A foreign company doing business in the Netherlands is any non-Dutch legal entity or natural person conducting commercial activities here. At Musch Legal, we regularly advise English, German, and American parties entering the Dutch market. The Netherlands is known for favorable tax treatment, stable jurisprudence, and a strong trading position. The right legal entry point — branch, BV, or pure export — determines whether you operate efficiently.
What is the legal problem? (Which structure suits you?)
Foreign companies can enter the Netherlands via export, branch (permanent establishment), Dutch BV, or acquisition. Each route has its own tax, legal, and operational consequences. An unintended permanent establishment under Article 5 of the OECD Model Convention leads to Dutch tax liability. Choosing the wrong structure often costs more than careful preparation.
What does the law say? (Which Dutch frameworks apply?)
Book 2 of the Dutch Civil Code (BW) regulates legal entities. For permanent establishments, Article 5 of the OECD Model Convention and local tax treaties apply. The Corporate Income Tax Act 1969 regulates corporate income tax with a participation exemption under Article 13. The VAT Act 1968 regulates VAT. The Work and Income for Employees Act (Wet Werk en Inkomen voor Werknemers) regulates employment relationships. For the financial sector, Wft supervision applies via DNB and AFM. Foreign companies trading here via a permanent establishment must register with the Chamber of Commerce under Article 5 of the Trade Register Act.
Structure
Tax impact
Legal
Pure export
No Dutch tax
Own legal form, Dutch purchase contract
Branch/permanent establishment
Dutch corporate income tax on branch profits
Registered with the Chamber of Commerce
Dutch BV (subsidiary)
Dutch corporate income tax + participation exemption
Fully-fledged Dutch legal entity
Acquisition
Reorganization structuring
Due diligence + SPA
Structure
Tax impact
Legal
Pure export
No Dutch tax
Own legal form, Dutch purchase contract
Branch/permanent establishment
Dutch corporate income tax on branch profits
Registered with the Chamber of Commerce
Dutch BV (subsidiary)
Dutch corporate income tax + participation exemption
Fully-fledged Dutch legal entity
Acquisition
Reorganization structuring
Due diligence + SPA
What risks do companies face? (Where do things go wrong for foreigners?)
Unintended permanent establishment via a local agent or representative leads to Dutch corporate income tax liability. GDPR compliance when processing Dutch personal data. Non-compliance with Dutch employment law rules regarding secondment. Chain Liability Act for social security contributions in subcontracting. Unfamiliarity with Dutch general terms and conditions rules under Article 6:233 of the Dutch Civil Code.
Practical example from our practice (How did we guide a British entry?)
Musch Legal advised a British SaaS company that wanted to enter the Dutch market. We drew up a phased plan: first year export under a UK entity with Dutch general terms and conditions, local sales partner without a permanent establishment; second year, at 1.2 million euros in local turnover, establishment of a Dutch BV as a sales organization. Tax optimization via participation exemption under Article 13 of the Corporate Income Tax Act 1969. Total cost of legal setup €35,000 versus estimated scenario €110,000 with unstructured entry.
What can you do? (Which steps do you take first?)
Start with market analysis and determine expected volume. Below €500,000: pure export suffices. Above €500,000: consider permanent establishment or Dutch BV. For structural presence: Dutch BV with participation exemption. Consult with a Dutch tax specialist. Adapt general terms and conditions to Dutch law. Register trademarks via the Madrid Protocol with Dutch designation. Engage Musch Legal for structural advice.
Establishing a Dutch BV as a foreign entrepreneur