Establishment of a Subsidiary

To enter the Netherlands for investment, it is crucial to craft a well-defined entry plan. Successful entry hinges on a comprehensive plan that factors in investment size, type, area, and marketing strategy. Selecting an investment area in accordance with the Dutch investment environment requires regional environmental surveys tailored to industry characteristics. The establishment of marketing strategies and networks is essential to enhance the business performance of investment companies.

PROCEDURES FOR ESTABLISHING A PRIVATE LIMITED LIABILITY COMPANY: Establishing a corporation necessitates designating a notary specializing in Dutch civil law. This notary holds the legal authority to oversee the entire process, from registration to completion with the Chamber of Commerce.

① Power of Attorney: The power of attorney must be endorsed by the representative or director. This document delegates the corporation's establishment on behalf of the founder, with a straightforward legal statement prepared by an attorney who acted on behalf of the right to sign (typically provided by law firms)./p>

② Draft Articles of Incorporation: Civil law notaries prepare drafts of corporate documents, including articles of incorporation. These drafts must specify the following:

③ Notarization under Dutch Civil Code: A corporation can formalize its establishment under the Dutch Civil Code by obtaining a Deed of Incorporation. The company's certificate of incorporation includes the company name, issuance price, number of shares issued to shareholders, articles of incorporation, names of management board members, and, in cases involving a supervisory board, names of supervisory board members. The certificate of incorporation must be written in Dutch, and in most instances, the law firm provides an unofficial translation

④ Incorporation (BV) and Established Capital Bank Account: Incorporation is feasible if the Established Capital amounts to at least 0.01 Euros, as per the amended Act starting from October 1, 2012. The bank account opening process may be time-consuming, so it's advisable to initiate it early. It's also viable to open an account in the corporation's name before its official establishment, requiring temporary registration with the Chamber of Commerce (B.V.i.o.).

The necessary documents for opening a bank account in the name of a new company are detailed below

⑤ Trade Register: A corporation must register with the Chamber of Commerce using a copy of the incorporation certificate within eight days from the seal date of the incorporation certificate. All board members can complete the commerce registration, and most often, civil law notaries oversee this process. In the Chamber of Commerce registration procedure, the names of the CEO and shareholders (if stocks are involved) must also be registered. The registration incurs a fee of 75 euros, and cash payment is not accepted.

⑥ Submission of Annual Report: In principle, all corporations are obligated to submit annual reports to the Chamber of Commerce. The annual report encompasses financial statements such as balance sheets, income statements, supplementary explanatory data, and board reports. The scope of financial statements submitted varies based on the company's size. Since January 2013, the Ministry of Economy has supported the Chamber of Commerce and Industry's activity expenses, eliminating the need for annual membership fees

Management board members must obtain shareholders' approval for financial statements within five months of the settlement date. The management report of the board of directors should be prepared concurrently with the financial statements. Shareholders have the option to extend the deadline for submitting financial statements and management reports for up to six months. All management and supervisory board members (if applicable) must sign the financial statements before they are approved at the general shareholders' meeting.

Change Information Since Establishment

If there are changes in business activities, registration must be updated promptly, ensuring that information on the changes is consistently updated. Changes in addresses, web addresses, telephone numbers, fax numbers, email addresses, and corporate names should be registered with the Chamber of Commerce within one week of the modification. Download the application form from the Chamber of Commerce's website and submit it to the local Chamber. In cases where the registered director changes, the new appointment must occur at a general shareholders' meeting, and an application for change should be prepared and submitted.

Branch Establishment Procedure

To establish a branch office, there is no requirement for a civil law notarization procedure, unlike for a corporation. Instead, a commercial registration must be completed with the Chamber of Commerce. Given that this process is conducted in Dutch, foreign companies commonly engage a Dutch accounting firm for assistance. Following registration with the Chamber of Commerce, all branches are generally obligated to submit their parent company's annual report to the Trade Register.

