TAPPING INTO THE EUROPEAN UNION:
BEST BUSINESS OPPORTUNITIES IN THE NETHERLANDS

--Priyamvada Lonial, Legal Specialist

The Netherlands, also popularly known as Holland is one of the most prominent economies not just in the European Union, but also worldwide. The major trade hubs of Amsterdam and Rotterdam are located in close proximity to other European trade hubs, and the government offers multiple tax incentives to investors in areas like R&D and environment friendly projects, thus making it a viable option for entrepreneurs looking to establish or expand their business in the country. Being a member of the European Union and Schengen zone, it offers seamless access to the single European market, consisting of nearly 500 million consumers. 

THE DUTCH BUSINESS LANDSCAPE

The Netherlands boasts of a rather stable yet robust economy, with the GDP being valued at well over $1 trillion, and a GDP per capita of over $57,000. The economy is mainly driven by small and medium sized enterprises, which is evident in the fact that 1.45 million enterprises (nearly 99%) in the country are SMEs. It is relatively easy to incorporate a company, with a private limited liability company (BV) being the most popular form, and requiring merely €0.01 as initial capital. All you need to do is get the company registered in the KVK’s Business Register (Handelsregister), and registering the business with the Netherlands Tax Administration. In certain cases, companies may even be set up completely online, which in turn makes the process more time efficient. 

Moving on to the tax regime, the Netherlands has a comparatively more favourable corporate tax regime as compared to other European nations. While profits of up to €200,000 are taxed at 19%, any amount above that is taxed at 25.8%. The government also offers tax incentives to foster innovation and growth, with such incentives being open to entrepreneurs and SMEs. The Dutch economy is mainly focused on high technology, life sciences, health, agriculture, food and chemical industries, which have been discussed at a later stage herein. Moreover, the overall business landscape is rather progressive, and focused on achieving the best possible results.

KEY INDUSTRIES

The Dutch economy is driven majorly by the following sectors, which are also the key focus, as per the Dutch Invest Body:

1. Life Sciences & Health

The Netherlands is home to one of the best life sciences industries in the EU, and the best biotech companies across the world. Often known as the EU’s life sciences metropolis, it has more than 3100 R&D and biopharmaceutical companies employing more than 65,000 individuals. On the other hand, the medtech industry has a turnover of approximately €4.7 billion, and witnesses around 600 new clinical trials annually. Talking about life sciences and health industries, they employ more than 100,000 people and has a turnover of over €7 billion. The Netherlands witnesses the registration of more than 1200 health & life sciences related patents on an average; and houses multiple science parks in major cities like Amsterdam and Eindhoven.

1. Agrifood

Driven by advanced farming and smart food technology, the Netherlands is the world’s second largest agrifood exporter, and ranks 1^st globally in terms of agrifood related R&D investment. The country follows a triple helix model wherein the government, academic institutions and commercial players are linked intrinsically, thereby offering great support to new players. The Dutch agrifood landscape is marked by the presence of major food companies like Nestle, Yakult, and Heinz, as well as scale-ups like Beyond Meat and Protix. The industry generates employment for more than half a million people directly and indirectly, consists of 7,000+ companies, and generates on an average, an annual revenue close to €90 billion.

1. IT & Tech

The Netherlands is one of the most sought after destinations for highly skilled IT workers. It is also one of the most popular and established industries in the country, with 98% of the households having access to a broadband connection. The country also seems to be working towards the regulation of AI, with the government having launched the Strategic Action Plan for AI, which is based on three main pillars, i.e. capitalizing on opportunities presented by AI, advancement of AI knowledge through R&D and human capital, and safeguarding the public interest establishing ethical guidelines with regards to AI. The Netherlands is also home to Hague Security Delta, a network of over 300 public and private companies working together to accelerate cyber security solutions, and Europe’s largest security cluster. As of 2021, the IT industry employed over 300,000 people.

1. Chemicals

The Netherlands is home to 19 out of the top 25 chemical companies in the world, and has a total of more than 2000 chemical companies overall. The country is also a part of the Antwerp-Rotterdam-Rhine-Ruhr Area which produces approximately 30-40% of Europe’s total chemicals, and has a network of 11 reputed universities offering courses in chemistry. The chemical industry is also a viable options for start-up founders, with the Netherlands having 16 certified incubators and demo locations to stimulate innovation and scaling-up. Moreover, the country also has multiple seaports, which not only facilitates access to over 170 million consumers and major German and French industrial clusters, but also facilitates the infrastructure needed for the success of the chemical industry.

