If you want to set up a company in the Netherlands, or move your existing company to the Netherlands, you can use a legal structure from your own country. For instance an SA, AG or GmbH. There are some disadvantages to this, however. Read this article to find out more.
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Registering with a foreign business structureYou have to register in the Commercial Register at KVK before you start doing business in the Netherlands. You can use a foreign legal structure: Dutch company law recognises all foreign business structures except sole proprietorships. For example, an English Private Limited Company (Ltd) can run a restaurant in the Netherlands. Other examples of foreign legal structures are the English LLP, the German AG and GmbH, the French SA, and the Delaware Corporation from the USA.
Foreign and Dutch law
In the Netherlands, the ‘Incorporation principle’ applies. This means that a foreign company must comply both with Dutch law and the law of the country of origin. Foreign law determines:
- the rules for incorporation (if you register a company with legal personality)
- the duties and rights of a company with legal personality
- the structure of the company (structure, powers, obligations)
- the power of representation
- the rules for ending a business (termination)
Advantages of using a foreign legal structureIf you are moving an existing company to the Netherlands, you won’t have to change your legal structure. This can make the transition less complicated. You already have the knowledge required to comply with company law in your country of incorporation. If you are setting up a new company in the Netherlands, using a non-Dutch legal structure is relatively easy and cheap, compared to the Dutch legal structures that require a notary’s services.
Disadvantages of a foreign legal structureOnce you are in the Netherlands, you must do your own research into company law in your country – and changes to it. The Netherlands Chamber of Commerce KVK cannot inform you about this. Also, foreign legal structures are not always considered trustworthy. This can lead to practical problems, for example when applying for a telephone connection. Banks and insurance companies can be reluctant to enter into agreements with foreign companies. Be aware of these practical objections, and seek expert advice.
Formally foreign companiesA formally foreign company is a foreign company from outside the European Economic Area, that was founded and registered abroad, but operates entirely in the Netherlands. It has no real connection with the country of incorporation. If you run such a company, you must comply with the Dutch Companies Formally Registered Abroad Act (Wet op de formeel buitenlandse vennootschappen). Every year, your company must file the following documents with the Netherlands Chamber of Commerce KVK:
- an extract from the foreign register;
- annual accounts under foreign law;
- annual accounts under Dutch law.
European business structuresBesides choosing a Dutch or a foreign legal structure, you can set up a business with a European legal structure. This may be useful if your business has activities in more than one European country. There are 3 European legal structures:
- the SE
- the European Cooperative Society (SCE)
- the European Economic Interest Grouping (EEIG)