5 reasons why Founders should Establish their Company in the Netherlands
Most companies might think of the United States, specifically Silicon Valley, and Delaware when thinking of start-ups. However, thanks to globalization and advancements in technology, more and more founders are considering establishing their companies elsewhere. One country has proven an attractive option: Netherlands. The Netherlands is increasingly regarded as a technologically advanced, politically stable, and entrepreneurial nation as a hidden gem in the start-up landscape. Here we present five reasons that contribute to Netherlands’ surge in popularity and provide some insight on why founders should consider establishing their business there.
- Technological Advancements
The Netherlands is one of the most technologically advanced countries in the world. Home to over 15,000 IT companies, Netherlands hosts big names such as Microsoft, Cisco, and Netflix and many startups and emerging businesses. The city is also host to some of the most well-regarded tech conferences and events, ranging from AI, Drone, Design, and Big Data. With a highly developed physical and technical infrastructure, Netherlands ranks No. 2 in the world for online connectivity, with internet penetration reaching 98% of households.
2. Access to Talent
The Netherlands is also known for its highly skilled, productive workforce. Dutch universities are internationally renowned, attracting scholars from all over the world to learn, collaborate, and research. Almost 50% of the city’s adult residents have a university degree. In addition, Netherlands’ residents boast a high degree of English literacy, with many fluent in more than one language. The EF English Proficiency for Companies survey, which ranks English skills among the global workforce, ranks the Netherlands first in 2016.
In addition to homegrown talent, there are a multitude of incentives in place to attract international entrepreneurs. For example, highly skilled migrants that work a specialized job may qualify for a 30% tax ruling. Additionally, similarly to the OPT program in the US, the orientation year permit in the Netherlands allows international graduates one year to find work in the country, allowing ambitious entrepreneurs a promising way to start up their businesses.
3. Tax Benefits
The tax benefits of starting a business in the Netherlands are plentiful. The corporate tax rate is only 15% for profits up to Euro 245,000 and 25% for profits exceeding Euro 245,000. Companies that develop intangible assets (including software) can even benefit from an effective tax rate of 9% for profits derived from these self-developed intangibles if an R&D declaration is obtained. Furthermore, the R&D declaration provides an additional benefit in the form of a wage tax credit of between 16–50% for R&D wage tax costs. Not only the start-up itself benefits from the Dutch tax system. Founders can defer taxation on a (partial) exit if they hold their shares through a holding company, further to which they can use the gross amount of exit proceeds for making new investments. The most important and huge benefit to employees is the 30% reimbursement ruling, a tax advantage for highly skilled migrants in the Netherlands. The employer can grant a tax-free allowance equivalent to 30% of the gross salary. These and other tax benefits and the transparent tax system attract many to set up companies in the Netherlands.
4. Environmental
The crossover between technology and environmental consciousness is often a testament to the ability of Dutch startups to adapt to the demands and problems of the 21st century. For instance, recent developments in AgTech have proven that the Dutch can face the challenges of the agricultural industry head-on. With state-of-the-art AI software to replicate human behavior, robots have already been used in many Dutch industries, including manufacturing and automobile production, satisfying the demand for greater precision and safety while reducing labor costs. Additionally, the transition to a circular economy is increasingly taking shape, reflected in the increased environmental innovation and startups across the Netherlands and wider Europe. By analyzing the impact of policy on the environment and the economy, establishing a company in the Netherlands can allow founders to capitalize on this growing market. Therefore, putting down roots in the Netherlands’ technology-driven, environmentally aware economy is a smart and savvy way to thrive in the start-up industry.
5. Entrepreneurial Spirit
Arguably the most essential point that attracts entrepreneurs is The Netherlands’ entrepreneurial spirit. Amsterdam is Europe’s startup hub, an ecosystem booming with young talent and ideas. Amsterdam has been crowned European Commission’s European Capital of Innovation in the annual iCapital competition. Its internationally pragmatic and innovative way of thinking allows both entrepreneurs and investors to flourish and thrive.
Superior fiscal climate, technological infrastructure, high quality of life, multilingual workforce, and innovative spirit are all reasons why the Netherlands is now a destination for many founders and why you should also consider expanding your business here.
