Why Branch Registration in the Netherlands is Important to consider as option to enter a new market
Registering a branch is an efficient, cost-effective way to expand your business into a foreign market. The Netherlands, with its robust...
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Company formation in Netherlands and Germany can be very straightforward, and be finalized within several days.
In case of The Netherlands company, you can finalize the formation remotely , and without capital deposit. While in Germany, a visit is suggested because a bank account will also need to be opened.
There is no requirement to appoint a local director or shareholder in Netherlands or Germany.
On average, it takes ten days to set up a company in Germany:
Company name check with local chamber of commerce
Preparation of the necessary power of attorney to attend
the notarial deed for the incorporation (for remote formation of the company without visit to the notary)
Attendance of notarial deed for incorporation upon power of attorney
Assistance with the preparation of the articles of association
In the first year there are certain (legal) issues that need to be taken care of, such as:
- Opening of a Bank Account
- Application of a VAT Number
- Translation and processing of incoming mail to the registered office (which is in Dutch or German)
- Dealing with the Tax authorities/Chamber of Commerce (concerning the formation of the new company, etc.)
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Location and business environment in Germany
The largest economy in Europe is Germany, making up 22% of Eurozone GDP and having access to 454 million consumers.
It belongs to the largest exporters in the world and “Made in Germany” is recognised as an indication of high quality all around the world. The country’s optimal geographic location,
neighbouring the established markets of Western Europe on one side and the emerging markets of Central and Eastern Europe on the other, makes it a hub for expanding business
throughout Europe.
Type of Company for International Trade and Investment:
Gesellschaft mit beschränkter Haftung
(GmbH or Limited Company) (MOST POPULAR!) or UG
Aktiengesellschaft (AG or Joint Stock Company)
Other forms available are partnerships such as the general
partnership (OHG), limited partnership (KG), GmbH & Co KG,
silent partnership, civil law association (BGB Gesellschaft).
In Germany, the most common consideration is between the UG and the Gmbh. But we always suggest to go for the Gmbh, in case of a non-European client.
The reason is the reputation of the vehicle, and it will be easier to open the bank account. But also, if you decide to incorporate an UG, without capital deposit, there might be practical issues later on, when the client wants to change a director or shareholder. (The court might request for proof that the company is financially sound anyway).
However, the UG is very popular if you need a German company ASAP, and a local bank account is not a requirement(in short term)..
In that case, we suggest the UG, because the formation procedure is simpler, because no capital deposit is required if we incorporate the company with just a share capital of 1 EUR.
After formation of the company, we can still consider to open a bank account, in Germany, or in another European country. However in MOST cases, the bank needs to identify the director of the company in person.
Either way, both the UG and the Gmbh have their downside in Germany, and in any event, we suggest your client to visit Germany to start and finalize the procedure. We can schedule meetings with the notary, bank and bookkeeper, all in 1 day.
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Filing requirements and (tax) compliance
The German tax law is based on the Basic Law (Grundgesetz), every German tax is regulated by a statute and there are presently 30 statutes in being. The German tax system levies direct taxes on income and on net worth.
Types of taxes are: Corporation Tax, Personal Income Tax,
Municipal trade tax on income, withholding taxes on dividends,
rental, royalties, fees, interest, church tax and VAT.
Current Tax rates are:
Corporation Tax 15% (federal, see regional corporation tax below)
Municipal Trade Tax 14% (average)
Withholding Tax 25% on dividends
Up to 25% on interest
VAT 19%
Description
Minimum Capital Deposit
Netherlands BV: No required
Germany Gmbh: minimum 50% of 25.000 EUR
(Local) Bank Account requirement
Netherlands BV: No, bank account can be opened AFTER formation, and OUTSIDE Netherlands
Germany Gmbh:Yes, the bank account must be opened BEFORE company formation, and INSIDE Germany
Registered Office requirement
Netherlands BV: Yes, typically 100 EUR pm
Germany Gmbh: Yes, typically 120-150 EUR pm
Formation Fees
Netherlands BV: € 750, including notary fees (based on standard Formation Deed)
Germany Gmbh: € 1.200 including notary fees (based on standard Formation Deed) (< 3 shareholders/directors (non-corporate entities))
(Entrepreneurial) Diploma Required for Formation?
Netherlands BV: No
Germany Gmbh:No
Translation Required (of Formation Documents)
Netherlands BV: No, but preferred
Germany Gmbh: Yes, unless the person speaks German. The notary might check if the shareholder understands the Formation Deed fully in its own language.
Time Frame Formation
Netherlands BV: 2 weeks on average
Germany Gmbh: 2-3 weeks
Remote Formation Possible
Netherlands BV: Possible (video call)
Germany Gmbh: Not possible, due to banking requirement.
Corporate Taxes
Netherlands BV: 15% upto 200.000, 21,4% above 200.000 (2021)
Germany Gmbh: Approx 30-35% depending on the 'State' in region
Withholding Taxes
Netherlands BV: 0% on royalties, 15% on dividends, 0% on interest. Over 100 treaties applicable.