The extent of financial data submitted varies based on the entity's size. Dutch commercial registration through the Chamber of Commerce necessitates fundamental details about the branch and comprehensive information about the parent company. The information required for branch registration is outlined as follows:

Documentation pertaining to the foreign parent company required for registration encompasses the following. Documents issued in investor’s countries necessitate notarized translation and apostille:

Upon registration with the Chamber of Commerce, you will receive a business registration number (KVK Number), and automatic registration with the Dutch Tax Office (Belastingdienst) for obtaining a VAT number will follow. In the Netherlands, commercial registration typically takes less than a week, yet preparing documents related to the parent company may require a significant amount of time.

Procedure for establishing a representative office

The establishment of a representative office does not have a notarization procedure such as the establishment of a corporation, and it is the same as the registration method of the branch. After commercial registration, all representative offices are, in principle, obliged to submit the annual report of the parent company to the Chamber of Commerce. The scope of financial data submitted varies depending on the size of the entity.

Private business registration

Since an individual business entity is not a corporation, it is not necessary to go through civil law notarization procedures for the establishment of a corporation and must register commercial at the Chamber of Commerce. When related documents are prepared, the registration will be completed within one business day at the Chamber of Commerce and Industry. In some cases, permission by industry is required to do personal business. For example, in the case of restaurants, permission from health and fire authorities is required, and in the case of dangerous goods handling projects, related permission is also required. You can check the Dutch Chamber of Commerce website (www.kvk.nl/english/) / www.kvk.nl for necessary permission information by industry.

Real Estate Contract

Dutch commercial real estate is predominantly categorized into general commercial real estate and small-capital commercial real estate (retail and restaurant businesses). Small-capital commercial real estate encompasses retail stores, restaurants, cafes, hotels, camping sites, takeout stores, handicraft stores, chains of large discount stores, shop-in-shops, repair shops, laundry stations, and gas stations. Lease contracts for small-capital commercial real estate often feature more tenant protection provisions compared to other contracts. On the other hand, general commercial real estate is known as Kantoorruimte and encompasses factories, offices, small warehouses, banks, product exhibitions, travel agencies, newspaper distributors, lottery stores, casinos, adult clubs, theaters, bicycle parking lots, rental companies, workplaces, lodging rental companies, funeral companies, sports centers, club halls, pharmacies, various clinics, and freelance sites (archives, lawyers, etc.).

Lease period

There are no legal regulations regarding the lease contract period for general commercial real estate, and the lease duration can be determined through an agreement with the tenant. If the contract period is not separately defined, the contract remains valid indefinitely until termination is communicated. The process of terminating a general commercial real estate contract "by the tenant" is quite straightforward. When the contract period is specified, it concludes upon reaching its maturity, eliminating the need for separate notification. In essence, if the standard lease contract for general commercial real estate reaches its expiry date, it requires adherence to the designated contractual duration. Naturally, both the lessor and the lessee have the option to renew their contracts as desired.

In practice, it's common to enter into a contract with a five-year term, including a pre-notification period for contract termination, along with an optional extension period of two to three years. In this scenario, if termination is not communicated (in writing) during the specified notification period before the initial five-year term concludes, the contract will automatically extend for the designated duration. Many office buildings, such as the World Trade Center office in Amsterdam's Zuidas area, feature a relatively extended pre-notification period of "one year before maturity." Consequently, it's essential to exercise caution to avoid unintentionally prolonging leases if extension is not desired. While it's not obligatory to include an optional extension period, it's also possible to establish an organic lease contract that naturally concludes when the term expires. Alternatively, negotiations could determine a more flexible pre-notification period, such as "9 months before maturity" or "6 months before maturity," rather than the standard one year.

If the contract duration is established, generally, even a tenant cannot unilaterally notify the contract's termination. This signifies that even if the office is vacated within the lease contract's term, rent must continue to be paid until the end date. For foreign companies entering the Netherlands for the first time, it's advisable to opt for a two to three-year contract or a two to three-year lease with an extension option, rather than initially committing to a five-year lease contract.

