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Why invest in the Netherlands

Why invest in the Netherlands?

A pro-business climate, its strategic location, a stable legislative system, a highly educated multilingual workforce and superior infrastructure are just some of the many advantages of doing business in the Netherlands

In this chapter we will show you why the Netherlands is considered the perfect stepping stone into the European market and the gateway to the EU.

Best country for business and a great place to live

Ranked No. 4 in the world by IMD’s World Competitiveness Ranking 2020, the Netherlands, being home to 15,000 foreign companies, is a truly world-class destination and has a very competitive international climate. In fact, 50 per cent of Dutch GDP is derived internationally. 

According to the 2019 ranking of the Competitive Index of World Economic Forum (WEF), the Netherlands has the most competitive economy in Europe and is one of the top countries for business investment in the world. WEF ranks the Netherlands highest in the world for macroeconomic stability and the report also sees the country performing particularly well in infrastructure and business dynamism. In the WEF Global Competitiveness Report Special Edition 2020, which focuses on priorities for recovery and revival in relation to the COVID-19 crisis, the Netherlands ranks fourth on general economic transformation readiness, after Finland, Sweden and Denmark. The Netherlands scores particularly high on transformation readiness priorities like infrastructure and digital networks and skills and training for the future labour market. Also on priorities like reliable public institutions, social protection and labour reforms for the new economy, expansion of care infrastructure, public-private partnerships for future markets and the stimulation by companies of diversity and inclusion, the Netherlands scores relatively well.

The Netherlands’ strategic location at Europe’s front door provides the perfect springboard into the European market – with access to 95 per cent of Europe’s most lucrative consumer markets within 24 hours of Amsterdam or Rotterdam. Add to that our supportive legal and tax structure to set up operational business, highly educated, multilingual workforce and superior logistics and technology infrastructure and it’s no wonder so many multinational businesses – from small and mid-sized to Fortune 500 leaders – have chosen the Netherlands as their gateway to Europe.

In addition to having an outstanding business climate, the Netherlands offers an affordable cost of living and an exceptional quality of life. Ranked as the 6th happiest place on earth by the World Happiness Report 2020 and ranked first in the area of children’s well-being according to a survey by UNICEF, the Netherlands has a high standard of living. Also, according to the latest OECD better life index, the Netherlands is the country with the best work-life balance. Its very low rates of youth unemployment, high literacy levels, high levels of life satisfaction in childhood and the amount and quality of leisure time of Dutch employees are factors that contribute to the country’s top position in the better life index.

According to the World Bank, the government of the Netherlands is one of the most effective in the world. Also, the Netherlands is one of the most stable nations in the world, thus making it easier for companies to make medium and long-term decisions.

The Netherlands also offers a wide tax treaty network, special measures for highly skilled expats and often certainty in advance of interpretation of tax law — just a few of the features that help multinational companies to thrive in the Netherlands.

Enjoying a good international reputation

According to the World Bank, the government of the Netherlands is one of the most effective in the world. Also, the Netherlands is one of the most stable nations in the world, thus making it easier for companies to make medium and long-term decisions. Besides, government finances are healthy. Although, as a result of recession caused by the Covid-19 crisis and the related support measures taken by the Dutch government, public debt is expected to increase from 48.7 per cent of GDP in 2019 to 59.0 per cent in 2021, the 2021 ratio is well below the European average and still far from levels that can be considered problematic. Of course, the pandemic has not yet been contained, but the Netherlands economy is in a good position to come out of this relatively well.

Highly skilled, productive and multilingual workforce

The Netherlands is home to a highly skilled, productive, flexible and multilingual workforce. The country ranks first out of 100 countries on the EF English Proficiency Index 2020. In addition to English a higher percentage of the Dutch population than their counterparts elsewhere also speaks German and French. According to the OECD Skills Outlook 2019, the Netherlands, together with a few other countries, is ahead in the digital transformation of the workplace, with most of its workers intensively using technology in their job and predominantly performing non-routine tasks. It also mentions the Netherlands as being among the countries with the highest share of individuals with well-rounded cognitive (literacy, numeracy and problem-solving) skills.

