Using a foreign legal structure in the Netherlands

Registering a foreign business structure

You have to register in the Business Register at KVK before you start doing business in the Netherlands in these situations:

• You want to open a branch in the Netherlands.
• You lend out workers in the Netherlands against payment. You will then have to deal with the Dutch Workers Allocation by Intermediaries Act, Waadi. It does not matter whether or not you have a branch in the Netherlands.

Not required to register

Do you have a foreign company without an establishment in the Netherlands? Then you may register in the Dutch Business Register. However, you must meet certain conditions. Such as that you can show that you carry out business activities in the Netherlands.

Establishing a foreign company from the Netherlands

Are you a Dutch entrepreneur? Then you can set up or have a company incorporated abroad. You do not need to convert this into a Dutch legal form. You will, however, have to deal with Dutch and foreign law. For example, you must deposit the financial statements of your company abroad and in the Netherlands. In the Netherlands you can do this at the Netherlands Chamber of Commerce, KVK.

Foreign and Dutch law apply

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
• the structure of the partnership, such as the legal structure, the duties and rights of the directors
• the power of representation
• the rules for ending a business (termination)
• liability

In addition, Dutch law determines the rules that the company must adhere to when doing business. For example:

• register your company in the Dutch Business Register
• taxes
• environment
• working conditions for staff
• bankruptcy
• works councils
• criminal law

Advantages of using a foreign legal structure

• Foreign legal entities such as a company are sometimes easy and cheap to set up, compared to the Dutch legal structures that require a civil-law notary’s services.
• You already have the knowledge required to comply with company law in your country of incorporation.
• Many foreign companies are accepted as legal entities in the Netherlands by the Chamber of Commerce, KVK.

Disadvantages of a foreign legal structure

• You must comply with the rules abroad, which you may not be familiar with. For example, you need a lawyer for this, which means extra costs. The Netherlands Chamber of Commerce KVK cannot inform you about this.
• Some companies such as banks and insurance companies require additional information before entering into an agreement with a foreign company.
• This may also apply to other service providers. Like telecom providers. This can make it more difficult to arrange a telephone or internet connection.

Requirements for formally foreign companies

Do you run a foreign company from outside the European Economic Area (EER: all EU-countries, plus Liechtenstein, Norway and Iceland)? But do you have no real connection with the country where the company was founded, and do you only do business in the Netherlands? In that case, in addition to the information you provide to the Dutch Business Register for the registration of a foreign company, you must also comply with the Formal Foreign Companies Act (Wet op de formeel buitenlandse vennootschappen).

This law determines that every year, your company must file the following documents with the Netherlands Chamber of Commerce KVK:

• an extract from the foreign register;
• financial statements under foreign law;
• financial statements under Dutch law.

Examples of foreign companies

There are various types of foreign companies registered with KVK in the Netherlands, such as:

• Private limited company (Ltd) (UK)
• Limited Liability Partnership (LLP) (UK)
• Limited Liability Company (LLC) (USA)
• Delaware Corporation (USA)
• Gesellschaft mit beschränkter Haftung (GmbH) (Germany)
• Société Anonyme (SA) (France)

European business structures

Besides 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 European Public Limited Company (SE)
• the European Cooperative Society (SCE)
• the European Economic Interest Grouping (EEIG)