Rent

The rent level and the decision to increase it can be openly discussed. However, once the lease period begins, the tenant, lessor, and even the court cannot alter the rent. Nevertheless, it's possible to stipulate in the contract that the rent will be reviewed at specific intervals. In such cases, it's advisable to document this agreement.

Rent escalations are often detailed in contracts, adhering to the annual rent adjustment index (Index) provided by the Dutch National Statistical Office. Alternatively, in certain instances, they might be specified to increase by a fixed monetary amount each year. In essence, commercial real estate rents can undergo upward adjustments even within the contract term, if they're predetermined or separately established in the agreement. Once the monthly rent is agreed upon and documented in the contract, it remains obligatory to pay that fixed amount every month, even if it exceeds local market rates, until renegotiation occurs.

Service Cost

Service costs, in a narrow sense, encompass expenses like electricity, heating, water, IT networks, maintenance, installations, cleaning, waste disposal, environmental upkeep, security, insurance, and local government taxes. Broadly, service costs also involve facility management expenditures, such as on-site restaurants, catering, beverage vending machines, building security, cleaning, mail reception, and service desk management. Within the lease contract, the latter is collectively termed as service costs, and at times, the electricity fee is computed separately.

When inquiring about monthly service costs prior to signing the lease agreement, landlords often provide estimates based on the lowest potential expenses. Occasionally, tenants might find themselves facing elevated costs, as they may not give due consideration to confirming these expenditures. As a precaution, tenants are better off requesting an "annual cost calculation table," detailing the actual costs of leasing the site or office, inclusive of service costs, before finalizing a clear and written agreement with the lessor. This is especially pertinent concerning service costs.

Create a Report by Country

The Dutch government recognizes the transparent and automatic exchange of tax information as a countermeasure against tax avoidance. The OECD sets forth minimum standards for national reports under the offshore tax avoidance (BEPS) action plan 13, and the Netherlands revised the legislation for submitting national reports, effective from January 1, 2016, with enforcement starting on June 5, 2017. Consequently, multinational companies that commenced operations after January 1, 2016, are mandated to provide reports. An active agreement on the exchange of reports with specific is in place, and local subsidiaries are exempt from on-site submission requirements./p>

As per the present legislation presented to the National Assembly, subsidiaries of Dutch multinationals with annual sales exceeding 750 million euros are obligated to furnish a country-by-country report to the Dutch tax authorities within 12 months following the fiscal year's conclusion. The report should encompass multinational corporations' tax strategies in the Netherlands, pre-tax profits, income tax payments, cumulative profits, and employee numbers. This report can be prepared in either Dutch or English. Currently, the Dutch tax authorities estimate that approximately 150 Dutch multinational firms are subject to national reporting. In certain instances, the obligation to provide country-specific reports is mandatory, for instance, for multinational entities located in countries lacking a definitive parent company in the Netherlands or for those not consulted regarding information exchange.

Failure to comply with the reporting duty, such as omitting submissions or negligence related to national reports, may result in the imposition of fines by the tax inspector, reaching up to 20,750 euros, or legal prosecution in a national court.

Investment Incentives

1) WBSO (R&D Wage Tax Credit, R&D Incentive)

• Subject to Support

• Selection Criteria

• Details and Scale of Support (Amount)

• How to Apply

2) Innovation Box (R&D Incentive)

• Selection Criteria

• Details and Scale of Support (Amount)

3) MIA/VAMIL (Milieu Investeringsaftrek / Willekeurige afschrijving milieu-investeringen)

• Subject to Support

• Selection Criteria

• Details and Scale of Support (Amount)

4) Energy Investment Allowance (EIA)

• Subject to Support

• Selection Criteria

5) 30% tax exemption for foreign workers

• Subject to Support

• Selection Criteria

6) Financial Income Exemption

• Subject to Support

• Selection Criteria

Restrictions and Prohibitions (Industry)

1) Restrictions on Foreign Investment

The Netherlands does not prohibit or restrict investments through laws and regulations, allowing foreigners to establish local branches and corporations as long as certain requirements are met. Foreign companies' involvement in central banks and state-run public broadcasting (TV, radio), and the establishment of similar institutions, is prohibited. However, banks and broadcasting industries are permitted to engage for commercial purposes, resulting in no restrictions or prohibited sectors.