The Netherlands has been named as one of the world’s best countries for talent competitiveness. The annual Global Talent Competitiveness Index 2020 (GTCI 2020) ranks the Netherlands 6th, up two places from 8th in 2019. According to the specific GTCI Country Report on the Netherlands: “The Netherlands is most impressive when it comes to growing talent (3rd), where it posts high scores in all three sub-pillars: Formal Education (5th), Lifelong Learning (4th), and Access to Growth Opportunities (2nd). The country is also a top performer in the pillars Enable (5th), Vocational and Technical Skills (6th), and Retain (7th), where some of its greatest assets include a conducive Business and Labour Landscape (5th), robust Sustainability (6th), and talent that matches the needs of the economy well (Employability, 5th).”

The Netherlands has a population of 17.4 million people. A large proportion of the Dutch population is in the economically ‘active’ age range (15-67 years) and the availability of skilled labour outpaces major competitors. The Dutch workforce outranks many of its competitors when it comes to productivity, largely as a result of our high standard of education and training, pragmatic labor laws and commitment to IT investment. Thanks to the stability of the Dutch government and its pragmatic approach to business, very little time is lost to labor disputes or labor relations compared to Europe as a whole.

As an internationally oriented country, the Netherlands is home to many foreign workers and offers a ‘Highly Skilled Migrant Visa’, which allows companies to bring highly qualified expats to their Dutch operations. According to the IBM Global Location Trends 2019 report the Netherlands is the top attractor of quality Foreign Direct Investment jobs worldwide.

The Netherlands also outpaces many of its competitors when it comes to workforce flexibility and adaptability. As a result, businesses in the Netherlands benefit from the assurance that labour is ready when they need it, for as long as they need it.

Part of the Dutch DNA

The Netherlands ranks among the top 5 global leaders in innovation, according to the Global Innovation Index 2020 (GII 2020). The Netherlands scored highly for sub-rankings in innovation output (4), ICT infrastructure (4) and knowledge absorption (2). The Netherlands also moves up to No. 5 for quality of innovation, which is its highest ranking to date. The country remains in the No. 1 position for IP payments and scores consistently well for regulatory quality, online participation, intensity of local competition, cluster development and university/industry research collaboration.

With the Netherlands jumping two spots from 2019 for business sophistication (4) and business environment (5), the GII 2020 affirms the country’s position as a place where business and innovation can thrive together. Also Dutch innovation outputs continue to rank highly due to the Netherlands’ strengths in online creativity (2) and knowledge diffusion (5).

Dutch industry includes a large number of innovative and knowledge-intensive companies that enjoy a worldwide high reputation and that carry out a great deal of R&D.

Stimulating Foreign Investment and Entrepreneurship

With a competitive corporate income tax rate in Europe – 15 per cent on the first  245,000 euro (2022: 395,000 euro) and 25 per cent for taxable profits exceeding  245,000 euro (2022: 395,000 euro)  – as well as a number of attractive incentive programs, the Netherlands offers a supportive fiscal climate for international companies. 

The Netherlands actively promotes engaging in R&D activities through a favourable corporate tax structure and specific R&D tax incentives to stimulate innovation.

We will elaborate on the Dutch incentives and taxes later on.

A superior logistic and technology infrastructure

In the 2020 edition of DHL’s Global Connectedness Index the Netherlands tops the list being the world’s most globally connected country. It is praised for its deep integration of global trade and links to many different countries.

Driven by world-class seaports and airports, an extensive network of roads and rail and a telecommunications network that ranks among the world’s best for quality, speed and reliability, the Dutch infrastructure is one of the best on the planet. With its logistics infrastructure and central location in the heart of the European Union, the Netherlands gives companies unparalleled access to the continent and beyond. By rail, road or water, companies can reach 160 million consumers within 24 hours of Amsterdam or Rotterdam.

Furthermore, the Dutch dense, high-quality telecommunications infrastructure offers fast connections no matter how or where you and your products or services are traveling. With one of the highest broadband penetration per capita in the world as well as one of the world’s fastest average broadband speeds, the Netherlands is also the digital gateway to Europe. It directly links continental Europe to North America, with most transatlantic sea cables going directly to the Netherlands.

Legal System

There are several ways to operate a business in the Netherlands via a legal entity. A distinction can be made between entities with legal personality (corporate entities) and entities without legal personality (non-corporate entities). It is also possible to perform business activities through a branch office of a foreign legal entity. Below we discuss the main legal entities used by foreign investors and companies expanding their businesses to the Netherlands.

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