially, businesses selling their products to private individuals for a value below €10,000 in all member states combined within a calendar year do not have to register for OSS or for VAT in each country. Instead, they may choose to charge Dutch VAT and submit a consolidated VAT return for all their EU sales, saving both time and resources. This centralised approach is particularly valuable for businesses new to the European market, as it ensures a more straightforward and cost-effective method for meeting VAT obligations.
If a business were to exceed the €10,000 sales threshold, two options are available:
- Registering as a VAT entrepreneur in the member states where the products are sold and filing local VAT
- Registering for OSS and filing one consolidated VAT report with the Dutch tax authorities
Note that in the case of OSS, a business would still be required to charge local VAT for each specific member state. However, the reporting can be centralised at the Dutch level as opposed to submitting multiple reports in each respective country.
For sales to other European businesses (B2B) with a valid VAT number, a 0% VAT rate is applicable, as the transaction is generally considered an intra-Community supply for VAT purposes. Subsequently, the Dutch company is required to report this intra-Community supply in its VAT return. Therefore, the relevant EU member state, where the buyer is registered for VAT, will account for the VAT under the reverse charge mechanism.
Corporate income tax and other benefits
In the context of global trade and international structures, corporate income tax (CIT) rates and other tax benefits also play an important role when considering international business expansion. In the Netherlands, there are currently two taxable income brackets. A lower rate of 19% applies to the first income bracket of €200,000 followed by the standard rate of 25.8% for the excess of the taxable income. The competitive CIT rate is subsequently augmented by the participation exemption, which exempts income (such as dividends received and capital gains/losses realised) derived from a qualifying shareholding in a subsidiary from CIT.
The Netherlands also boasts an extensive and strategically crafted tax treaty network with over 100 bilateral tax treaties in force. These treaties serve to prevent double taxation and provide clarity on the tax obligations of businesses engaged in cross-border activities. The Netherlands’ commitment to maintaining a wide tax treaty network enhances its reputation as a global business hub, offering businesses a stable and predictable tax environment for their international operations.
Consider the Netherlands, and IQ-EQ
From the strategic advantage of its central location to the innovative tax mechanisms such as the deferment licence, OSS and participation exemption, the Netherlands positions itself as an ideal launchpad for global growth.
As you consider expanding your operations through the Netherlands, IQ-EQ stands ready to be your trusted partner, bringing extensive experience in managing Dutch corporate structures. From incorporation to sale or liquidation, our comprehensive administrative services allow us to tailor solutions to your exact needs.
For a seamless and successful expansion journey, get in touch to explore how we can navigate this transformative journey together:
Eduard Bezusca
Client Relationship Manager
E eduard.bezusca@iqeq.com
T +31 20 522 25 67