Conversely, akin to Dutch corporations, foreign-invested companies require prior permission to enter special industries such as construction, automobiles, and food. Additionally, they must obtain environmental permission when investing in new industrial facilities. Building permits are mandatory for constructing offices or industrial facilities

The EU restrains monopolies based on Articles 101 and 102 of the Treaty on the Functioning of the European Union, and these regulations are applied through competition law in the Netherlands. Competition laws can pose challenges, especially in mergers and acquisitions.

The Competition Act came into effect on January 1, 1998. Competition law also prescribes cartels. A cartel, also known as corporate collusion and corporate union, pertains to the association of independent companies in the same industry to control the market. However, competition law stipulates that all activities between companies with the intent to restrict or ease various forms of competition in the Dutch market are forbidden. Not only businesses but also private-sector institutions, non-profit organizations, and government bodies related to the Dutch market are subject to competition law.

The Dutch Consumer and Market Authority (ACM; Authority for Consumers & Market) can impose fines of up to 10% of sales in the previous fiscal year on those forming cartels under competition law. Additionally, individuals violating competition laws and leading cartels can face fines of up to 900,000 euros.

In the Netherlands, it is obligatory to report to the Authority for Consumers & Markets (ACM) when global income exceeds 113.45 million euros following mergers and acquisitions, or when sales in the Netherlands surpass 30 million euros among participating companies. Distinct standards are applicable to banks, the insurance sector, and medical institutions. If mergers and acquisitions are subject to European executive discount, reporting to Dutch consumer and market authorities is not required.

The entity can decide when to report to the ACM during an ongoing merger and acquisition. However, the merger and acquisition contract cannot be concluded for four weeks after the official report. Within this four-week period, unless the ACM officially requests an additional review period, the ACM will inform the entity if M&A authorization is required. If the ACM does not make an announcement regarding the need for a permit within four weeks (without a separate extension), the merger or acquisition is considered approved. If it is determined that no permission is required within four weeks, the merger and acquisition can proceed immediately. If mergers and acquisitions significantly impede effective competition in the Dutch market, the ACM may decide that a license is necessary. Over the next 13 weeks, the ACM will conduct a thorough review and make a decision on whether to grant the license. Ultimately, the Ministry of Economy (Ministry of Economic Affairs) holds the authority to grant permission.

As per the Act on International Financial Relations (Wet financiële betrekkingen buitenland 1994), special financial institutions in the Netherlands are required to register with the Dutch central bank, irrespective of their legal structure. In this context, a special financial institution pertains to a holding company of a foreign entity primarily focused on receiving or disbursing funds from foreign companies within the Netherlands.

(Note) Restrictions for the Prevention of Offshore Tax Avoidance (BEPS) Enterprises

The Netherlands offers a tax system advantageous for holding companies and a comprehensive range of tax agreements. To capitalize on this, numerous multinational corporations have established paper companies in the Netherlands, a reputation often associated with being a "tax haven." Aligning with global policy trends, including OECD initiatives recognizing offshore tax avoidance (BEPS) as a concern, the Netherlands is proactively developing measures to address tax avoidance and shed the label of contributing to tax evasion.

Starting January 1, 2014, companies based in the Netherlands must fulfill "Minimum Substance Requirements" to benefit from tax agreements. If the conditions are not met, a concrete plan must be devised to physically exist in the Netherlands in the near future. These conditions are also essential for utilizing Advance Pricing Agreements (APA) and Advance Tax Rulings, tools used by companies to enhance tax predictability. If no other activities are conducted in the Netherlands, or if the minimum conditions for substantial presence are not met, Dutch tax authorities will share pertinent information with overseas tax authorities.

