Setting up a BV in the Netherlands — the standard choice if you plan to raise investment
The Netherlands is not an inexpensive option, nor does it offer the lowest tax rate. Nevertheless, it is the first choice for teams seeking investment: a holding structure, participation exemption and a legal framework familiar to international investors all in one. The requirement to incorporate before a civil-law notary is the most notable friction in the process.
What is easy, and what is difficult?
The challenges in the Netherlands lie not in taxation, but in incorporation and banking. In return, you gain a level of corporate credibility that no low-tax jurisdiction can offer.
No capital barrier
A BV can be incorporated with share capital as low as one euro cent. There is no amount to be blocked, no capital commitment monitoring and no waiting for a bank receipt; incorporation is completed without opening a bank account.
A legal framework familiar to investors
Share classes, option pools, drag-along and tag-along rights are established using recognised practices under Dutch law. International investors are familiar with these documents, shortening legal negotiations during a funding round.
Holding structure and participation exemption
In a two-tier structure, profits flowing from the operating BV to the holding company and gains from share disposals are not taxed again at holding-company level when the relevant conditions are met. This is where the structure makes a difference in an exit scenario.
Extensive tax treaty network
The Netherlands has one of Europe’s most extensive double taxation treaty networks. The risk of unexpected withholding tax liabilities in cross-border partnerships is significantly reduced.
Business can be conducted in English
Communicating in English with banks, civil-law notaries, accountants and public authorities is standard practice. Operations are considerably faster than in countries where correspondence must be translated.
The notarial requirement determines the timetable
A BV is incorporated by notarial deed. Appointments, identity verification and preparation of the deed extend the process compared with electronic registration; some civil-law notaries may require attendance in person.
Opening a bank account is the most difficult step
Major banks conduct detailed reviews of companies with non-resident shareholders and overseas management; some do not accept this profile at all. Applications without a genuine connection to the Netherlands are frequently rejected.
Costs are higher than in Eastern Europe
Civil-law notary fees, accounting costs and annual compliance expenses are significantly higher than in Hungary or Bulgaria. The tax rate is not low either.
Director salary requirement
A minimum director’s salary must be set for individuals who own 5% or more of the company and work for it. It is not possible to take all profits as dividends.
Substance-over-form approach
Structures established only on paper, with actual operations in another country, are scrutinised in both the Netherlands and Türkiye. The address and management must be genuine.
Holding structure and participation exemption
Almost all companies seeking investment in the Netherlands are established not as a single BV but with a two-tier structure: a holding BV owned by the founders, with an operating BV beneath it that conducts the business. This structure is not merely an accounting device; thanks to the participation exemption (deelnemingsvrijstelling), profits and gains from share sales flowing from the operating BV to the holding are not taxed again at holding level. This is the arrangement that makes the greatest difference upon exit.
Holding BV
The founders own this company directly. It holds the shares in the operating BV, where profits and gains from share sales accumulate.
Operating BV
The business operations, contracts, employees and commercial risk sit within this company. If problems arise, the holding's assets are unaffected.
Participation exemption
Dividends and gains from share sales flowing from the operating BV to the holding are not taxed again at holding level when the conditions are met.
Where the difference arises on sale
When the company is sold, the proceeds remain in the holding and can be reinvested tax-free. This option is not available with a single BV.
The Netherlands or another country? Comparison table
The four countries we most frequently compare with the Netherlands. Click a column heading to visit that country's page.
Formation process: the notary determines the timeline
In the Netherlands, a BV is incorporated by notarial deed. This means a different pace from electronic registration in the UK or Estonia: the notary appointment, identity verification and preparation of the deed are the key factors determining the timeline.
Passport
Required for all shareholders and directors; used by the notary for identity verification.
Proof of address
A utility bill or bank statement issued within the last 3 months.
Power of attorney + apostille
For remote incorporation; executed before a notary, apostilled and translated.
Share and company name structure
Number of shareholders, share distribution, alternative company names and business activities.
Tax and annual obligations
The Netherlands is not a low-tax country; what it offers is predictability and scope for structuring. Corporation tax is progressive, there is a separate regime for intellectual property income, and its tax treaty network is among the most extensive in Europe.
Director's salary rule
Individuals who hold a shareholding of five per cent or more in a BV and work for the company must be paid a minimum director's salary. It is not possible to distribute all profits as dividends without paying a salary; this is an item frequently overlooked in cash-flow planning.
Do not overlook the Turkish tax implications
Turkish tax residents must declare profit distributions received from an overseas company. Controlled foreign company rules may also tax the income in Türkiye under certain conditions.
Read the detailed guide →Who is the Netherlands right for?
A summary of what we discuss in the first half-hour of a consultation.
Our clients who have set up companies in the Netherlands
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Frequently asked questions about company formation in the Netherlands
Organised under six headings: formation, holding structure, banking, tax, personnel and considerations in Türkiye. Select a topic or search directly.