The Netherlands presents a unique opportunity for entrepreneurs with its strategic location, business-friendly climate, and culture of innovation. Its strong digital infrastructure and access to tax advantages, making it an attractive business hub for entrepreneurs. Most entrepreneurs, SMEs and companies aim to achieve success by taking all of these advantages.

However, entering this dynamic market requires a thorough understanding of legal requirements, cultural nuances, and strategic planning. This article explores the key legal and practical considerations for foreigners looking to start a business in the Netherlands.

Requirements for Foreigner Entrepreneurs

The Netherlands provides a pro-business environment with straightforward legal requirements for setting up a company, especially compared to other EU countries. Nevertheless, foreigners need to follow these requirements properly to avoid penalties or revocation of business permits.

Registering with the Chamber of Commerce (KVK)

Individuals who come from outside the EU/EEA or Switzerland may need a residence permit or a foreign startup residence permit to stay and start a business in the Netherlands. As part of this process, they must complete company registration with the Dutch Chamber of Commerce (KVK). This registration is essential, as it links the business to the Dutch Tax Administration for obtaining a VAT number. 

Before registering with KVK you need to make a business plan or BMC, financing, and register a domain name.

To register, fill out the online registration form. You need to fill the form with a business description and name, legal structure and Dutch address.

How to Choose the Right Business Structure? 

The legal structure is the framework of a business operation based on local laws. This structure affects your liability, tax obligations, and business management. 

The legal structure determines whether you are personally responsible for the company’s debts, how the company is taxed, and how decisions are made. Common options include:

  • Sole Proprietorship (Eenmanszaak)

This structure is easy and inexpensive to set up with minimal regulatory requirements. The owner has complete control over decision-making and operations. In addition, income is taxed as personal income leading to low tax rates for small profits.

However, it involves personal liability for all business debts and obligations putting personal assets at risk. Raising funds can be challenging since the owner relies on personal savings or loans. Therefore, the business may struggle to survive if the owner becomes incapacitated or decides to retire.

  • Private Limited Company (BV)

A BV(besloten vennootschap) offers limited liability protection for personal assets. It enhances credibility with customers and suppliers as it is perceived as a more formal business structure. On top of that, a BV helps you attract investors or partners more easily due to its limited liability structure.

Nevertheless, BV needs more strict legal and regulatory obligations, including filling annual financial statements and maintaining corporate records. It also requires higher setup and operational costs compared to sole proprietorship, including legal fees and compliance costs. Management structures also can be more complex, possibly requiring you to have meetings and decisions.

  • Partnership (VOF)

In this structure, partners can share the workload and responsibilities that allow for diverse skills and expertise. Partners can also combine financial resources to fund operations or expand the business. Partnerships typically enjoy pass-through taxation, meaning profits are taxed at individual rates rather than at the partnership level.

All partners are jointly responsible for business debts meaning personal assets are at risk if the business fails. Nonetheless, disagreements among partners can lead to conflicts that may disrupt operations or relationships. In addition, profits must be shared, possibly leading to disputes over contributions and compensation.

A Comprehensive Business Plan

A solid business plan is essential for market entry and securing funding. Your plan should outline objectives, target markets, and financial projections while addressing potential financial management risks.

The Dutch government asks companies to include the following information in their business plans:

  • Company structure 

  • Personnel roles and responsibilities

  • Business legal structure

  • Employee data

  • Company objectives

  • Description of the company’s product or service and why it is innovative 

  • Description of the development activities related to the company establishment 

  • Detailed business development activities planned for the first 12 months 

  • Detailed marketing plan and market analysis.

Resources like KVK’s business plan templates can be invaluable in this process. KVK also has several helpful tools to help aspiring entrepreneurs set up their businesses.

Additional Permit Requirements

Foreign entrepreneurs must secure a resident permit or an entrepreneur permit to operate legally. Depending on the business type, a startup visa might also be required. 

Additionally, some industries necessitate specific permits, such as:

  • Goods transport business: Licenses for road transportation from the National and International Road Transport Organisation.

  • Hospitality: Permits for serving alcohol and food safety compliance

  • Financial services: Licensing through the Dutch Central Bank (DNB) and the Netherlands Authority for the Financial Markets (AFM).

Financial Considerations

Financial management and planning are crucial to the success of businesses. They also demonstrate the viability of the business idea to Dutch authorities.

This process highlights the costs involved and what is needed to finance the business, making it essential for convincing financiers to lend you money and forming the foundation of your financial pitch. 

Once you have your financial management and planning documents set, you can start exploring several funding options and studying tax obligations under Dutch laws.

Funding Opportunities in the Netherlands 

The Dutch government provides several funding programs to support businesses:

This credit program is designed for technically innovative projects. It offers up to €10 million for technical development or €5 million for clinical projects.

Additionally, it covers a percentage of costs based on business size:  

SMEs can receive up to 45% (or 50% with collaboration), medium enterprises up to 35% (50% with collaboration), and large enterprises may receive 25% of innovation credit (40% with collaboration). 

To qualify, projects must be both innovative and technically challenging. This credit aims to boost businesses that can deliver marketable products within five years.

The DGGF focused on sustainable development sectors like renewable energy and healthcare. The funding offers tailor-made financial instruments, including loans, guarantees and equity investments. 

Businesses must demonstrate alignment with sustainability principles and benefits for local communities.

Dutch Tax Obligations

The Netherlands offers notable tax advantages, but its tax system can be complex. You might want to identify low-tax rate opportunities through expert advice. A local tax advisor can help with compliance, reduce risks, and uncover tax advantages for startups.