In order to prove an existing company in the Netherlands, the following requirements must be met:

Investment Location Conditions

Special Economic Zones and Free Trade Zones

There are no special economic zones or free trade zones in the Netherlands that provide separate benefits such as tariff benefits, but a representative commercial district in the Netherlands is the "Zuidas" area in southern Amsterdam. Due to Brexit, more than 40 companies moved from the UK to the Netherlands in 2018. According to the Dutch Investment Authority (NFIA), 423 multinationals moved to the Netherlands in 2021. Currently, in the Zuidas area, the World Trade Center (WTC) building, where companies from around the world reside, and the headquarters of multinational companies such as ABN-Amro and AkzoNobel are gathered. The European Medicines Agency (EMA) in London has moved its headquarters to the Zuidas area, and many multinational companies are expected to move in the future.

The Zuidas area is a rapidly growing business area. Located between the Amstel River and Schinkel, it is formed around the Amsterdam Zuid station. Amsterdam Zuid station will be incorporated into the European high-speed train Thales and the German high-speed train ICE in the future, and an extension of the subway line to Amsterdam Schiphol Airport is planned.

Major Regional Conditions

• Rotterdam (Rotterdam)

It is likely to become a logistics and petrochemical hub centered around Rotterdam Port, Europe's premier port. Within a 600-mile radius of Rotterdam, there are 220 million consumers and major cities. Rotterdam Port hosts over 45 chemical-related companies, five refineries, and power plants, forming a significant oil industry cluster.

Prominent companies include Royal Dutch Shell, LyondellBasell, Vopak, Odfjell Terminals & Shipping. With various production companies along the production chain concentrating in the region, one company's production waste becomes raw material for another, effectively leveraging synergy through cluster formation.

• North Brabant Region

Leading companies like Philips Electronics and ASML (semiconductor equipment manufacturing) have established themselves around Eindhoven, a high-tech industrial complex in the Netherlands, gaining renown for their IT and electronics sectors. This region accounts for over 30% of Dutch manufacturing and 50% of Dutch R&D expenditure. More than 1,500 foreign companies, including Exxon, GE, IBM, and Bosch, have a presence here.

Key industries encompass high-tech, information and communication, pharmaceuticals and medical care, chemistry, automobiles, solar energy, and food. The area also hosts significant research institutes such as TNO, Dutch Polymer Institute, Energy Research Center of the Netherlands (ECN), MiPlaza, and Holst Center. The Brabant region was chosen as a major foreign investment destination, with West Brabant being designated as the Netherlands' top distribution logistics area in 2017.

• Amsterdam (Amsterdam)

As the Netherlands' capital and one of Europe's most international cities, Amsterdam is home to major Dutch firms like Heineken, Ahold (distribution industry), Akzo Nobel (chemical), and ING. Key industries in Amsterdam include information and communication, life sciences and medical technology, financial and business services, logistics, horticultural agriculture, food, and the Creative Industry. The Alsmere Flower Auction House and Schiphol Airport are nearby.

Over 4,000 foreign-invested companies operate here, with over 500 serving as European headquarters. Noteworthy tenants include Cisco (USA), Hewlett Packard (USA), and IBM (USA). Economic uncertainty caused by Brexit has led many companies to relocate to Amsterdam, driving an increase in investment in the city.

• Zuid Holland, South Holland

It is an area where cities such as The Hague, the administrative capital of the Netherlands, Delft, and Leiden are located, and is likely to be in ICT, biotechnology, and water resource management. Major educational institutions such as Delft University of Technology and Leiden University are located, and Leiden Bio Science Park, one of Europe's most successful science parks, is also located.

• Flevoland Region (Flevoland)

It is an area created by reclamation of the sea and is the fastest growing area in the Netherlands. It is also one of the lowest real estate prices in the Netherlands. It is likely to be located in agriculture, genetic technology, biotechnology, renewable energy, and water resource management. Currently, foreign companies operating in the region include Giant (Taiwan), Yakult (Japan), Mitsubishi-Caterpillar Forklift Europe (Japan/U.S.), LG Electronics (Korea), and IBM (U.S.).

