Starting a Business in Netherlands

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Starting a Business in Netherlands

The Netherlands welcomes entrepreneurs from all across the globe and encourages them to start a business in their country to give wings to their ideas. It stands among some of the best jurisidictions for integrating an expanding business or developing a new startup.

Economy of Netherlands

The Netherlands has a developed economy and has been playing a special role in the European economy for many centuries. Since the 16th century, shipping, fishing, agriculture, trade, and banking have been leading sectors of the Dutch economy. The Netherlands has a high level of economic freedom. The Netherlands is one of the top countries in the Global Enabling Trade Report (2nd in 2016), and was ranked the fifth most competitive economy in the world by the Swiss International Institute for Management Development in 2017. In addition, the country was ranked the second most innovative nation in the world in the 2018 Global Innovation Index.

The Netherlands is a heavily developed country.

Netherlands GDP Economic Sectors
Netherlands GDP Economic Sectors

Netherlands Economic Indicators

Netherlands GDP Growth Rate

The Netherlands is the sixth-largest economy in the Euro Zone and important transportation hub in Europe. The Dutch economy depends heavily on foreign trade, with exports accounting for 83 percent of GDP and imports for 72 percent. Household consumption is the main component of GDP (45 percent) followed by government expenditure (26 percent), gross fixed capital formation (18 percent) and net trade (11 percent).

 

Netherlands GDP Growth Rate
Source: Statistics Netherlands
Netherlands Interest Rate

Netherlands is a member of the European Union which has adopted the euro. Netherlands’s benchmark interest rate is set by the European Central Bank. The official designation for the rate is main refinancing operation.

Netherlands Interest Rate
Source: European Central Bank
Netherlands Inflation Rate

In Netherlands, the most important categories in the consumer price index are: housing, water, electricity and gas (24.5 percent of the total weight); transport (11.6 percent) and food and non-alcoholic beverages (11.3 percent). The index also includes: recreation and culture (10.3 percent); furnishing and household equipment (6 percent); clothing and footwear (4.9 percent); hotels and restaurants (4.2 percent); communication (3.3 percent) and alcoholic beverages and tobacco (3.1 percent). Health, education and other goods and services account for the remaining 20.8 percent of total weight.

Netherlands Inflation Rate
Source: Statistics Netherlands
Netherlands Unemployment Rate

In Netherlands, the unemployment rate measures the number of people actively looking for a job as a percentage of the labour force.

Netherlands Unemployment Rate
Source: Statistics Netherlands
Netherlands Government Dept to GDP

Generally, Government debt as a percent of GDP is used by investors to measure a country ability to make future payments on its debt, thus affecting the country borrowing costs and government bond yields. Netherlands recorded a government debt equivalent to 48.60 percent of the country’s Gross Domestic Product in 2019. 

Netherlands Government Debt to GDP
Source: Statistics Netherlands
Netherlands Balance of Trade

The Netherlands is an export-oriented economy and derives more than two-thirds of its GDP from the merchandise trade. Main exports are: machinery and transport equipment (28 percent of total exports), mineral fuels (23 percent), food (11 percent), clothing and footwear (10 percent) and pharmaceuticals (5 percent). Netherlands main imports are: fuel (29 percent of total imports), machinery (26 percent) and food and live animals (8.6 percent). Main trading partners are Germany (24 percent of total exports and 17 percent of imports) and Belgium (12 percent of exports and 10 percent imports). Others include: China, France, United Kingdom and United States.

Netherlands Balance of Trade
Source: Statistics Netherlands
Netherlands Currency Euro

The euro is the official currency of Netherlands, which is a member of the European Union. The Euro Area refers to a currency union among the European Union member states that have adopted the euro as their sole official currency. In Netherlands, interest rate decisions are taken by the Governing Council of the European Central Bank.

Netherlands Currency Euro

Netherlands Stock Market AEX

The AEX Index is a major stock market index which tracks the performance of the leading stocks traded on the Amsterdam Exchange. It is a free-float adjusted market capitalization weighted index. The AEX Index has a base value of 538.36 as of January 4, 1999 after conversion to Euro.

Netherlands Stock Market AEX

Netherlands Ease of Doing Business

Netherlands is ranked 42 among 190 economies in the ease of doing business, according to the latest World Bank annual ratings. The rank of Netherlands deteriorated to 42 in 2019 from 36 in 2018. The Ease of doing business index ranks countries against each other based on how the regulatory environment is conducive to business operationstronger protections of property rights. Economies with a high rank (1 to 20) have simpler and more friendly regulations for businesses.

