Not only is the Netherlands a fantastic central European location for businesses with a reach of 170 million consumers, but the attractive tax incentives provided by the Dutch government has really put Holland on the map for foreign entrepreneurs.
The tax treaties with countries such as the USA, Australia, Canada, Luxembourg, Singapore and others, means entrepreneurs can avoid double taxation. Plus the corporate income tax in the Netherlands is only 19% for SMEs and businesses declaring less than €200,000. (The higher rate of 25.8% is applied to businesses exceeding that amount.)
Tax incentives for expat-entrepreneurs who want to start a business in the Netherlands include an entrepreneur allowance called the ondernemersaftrek. This allows investors to pay less income tax by docking a fixed amount when declaring the business on their income tax forms. There is also a tax-free allowance of up to 30% of the gross salary for expat-employees who have to relocate to the country. The stipulation is that the employee must have specific expertise in their field and either a minimum salary of €41,954 (or €31,891 for graduates under 30). The good news is that this incentive can be applied for five years which could mean a significant saving for upcoming entrepreneurs.
For innovative businesses and startups that provide research and development in science and technology there is a wage tax deduction of 32% on wage costs up to €350,000 and a 16% deduction on other R&D expenses. If you go above that wage bracket, you can claim up to 40% reduction.
Green startups with a view to sustainability, green energy and environmental issues can apply for funding to finance their early-stage developments in prototypes or market research. And the Innovative SME Program offers a tax rate of just 9% instead of the statutory corporate tax rate. In order to apply for the R&D tax credit declaration, it’s also a great boost to have a patent, an exclusive license or a pharmaceutical certification to qualify.
If you’re investing in an environmental company, there is a tax relief regime called MIA which allows companies to deduct up to 45% of the investment from €2,500 to a maximum of €50 million per year per taxpayer. And another tax regime called ‘Vamil’ allows companies to pay off 75% of the investment costs of a qualifying environmentally friendly investment.
Whatever type of company you want to open – whether it be big, small or environmentally-friendly – Holland is a great location to scope out starting a business. For more company formation details on the Netherlands and other European countries, you can download our free guide below, or get in touch via our contact page.