The Netherlands offers two primary forms of corporations: limited liability companies (B.V.) and N.V. (Naamloze Vennootschap), akin to the UK's "Limited Liability Company" or Germany's Limited Company (GmbH). B.V. suits closely related parties for running a business with limited liability, while N.V. is comparable to a British "Public limited company" or German corporation (AG).

For setting up a corporation, one must cover establishment agency and tax authorities registration fees. Ongoing costs include preparing financial statements, annual Chamber of Commerce and Industry fees, and tax-related expenses. For example, corporate tax aligns with branches when taxable income arises, with a 15% dividend withholding rate, reduced to 10% under the Netherlands-Korea tax agreement. Compliance with Dutch VAT and regular reporting is essential.

Starting August 2022, online registration will be available for limited companies.

Alternatively, foreign investors can opt for a branch. A branch is an integral part of a foreign company operating locally. While not an independent entity, branch activities fall under Dutch law and the parent company's responsibilities.

Branches adhere to Dutch corporate tax rates like N.V. and B.V., without capital requirements or separate articles of association. Establishment doesn't demand civil notarization, only commercial registration with the Chamber of Commerce. This process usually requires a Dutch accounting firm for non-Dutch speakers. After registration, branches generally must submit their parent company's annual report to the Trade Register. Comparatively, maintaining a branch is more cost-effective than a corporation, with fewer annual expenses.

The scope of financial data submitted varies depending on the size of the entity. Basic information on the branch and detailed information on the parent company are required for the Dutch commercial registration of the Chamber of Commerce. The information required for branch registration is as follows:

Details of the foreign parent company required for registration include the following:

When registered with the Ultimate Beneficial Owner (UBO Statements) Chamber of Commerce, you will receive a business registration number (KVK number) and will automatically be registered with the Dutch Tax Office (Belastingdienst) to receive a VAT number. In the Netherlands, commercial registration usually takes less than one week, but it can take a considerable amount of time to prepare documents related to the parent company.

Usually, cases where there is no tax business activity are classified as representative offices separately from branches, but in the Netherlands, it is not a legally defined concept. The basis for distinguishing the representative’s office from the branch depends on the 'action'. The term "representative office" is sometimes referred to only when a branch of a foreign corporation does not engage in business activities and the act is limited to preliminary and auxiliary activities. In other words, the fundamental difference between the branch and the representative office is that while the branch is performing business activities, the representative office is performing only non-business activities (market research, business contact, etc.) for the headquarters.

As the representative office does not have a legal form, the establishment process is the same as the branch, and when it is reported to the competent tax office, it is reported as non-taxable. If the representative office wants to conduct business activities, it is reported separately to the regular workplace, and corporate tax begins to be imposed on income generated in the Netherlands.

The form of corporations in the Netherlands is largely divided into limited liability companies (B.V.) and N.V. Naamloze Vennootschap (N.V.) is a form similar to the British "Public limited company" or German corporation (AG), and the detailed requirements are as follows:

1) Staple Food

2) Management Structure

3) Profit Dividends

The board of directors proposes a resolution on profit dividends to the general shareholders' meeting. In some cases, the consent of the auditor is required, and the general shareholders' meeting votes on the dividend plan. Dividends may be limited by capital and creditor protection rules./p>

4) Establishment Procedure

Once completed by this stage, the physical infrastructure is in place, and the establishment of the corporation is completed, allowing normal business activities to begin.

The form of corporations in the Netherlands is largely divided into limited liability companies (B.V.) and N.V. Besloten Vennootschap (B.V.) is a form like the UK's "Limited Liability Company" (Ltd.) or Germany's Limited Company (GmbH), which is suitable for a small number of related parties to run a business with limited liability. The detailed requirements for establishment are as follows.

1) Staple Food

No minimum required capital.
The founder determines the number of shares issued and paid-in capital, which is specified in the articles of association

• Shares without voting rights can be held, but dividend rights must be given. In the case of stocks with voting rights, dividend rights are not required.

