A subsidiary in the Netherlands is a conventional Dutch business with a full legal identity. It is distinguished by the fact that its equity shares are owned entirely or substantially by a foreign firm. In contrast to a Dutch branch, this distinction is extremely useful.
The foreign firm can control its Dutch subsidiary from overseas. Unlike a branch, it is not entirely liable for its actions, debts, and liabilities in the country. The subsidiary is not confined to carrying out the same business activities as the parent company; if necessary, it may register with the appropriate authorities to carry out additional business activities in the country. This, together with the foreign company’s absence of accountability, is two of the subsidiary’s most significant advantages.
The proprietors have two options when creating a subsidiary in the Netherlands: private limited liability corporations or public limited liability corporations.
Subsidiary Legal Structures In The Netherlands
The private limited company, or the Dutch BV, is a type of business that is primarily used by small and medium-sized enterprises. The incorporation of a subsidiary in the Netherlands in the form of a BV company is not needed by law to have a mandatory minimum share capital. This company can be formed for as little as 1 Euro. The share capital should be divided into non-transferable registered shares whereas the shareholders’ liability is restricted by their contribution to the company’s capital. Also, the administration of a Dutch kind of corporation is guaranteed by at least one director. There are numerous options for forming a BV corporation, including techniques that assure the shareholder’s and director’s privacy, tax minimization, holding structures tailored for multinational firms, and BV corporations controlled by other special structures such as Dutch Foundations.
An entrepreneur can also register a subsidiary in Holland in the form of a public limited company or an NV company, which has to have a minimum share capital of 45,000 EUR divided into registered and bearer shares. Unlike a private limited liability corporation, this sort of organization can issue the certificate of shares for bearer shares. The shares may also be transferable to the general public. The shareholders’ responsibility is likewise restricted by the capital invested in the company. Unlike a private limited liability company, a public limited liability corporation can be listed on a Stock Exchange.
Following the establishment of a subsidiary in the Netherlands, the administration must be guaranteed by at least two members of a board of management. A supervising body may also be formed to manage the actions of the management. Large firms, typically the NV, will have more stringent annual accounting, reporting, and auditing standards.
Procedure For Registering A Subsidiary In The Netherlands In 2022
The first step in establishing a subsidiary in the Netherlands is opening a bank account into which the initial capital is put and a certificate of deposit is obtained.
The founders must also ensure that the chosen name is unique, and it must be validated at the Chamber of Commerce before registering. The subsidiary receives an email confirming the legitimacy of the name and based on that response, the subsidiary may begin the registration procedure.
A “declaration of non-objection” from the Department of Justice must be acquired prior to registration at the Chamber of Commerce to establish a subsidiary in the Netherlands. The investor must fill out an application and pay the relevant fees in order to get a declaration of non-objection.
The articles of association, the application for establishing a subsidiary in the Netherlands, and the foundation deeds must all be certified. The above-mentioned papers, as well as the certificate of deposit and the “statement of non-objection,” must next be presented to the Chamber of Commerce.
Documents Needed To Open A Subsidiary In The Netherlands
The following papers are necessary for establishing a subsidiary in the Netherlands:
- Details about the parent organization, including the location in the foreign nation;
- An extract issued by the Trade Register of the parent company’s jurisdiction verifying the existence of overseas business;
- The subsidiary’s articles of association must be certified by a Dutch public notary;
- A statement designating a local representative for the subsidiary;
- And the aforementioned certification of no objection, which was given by the Dutch Ministry of Justice.
We can assist you with the establishment of a subsidiary company in the Netherlands in 2022
Subsidiary Taxation In The Netherlands
In the Netherlands, there is a system of subsidiary taxation.
A subsidiary is considered a resident company as long as it is registered in the Netherlands and must pay the same business taxes as any other Dutch firm. Registration with tax authorities is required for this purpose. At the same time, when recruiting employees in the Netherlands, registration with social security officials is required.
The Dutch corporate income taxation is 20% on the first 200,000 EUR and 25% on earnings surpassing this amount. Resident corporations are taxed on their international earnings. Because the Netherlands is a member of the EU, the EU Parent-Subsidiary Directive applies to international firms that incorporate in the Netherlands. This regulation, in conjunction with the double tax treaties negotiated by the Netherlands and other countries, provides significant tax benefits and relief. In 2022, these taxes will remain unchanged.
Other company taxes in the Netherlands comprise real estate taxes, social security contributions, and a transfer tax. The tax year is often the same as the calendar year, and Dutch subsidiaries must follow accounting and reporting norms. Penalties and fines are imposed for failing to comply with the current filing requirements.
But no worries! The Dutch business registration procedure and establishing a subsidiary in the Netherlands is simple and takes around eight working days.
Why You Should Establish a Subsidiary in The Netherlands in 2022
Foreign corporations intending to establish a business presence in the Netherlands should go with a subsidiary because:
- It can take the shape of the most common business entity in the country, the limited liability corporation.
- In terms of taxation, the subsidiary is a tax resident and you may take advantage of several benefits, such as tax deductions and exemptions.
- It is not tied to the parent firm and can engage in a variety of operations tailored to the Dutch market.
- The registration procedure is quick and easy. It takes only up to 5 days to finish.
- No minimum share capital is required if it is registered as a private limited liability company.
If foreign company owners wish to establish totally autonomous firms in the Netherlands by 2023, they should consider establishing subsidiaries. They will be able to improve their income by adapting their goods or services to the Dutch market.
Following a difficult year, the Dutch economy is likely on the way to recovery this year, thus forming a subsidiary here is a viable choice for those who have postponed their objectives.
Should you need direction in setting up a Dutch organization in 2022, our experts can help you.
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