Ease of Doing Business in Netherlands
Source: World Bank
Netherlands Business Confidence

The Netherlands’ business confidence indicator fell to -5.6 in October 2020 from -4.8 a month earlier. This was the weakest reading since July, as manufacturers’ opinions on future output have deteriorated slightly for the third consecutive month. However, they were less negative about their order position and more positive about their stocks of finished products.

In Netherlands, the producer confidence survey covers 1,700 manufacturing companies and gathers up-to-date information on economic developments for all activities of the manufacturing industry. The survey covers three components: how companies evaluate their order positions, their stocks of finished products in the month under review and the anticipated economic activity for the next three months. The index is calculated as the percentage of positive answers minus the percentage of negative answers. Therefore, the indicator varies from -100 (all participants evaluate their situation as poor and expect it to become worse) to 100 (all companies are happy with current situation and expect it to improve); 0 indicates neutrality.

Netherlands Business Confidence
Source: Statistics Netherlands
Netherlands Consumer Confidence

The Dutch consumer confidence index declined to -30 in October 2020, the weakest since May, from -28 in the previous month, suggesting the mood among consumers hardly changed despite the country’s reopening efforts from the coronavirus-induced lockdown. Consumers were more pessimistic about the economy in the next twelve months, while opinion on the economic situation in the past twelve months were unchanged. Consumers’ willingness to buy was unchanged (at -9), as opinions on their expected financial situation for the next twelve months were slightly more positive, while those on their financial situation over the past twelve months have deteriorated slightly. Consumers also found this time unfavorable to make large purchases, unchanged from August. Meanwhile, consumers’ sentiment about the general economic situation weakened slightly, dragged by a deterioration in opinions on the economic situation in the next twelve months.

In the Netherlands, the Consumer Confidence survey is made by phone and covers 1,000 households. The questions cover the consumer’s assessments on national economy and own financial situation for the past 12 months and expectations for the coming 12 months. The index is then calculated as a difference between the percentage of participants that are optimistic and the share that is pessimistic. Therefore, the index takes a value between -100 (all respondents assess their situation as poor and expect it to become worse) and 100 (all participants are satisfied with the current situation and expect it to improve); 0 indicates neutrality.

Netherlands Consumer Confidence
Source: Statistics Netherlands
Netherlands Bank Lending Rate

Bank Lending Rate in Netherlands remained unchanged at 0.40 percent in September from 0.40 percent in August of 2020.

In Netherlands, the bank lending rate rate is the average rate of interest charged on loans by commercial banks to private individuals and companies.

Netherlands Bank Lending Rate
Source: De Nederlandsche Bank
Netherlands Corruption Rank

Netherlands is the 8 least corrupt nation out of 180 countries, according to the 2019 Corruption Perceptions Index reported by Transparency International. The Corruption Perceptions Index ranks countries and territories based on how corrupt their public sector is perceived to be. A country or territory’s rank indicates its position relative to the other countries and territories in the index.

Netherlands Corruption Rank
Source: Transparency International
Netherlands Credit Rating

Standard & Poor’s credit rating for Netherlands stands at AAA with stable outlook. Moody’s credit rating for Netherlands was last set at Aaa with stable outlook. Fitch’s credit rating for Netherlands was last reported at AAA with stable outlook. DBRS’s credit rating for Netherlands is AAA with stable outlook. In general, a credit rating is used by sovereign wealth funds, pension funds and other investors to gauge the credit worthiness of Netherlands thus having a big impact on the country’s borrowing costs. This page includes the government debt credit rating for Netherlands as reported by major credit rating agencies.

Euronext Amsterdam is a stock exchange based in Amsterdam
Euronext Amsterdam is a stock exchange based in Amsterdam

Taxation in Netherlands

Corporate tax Personal Income Tax VAT or sales tax Social Security Rate For Companies Social Security Rate For Employees
25% (on profits over €250,001)
20% (not over €250,000)
36.55% (first €21,103 per year is deductible)
49.50%[146] + reduction of deductions (arbeidskorting and general korting)
21% (standard rate)
9% (essential and selected goods)
23,19% 27,65%

Starting a Business in Netherlands

There are various government and other rules to follow. Use the checklist to find out what the procedure is for starting a company in the Netherlands. Depending on your situation, you may need to take other steps as well. Checkist is available here.