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Legal & Compliance Considerations for Expanding Your Business to the Netherlands

If you are considering expanding your business to the Netherlands, there are a few different legal considerations that you need to be aware of. Seeking out legal and professional expertise from Dutch people is a sensible approach to take if you have no experience in conducting business in the country. This will help you to hit the ground running, to understand the culture you can expect to welcome you, and any data protection regulations and laws you need to comply with – which can be managed by an ‘externe functionaris gegevensbescherming’, which is ‘external data protection officer’ in Dutch.

All of these things are important, so let’s dig a little deeper and look at the legal considerations for your business as you open a branch in the Netherlands.

What are the business structures of Dutch companies?

When you directly compare the Netherlands to other countries in the EU, you’ll see that it has a liberal framework to organise enterprises of non-resident companies and individual entrepreneurs. This flexible framework is one of the reasons it is such an attractive option to so many non-Dutch companies.

To begin with, there are no special restrictions on foreign-owned companies looking to open a branch of their existing company in the Netherlands or to start a new business in the country. There are a few different options as to the structure and legal shape your business can take, depending on your existing company dynamic and location.

One thing is for sure, to have access to the European single market and the free movement of goods and services, you must have a physical presence and representation in the Netherlands, and have your business registered in the country through the Netherlands Chamber of Commerce KVK and a business address in the Netherlands.

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Some of the business structures open to you are:

Moving your HQ to the Netherlands – this is an option where you must deregister your business in its home country and set up a Dutch company. This could be a private limited partnership (besloten vennootschap, bv), or a public limited company (naamloze vennootschap, bv). Any business working in the financial sector in the EU must have their headquarters in the EU.

A subsidiary of your business – a subsidiary with full, independent legal status is another option existing companies can take to expand into the Netherlands. This would commonly be in the form of a private limited partnership which allows you to reproduce your services and products for the EU market and means you don’t have to register solely in the Netherlands.

Upgrade an existing distributor – last, a popular option for some businesses who already have a working relationship with a distributor in the Netherlands is to upgrade this relationship so that the distributor becomes your company representative in the country and your Dutch company branch. This leaves your head office in your home country.

If you are not sure which is the correct business structure to take when expanding your business to the Netherlands, always speak to experts in Dutch business and legal structures. This is the best place to make sure you remain compliant with everything you need to be compliant with as a company operating within the Netherlands

There are a few different organisations in the Netherlands that can guide you through some of the main legal considerations of opening a business in the country, such as liability issues, the workforce, taxes, and GDPR. These include:

The Netherlands Chamber of Commerce KVK – helps with business registrations and supports businesses and managers in all things business in the Netherlands.

RVO, Netherlands Enterprise Agency – this helps to improve collaborations between non-resident companies and Dutch businesses, helps guide funding endeavours, networking facilitation, and compliance with regulations and laws.

NDL, National Distribution Council – a non-profit organisation that acts as an advisory body, matching services for supply chain operations within Europe.

NFIA – the Netherlands Foreign Investment Agency (NFIA) is often a first port of call for foreign businesses looking to operate within the country, as it helps new businesses to find their place effectively within the Netherlands.

ROMs (RDAs, Regional Development Agencies) – helping foreign entrepreneurs to accelerate their growth through investment opportunities and internationalisation of products and services.

One of the major considerations when expanding your business to the Netherlands is what to do about your compliance to GDPR in the country, or AVG as it is called in the Netherlands. One of the most sensible things you can do amongst the different aspects of legal considerations for a new business in the country is to outsource the role of DPO (Data Protection Officer) to a native Dutch speaker with the knowledge and experience of the intricacies of compliance in the country.

In Dutch this is called ‘externe functionaris gegevensbescherming’. This could be one of the most important pieces of the puzzle as you navigate the different hoops to jump through when you first expand your business into a new country.

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