Germany Gmbh: Withholding tax of 25%, plus 5.5% solidarity surcharge (giving an effective rate of 26.38%), is applied to dividend and interest payments.
15% plus solidarity surcharge on Royalties.
Chamber of Commerce Contribution
Netherlands BV: 50 EUR per year
Germany Gmbh: 150-200 EUR per year
Requirement to understand the local language
Netherlands BV: No, everybody in Netherlands speaks English well, and the authorities/banks/notaries are very cooperative
Germany Gmbh: Preferred, with the English language in Germany, its difficult to get the assistance of most authorities/banks/notaries
Non Resident Director Allowed
Netherlands BV: Yes
Germany Gmbh: Yes, however a work permit can be required before the formation of the company
Non Resident Shareholder Allowed
Netherlands BV: Yes
Germany Gmbh: Yes
Accounting Requirements
Netherlands BV: Bookkeeping Requirement, Filing of Annual Report, No Audit Requirement up to turnover of 8.8 million (or similar conditions)
Germany Gmbh: Bookkeeping Requirement, Filing of Annual Report, No Audit Requirement up to turnover of 4.8 million (or similar conditions)
Accounting/Bookkeeping Fees
Netherlands BV: In average 100 EUR per month
Germany Gmbh: In average 200 EUR per month
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Welcome
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Category | Business Formation
This article will inform you on the different types of Dutch legal entities
How to start a sole proprietorship in the Netherlands in a few simple steps.
A holding company is really just a BV (Private Limited Company).
In this article we will explain you the details of the Formation Deed, and why they are so important.
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Our Services
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What is House of Companies?House of Companies is in first instance a new concept in offering flexible office solutions and registered office addresses, covering more than 4.000 locations. Aside from full service office facilities (from dealing with your mail, to answering the phone) , we offer a ‘branch out membership’ which provides you the tools to start a new business, or keep your business running, at the lowest costs possible. House of Companies is located at an amazing mansion, on a 50.000m2 estate in the Netherlands offering room for hundreds of companies. But we also offer +4.000 locations in cooperation with partners.
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Can anybody use the services of House of Companies?Yes, basically anybody can use the services of the House of Companies. Even if you are not an entrepreneur yet! Our services are very low-key which allows companies of any sizes to expand overseas. We do have a strict onboarding process in place, and don’t deal with companies focused on tax avoidance, or who have operations in sanctioned countries, as well as certain sensitive industries.
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Is using a registered office address legal?Yes, 100% legal! Our team has over 10 years experience in providing registered office services, and our locations meet the standards of the Dutch Chamber of Commerce. Our locations provide a full time reception, and our locations are always able to provide you a working space when need be.
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Do I pay taxes when I use a virtual office in the Netherlands?A ‘virtual office’ typically does not pay taxes (yet). This is not due to a special tax status, but simply because a virtual office has no actual operations (or substance) yet (or has not started to make a profit, doing sales, or employing staff). In fact, a ‘virtual office’ is typically considered a ‘representative office’ and is not required to be registered at the Chamber of Commerce. Such requirements might change, once you perform any actual services from the Netherlands, or goods are stored and processed here. In case of doubt, it might be necessary to discuss your situation with a lawyer or accountant, but much information on this topic is available in our Dashboard.
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Does a Dutch company require a local address?In many cases a local company registration requires a local business address. Especially in (Western) European countries this is very common. There are some exceptions, especially in case of a branch registration (or a representative office). A registered office address is required to receive official government letters, and in come cases also to open a local corporate bank account.
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Can my Dutch business open a bank account?Yes, a business dealing on the Dutch market can also open a corporate bank account. However, this is becoming more challenging. House of Companies can inform you about European banks that can open bank accounts for any kind of European entity, without a visit to the bank required.
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When is a registered office address convenient for me?A registered office address is convenient for any kind of business, that is planning to expand to a new market, and is taking it step by step. A registered office address (or virtual office) allows you to explore a new market, while limiting your expenses. It’s not about being ‘virtual’, but it’s about avoiding as much bureaucracy and legal expenses as you can, while your business is not yet at its full capacity. Our tools allow you to get an understanding of the legal framework of a country, so you are able to make the decisions for yourself, rather than having to rely on an accountant or lawyer.
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Can I really submit my corporate tax return myself, without any charges?"Yes, anybody can submit their corporate tax return themselves, without any help from an accountant. Our Dashboard provides you the detailed information, step by step, on how to login to your online Tax Portal, and to file your tax return. Obviously, the more complicated your company activities (and transactions) the more complex your tax return will look like. But if you have almost no operations, then you can save thousands of euros in accounting fees, without requiring any accounting skills! Once your company grows, we offer more detailed information, so you can learn along the way. Or you can decide to involve an accountant at that stage.
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