These are the different types of business taxes that you need to be aware of. 

  • Income Tax

This is the tax businesses pay on their profits. The rate varies depending on the profit level of your business.

  • Sales Tax

Known as the Value Added Tax (VAT). This tax is a percentage of the revenue obtained from the customers. The standard VAT rate is 21%, but certain goods and services, like food and medical supplies, may be subject to lower rates (6% or even 0%).

  • Payroll Tax

Dutch companies are required to withhold payroll tax from their employees' salaries. This includes Social Security and Medicare.

  • Property Tax

For companies that own property, property tax is also an obligation. The tax is calculated based on the value of the property. However, the rate can vary according to the municipality.

  • Excise Tax

Excise taxes are applied to specific goods, such as alcohol, tobacco, and energy products. If your business sells these products, you must pay excise tax.

Effective Market Entry Strategies

Every company entering a new market should have solid strategies. These strategies are important for managing resources, scoping out rivals, and identifying potential risks. 

Having the right strategies also helps secure sustainable growth, allowing them to become an established fixture in the Dutch market. This is especially important in the Netherlands as the country’s market is highly competitive due to its attractiveness. 

Market Research for Business Growth

Every successful business strategy is based on thorough research. Studying the market means gathering information and data on your target market before making a business decision. 

It is important to conduct a market study first as it can allow companies to spot opportunities, minimize risk and choose appropriate targets. This includes an effective analysis of industry trends, customer demand, and competition. 

Without a solid understanding of the market, businesses might miss key trends, misjudge customer preferences, or fail to differentiate themselves from competitors.

Key components to consider in your market study:

  • SWOT analysis

This analysis helps to identify opportunities and refine your business structure. It assists businesses in defining unique selling propositions and differentiating offerings from the competition.

  • Get data from your target market

Conduct surveys, focus group discussions, and interviews for valuable customer insights, especially behavior and preferences. Some customers, for example, may tell you that they prefer cheap goods. Meanwhile, others want their products locally sourced.

  • Scope out competitors

Competitors can offer important insights for your own business. Understand their strengths and weaknesses. When you study competitors’ offerings, you can identify gaps in the market. These gaps are business opportunities for you.

  • See where the market is heading

Find new opportunities by observing the market trends and stay updated on emerging trends in your industry. Consumers nowadays focus on sustainability and digitalization, which affects their choices.

Smart Marketing for Credibility

Use smart marketing strategies to build trust in your business and get close to the target audience. A credible company has a strong brand presence and is more likely to gain loyal customers. Meanwhile, if you apply poor marketing strategies, you may risk losing current and prospective customers due to a bad reputation. 

Here are ways to market your business in a way that builds credibility:

  • Use various digital marketing channels like social media, SEO, and localized content to reach your target audience. Design your marketing content to make people feel intrigued.

  • Ensure advertising complies with the Dutch Advertising Code (NRC). Every advertiser in the Netherlands must follow the NRC's advertising rules. Based on the rules, ads should be legal and truthful.

  • Take part in local networking events to connect with potential clients and businesses. Face-to-face interaction can lead to valuable partnerships and customer loyalty.

Cultural Alignment: Building Connections with Customers

Commonly, the target market can accept businesses that align with their values. This means companies should understand the local cultures or values and adapt them to their products. It is a way for the brand to build a personal connection with consumers. Customers with strong relationships with the product are going to be loyal to the brand. 

Respecting local cultures or values is also extremely important as doing the opposite can lead to a disaster for your brand. Offending your potential customers can hinder market penetration and tarnish the company’s reputation.

Therefore, here are some company values that you might need to consider.

  • Sustainability focus

Dutch consumers think that sustainability is a key factor in their buying decisions. Ensure your products or services reflect eco-friendly practices.

  • Transparency

You can build consumer trust by being open about your business practices. Communicate your values and production processes. Any certifications that prove your commitment to ethical practices are also essential.

  • Local relevance

Increase relatability by adapting your marketing messages to reflect local customs and values. For example, incorporating local festivals or traditions into campaigns can resonate deeper, especially with Dutch consumers.

Navigating Cultural Differences in Dutch Business

To increase success and strong relationships, cultural competence plays a crucial role. Here are some tips to adapt to Dutch work cultures.

A Flat Organizational Structure

Dutch people favor flat organizational structures where all employees’ opinions are appreciated. Consulting with team members and reaching a consensus together is important in decision making. An understanding of this aspect creates a positive impact on team dynamics and cooperation.

Punctuality and Specificity in Business

Punctuality is highly valued in Dutch culture and maintaining clear communication is critical. The Dutch appreciate directness and precision in business dealings.

Trust and Transparency in Relationships

Long-term relationships are built on trust and transparency in Dutch business culture. Networking events and informal gatherings can be as important as formal meetings in forming partnerships.

How Unusual Companies Can Support You

Want to start your business in the Netherlands and need guidance on following local regulations? 

Unusual Companies can assist you in finding out the advantages of starting your own business in the Netherlands. 

With our expert guidance, you can slowly set up your business for long-term success. Our services include:

  • Assistance with company registrations and choosing the right business structure. We also help in completing your KVK registration smoothly.

  • Strategic market entry and compliance with corporate and labor laws. Ensure you hit the ground running with tailored guidance. Market entry strategies correlate with Dutch business practices.

  • You can gain valuable insight into building strong, compliant and effective operations with local connections.

Contact us today to take advantage of the unique advantages of starting your own business in the Netherlands.