Putting up a branch in the Netherlands is an attractive option especially for businesses founded in Singapore. The two countries are each otherâ€™s strongest trade partners and share a similar egalitarian and tolerant mindset. In fact, over a thousand Dutch companies are in Singapore and a significant number of Singapore companies also operate in the Netherlands.
If youâ€™re a Singapore company eyeing an expansion in the Netherlands, you have to cooperate with the KvK for your business to operate legally and efficiently. KvK or The Kamer van Koophandel (KvK) is the Chamber of Commerce in the Netherlands. If youâ€™re interested in landing a business in one of the strongest and fastest growing economies in the EU, here are 3 things you need to do to get started:
1. You have to be registered in the Commercial Register and the Dutch Tax and Customs Administration.
Foreign companies who wish to establish a branch are considered as â€śpermanent establishments,â€ť and must be registered in the Commercial Register. A foreign companyâ€™s registration can be done in person by the company director or branch manager or by sending documents and forms.
If the branch manager does the registration, he/she has to have a valid proof of identity and must present a power of attorney written in Dutch proving his/her designation signed by the directors.
And since youâ€™re only putting up a branch office, you do not have to register a separate legal entity in the Netherlands. The legal structure of your company is governed by Singaporeâ€™s laws or of the country where it was founded.
2. You have to be registered under the Dutch Tax and Customs Registration
Every business entity is obliged by law to pay for taxes and to be compliant, you have to register under the Dutch Tax and Customs Registration. If youâ€™re already registered in the Commercial Register, you will be automatically registered in the Tax and Customs Administration.
On the other hand, companies who arenâ€™t considered as â€śpermanent establishmentsâ€ť and arenâ€™t required to register for the Commercial Register still has to register under the Dutch Tax and Customs Registration to be legally compliant.
The Netherlands has one of the most competitive corporate income tax rate across EU; only 20% on the first â‚¬200,000 and 25% for taxable profits exceeding â‚¬200,000.
Dutch tax laws also offer generous incentives for everyone including foreign businesses. For example, you can offset losses from previous years or with future profits up to 9 years.
The Netherlands also rewards innovative companies with less tax through the Innovation Box. You can put your innovative and profitable activities under the Innovation Box in your corporate income tax return and pay less tax provided you meet certain standards.
Moreover, if your company employs people who are doing research and development, you and your employees can apply for the R&D tax credit under the WBSO scheme. Your company and its employees will enjoy lower wage tax and lower national insurance contributions.
Innovative startup companies who qualify for this enjoy higher compensation. On top of that, you can conveniently file your corporate income tax return digitally online.
The taxes companies pay in the Netherlands mostly depends on their business structure. But to be properly guided about Dutch tax laws, foreign entities who wish to expand in the Netherlands are advised to speak first with the NFIA (Netherlands Foreign Investment Agency) to get better advice.
The NFIA has branches across the globe and thereâ€™s even one right within Singapore!
You can request a meeting by simply filling up a short information sheet. Their office in Singapore serves a couple of other countries across Southeast Asia, so getting an appointment might take time.
3. You have to register as an employer before you can hire staff.
You have to register with the Dutch tax and customs administration or the local tax office as an employer before you can hire anyone as an employee and withhold wage taxes.
Once registered, you will receive an information package that gives you your payroll taxes number, payroll tax return letter, and employee wage tax letter.
The Netherlands have a robust system of taxation and government insurance and welfare system, so employers are required to strictly pay their taxes on time and correctly. Being unable to follow this through could cause you a lot of headache and legal consequences.
Dutch employment laws are known to change every year making it quite difficult to keep up. Nonetheless, you have the option to hire employees through PEOs (Professional Employer Organization) who will help you with your HR and payroll challenges.
By using a PEO like Bradfordjacobsâ€™ payroll service, you can lift the burden of payroll and compliance complexities from your shoulders and focus on the growth of your budding business.
The Netherlands is a haven for foreign companies who wish to expand their reach in the EU. And for Singapore companies, nowâ€™s the best time to do business in the Netherlands. Enterprise Singapore and the Netherlands Enterprise Agency just signed a two-year Memorandum of Understanding that gives both countries better access to each otherâ€™s markets and innovation opportunities.