1. High-Tech Systems

The high-tech industry encompasses various industries such as robotics, quantum, semiconductors, photonics, aerospace, and electronic vehicles, which are growing rapidly. The Netherlands is home to 350 robot and automation suppliers, 1700 materials related R&D firms, and an innovative ecosystem with over 100,000 companies employing more than half a million professionals. Innovation is also promoted by virtue of multiple public-private partnerships, cutting-edge R&D, and multiple science and innovation parks centred around universities. For instance, the high-tech campus in Eindhoven has around 220 companies and institutes, having around 12,000 researchers, developers, and companies. The Netherlands is also a leader in the semiconductor domain, and has a complete semiconductor value chain. Furthermore, high tech Netherlands Semiconductors, i.e. the national semiconductor network, stimulates cooperation between global names, local experts, universities, and other knowledge institutions and innovation centres

1. Creative

The Netherlands has more than 30 institutions offering creative arts and design courses. The advertising industry is also growing rapidly. Due to its geographical location and the abundance of skilled workers, a company situated in the Netherlands can serve the top 3 advertising markets in Europe, i..e the UK, France, and Germany. Moreover, the cities of Amsterdam and Hilversum are the top cities for media and entertainment companies, and house the regional headquarters of companies like Netflix, Disney and Discovery. 

1. Energy

The Dutch government is aiming to switch to 100% sustainable energy by 2050, and offers €500 million in investment to stimulate a €1.25 billion hydrogen cluster. The Netherlands has major energy related goals that it is seeking to achieve, some of them being reducing greenhouse emission by 49% by 2030, and by 95% by 2050, generating 21 GW of wind energy by 2030; and establishing 4GW electrolyser capacity, and 136,000 km of hydrogen retrofitted natural gas pipeline by 2030. An incentive which may be available to large projects is the Renewable Energy Grant Scheme (SDE+), wherein incentives totalling up to €130 million a year are granted. Further, there are sustainable energy investment grants for heat pumps, solar water heating systems, biomass boilers, and pellet stoves. It is noteworthy that the Netherlands is Europe’s second largest hydrogen producer at 9 million³  and has over 1000 kilometres of dedicated hydrogen pipelines. The Netherlands has one of the highest density of solar panels in the world, and the government has invested 400 million euros into a solar panel subsidy scheme that encourages further innovation in the area.

1. Fintech

The Netherlands is home to over 850 fintech companies, financial institutions and tech businesses, and is the EU’s second largest fintech industry. Not only is it the fastest growing fintech ecosystem in Europe, but also ranks third in terms of venture capital funding. Green finance is also one of the upcoming sub-domains in the Netherlands, with Amsterdam being the world’s 6^th largest city for green finance start-ups. 

1. Maritime & Water Technology

Rotterdam is the world’s second most prominent maritime city globally, and the world’s no.1 smart port planning to go carbon neutral by 2050. The maritime sector contributes 3.2% to the total GDP. Rotterdam also has the most competitive maritime cluster in the world. Water technology is also an upcoming area in the Netherlands, with the water campus of Leeuwarden being the hub of water technology in Europe, due to its European centre of excellence, known as Westus.

RELOCATION

If you are a non-EU national looking to set base in the Netherlands, you must obtain a residence permit. The application procedure basically entails application for two permits, namely a provisional residence permit (machtiging tot voorlopig verblijf) which will allow you to enter the Netherlands, and a residence permit for a self-employed person (verblijfsvergunning zelfstandig ondernemer). Self-employed people holding the title of director or major shareholder in a company must hold at least 25% of the total shares. In order to obtain a favourable decision on your application, one of the many factors which needs to be fulfilled is that as a self-employed person, you must prove that you are earning at least €1,564 of gross profit every month.

It is noteworthy that to deal with the Dutch administration, you will need to have a valid citizen number (BSN). Once you get your residence permit, you must register at your municipality and present before it, your legalized and translated birth certificate. You will then get your BSN. But fret not! SUO Consulting GmbH has you covered. We will assist you at every step of the way; from visa applications to getting your BSN.

The residence permit to work as an entrepreneur in the Netherlands is valid for an initial period of 2 years, and can be extended for another 2 years, provided that you continue to fulfil the conditions on the basis of which your initial permit was granted. Additionally, your main residence should be in the Netherlands in order to be able to get your residence permit renewed. While permanent residence may be availed after 5 years of uninterrupted stay, citizenship by naturalization can be applied for after 5 years of uninterrupted permanent residence.

The Netherlands is also relatively open to expats, with locals being highly proficient in English. The country has constantly ranked 1^st on the English proficiency index every year. This European country is known for its high standards of living, low crime rates, and friendly locals. What’s more interesting? At 4.83 million, nearly a quarter of the Netherlands’ population is made up of expats, with the most expat-friendly destinations being Amsterdam, Rotterdam, Utrecht, Maastricht, and Delft. 

CONCLUSION

It can thus be said that the Netherlands has multiple opportunities which are waiting to be explored. Though many industries like tech and life sciences are already well established and even globally renowned, multiple sub-sectors therein, and even upcoming industries like gaming and fintech offer a wealth of opportunities along with scope for growth. Though living in the Netherlands comes with its own set of challenges, you can establish your venture and get profitable returns on your investment, provided that your moves are strategically planned and backed by sound legal advice.