• The number of voting rights given per individual share may vary.

• However, despite the above, the right to attend the general shareholders' meeting is given to all stocks.

• Stock certificates can be issued, but the form of registered stocks is used, and the transfer may be limited according to the articles of association. Transfer is possible only by stock transfer certificate under civil law.

2) Management Structure

Annual shareholders' meeting (generally attended by shareholders who do not have voting rights) Appointment of an auditor (or non-executive director) is not mandatory unless it is a large company. In the case of large companies, it is mandatory to appoint an auditor (or non-executive director), and the auditor has the authority to appoint members of the board of directors. Shareholders can participate extensively in management. According to the Dutch Charter of Corporate Governance, the ratio of male and female composition of the board of directors must be disclosed.

3) Profit Dividends

If the board of directors proposes a profit dividend, the general shareholders' meeting will vote on it. h Depending on the liquidity situation, the board of directors may reject the profit dividend plan approved at the general shareholders' meeting. Interim dividends are possible.

It is an unincorporated business owned by an individual, and the owner has unlimited liability for all debts. Since there is no legal personality, notarization is not necessary, and commercial registration must be made with the Chamber of Commerce. Since the individual's debt and the company's debt are not distinguished, the company's creditors can claim to repay the company's debt with the owner's individual assets. Therefore, if a private company goes bankrupt, the owner also goes bankrupt. If there is a spouse in a legal marriage relationship with the owner, the spouse is also responsible for the debt of the private company unless there is a separate premarital contract. In the Netherlands, private businesses (self-employed) are called Zelfstandige Zonder Personeel, and are also referred to as ZZPer, which stands for it.

European companies (Latin Societas Europa: abbreviated SE) collectively refer to corporations in the European Union. It is a company that can be established under the European Company Status (ECS) enacted by the European Union at the end of 2004, providing the basis for companies to do the same business in a number of EU member countries. Instead of establishing subsidiaries according to different laws for each member country, it is possible to establish subsidiaries based on a single norm that is effective across the EU. In addition, M&A between countries is also easier. Only corporations can establish SE, and individual investors can participate in equity after the establishment of the company.

A European company may be listed on a Dutch or foreign stock exchange, with a minimum established capital of 120,000 euros. However, in reality, there is no difference from general companies under domestic law, so there is little response to European companies, and a small number of large companies operating throughout Europe, such as Allianz, have switched to this form.

According to the Formal Foreign Companies Act (FFCA), a company established outside the Netherlands in accordance with the laws of the country but does not engage in business activities in that country and develops most of its business activities in the Netherlands is called a Formal Foreign Company.

According to the Formal Foreign Companies Act, these companies are obliged to apply for registration with the Dutch Chamber of Commerce and to register a Deed of Incorporation, Articles of Association, corporate registration number, and detailed information if they have single shareholders.

In addition, formal foreign companies must submit an annual settlement report when applying for commercial registration to the Chamber of Commerce. However, companies subject to the laws of European economic countries are exempt from most provisions of the FFCA.

A Coöperatie, often referred to as a Co-op, is a special type of association established through notarization under Dutch civil law and recognized as a company under commercial law. It requires a minimum of two individuals to establish it, with at least one member needed for its continuation.

A Co-op is formed by members rather than shareholders, and both natural persons and corporations can become members. It operates with a board of directors and general meetings of members. The board of directors holds the authority to manage and represent the Co-op. Meanwhile, the general meeting of members approves the annual financial reports, holds the power to decide on profit distribution, and has the ability to appoint and dismiss directors. As there are no shareholders, stock dividends are not applicable. Instead, profit distribution is carried out in accordance with the provisions outlined in the articles of association. Importantly, a Co-op can be established without any minimum capital requirements.

Additionally, Dutch cooperatives receive corporate tax benefits from the government, unlike traditional cooperatives that are restricted from distributing profits. However, Co-ops are distinct from traditional cooperatives as they need to register with the Chamber of Commerce and fulfill corporate tax obligations.