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Doing business in the Netherlands 31. Business introductionto theNetherlandsKennedy Van der Laan is pleased tooffer you this edition of DoingBusiness in the Netherlands. The purposeof this detailed manual is to guideyou through the investment environment inthe Netherlands. It offers practical informationinto the country and how to set up a business,adopting the ideal legal form, the subsidy schemes,the tax system, labour law and much, much more.1.1 BackgroundThe Dutch United Provinces declared their independencefrom Spain in 1579; during the 17th century,they became a leading seafaring and commercialpower, with settlements and colonies around theworld. After a 20-year French occupation, a Kingdomof the Netherlands was formed in 1815. In 1830Belgium seceded and formed a separate kingdom.The Netherlands remained neutral in World War I,but suffered invasion and occupation by Germany inWorld War II. A modern, industrialized nation, theNetherlands is also a large exporter of agriculturalproducts. The country was a founding member ofNATO and the EEC (now the EU) and participated inthe introduction of the euro in 1999. In October 2010,the former Netherlands Antilles was dissolved andthe three smallest islands - Bonaire, Sint Eustatius,and Saba - became special municipalities in theNetherlands administrative structure. The largerislands of Sint Maarten and Curacao joined theNetherlands and Aruba as constituent countriesforming the Kingdom of the Netherlands.1.2 Country and GovernmentThe Netherlands has a total population of 16.83million inhabitants (August 2014) and is a constitutionalmonarchy. The king is head of the governmentand the Prime Minister, together with the 12 otherMinisters and 9 State Secretaries are responsiblefor the actions of the government. The king does notbear political responsibility and can therefore notbe held politically accountable by the parliament.The Netherlands has 12 provinces 403 municipalities,and 24 water boards, each with their own localauthorities.1.3 LocationMost of the major industries in the Netherlands aresituated in the country’s western regions. The Port ofRotterdam is one of the biggest ports in the world.The railway line, the ‘Betuweroute’, ensures fast andefficient transport from the port to the Europeanhinterland. Utrecht is a central traffic junction andSchiphol, the Dutch airport, is growing at a rapidrate. The Low Countries, as the Netherlands is alsoknown, play an extremely important role in the functioningof the transport artery.1.4 Economic overview and exportThe Dutch economy is the sixth-largest economy inthe euro-zone and is noted for its stable industrialrelations, moderate unemployment and inflation, asizable trade surplus, and an important role as aEuropean transportation hub. Industrial activity ispredominantly in food processing, chemicals, petroleumrefining, and electrical machinery. The country’sperfect location and healthy financial policyhave helped to ensure that the Netherlands hasgrown into an important import and export nation.The country’s most important industrial activitiesinclude oil refineries, chemicals, foodstuff processingand the development of electronic products.Germany, Belgium-Luxembourg, Great Britain,France and the United States are the country’s mainimport partners. All the above-mentioned countries,including Italy, are also the country’s most influentialexport partners.1.5 FinancesThe Euro monetary unit was officially introduced on1 January 2002. The Nederlandsche Bank (DNB) isresponsible for the money flow in the Netherlands.One of the government’s most important objectivesis to keep prices stable and thereby to contain inflation.Dutch banks offer an extensive range of financialservices: some are specialized, while othersoffer an extremely wide range of services. Dutchbanks are reliable: most financial institutions useorganizational structures that prevent the possibilityof entanglement of interests. The general prohibitionon commission also contributes to this from 1April 2014.1.6 Right to establish a businessForeign companies wishing to set up business activitiesin the Netherlands can set up the existing foreignlegal entity in the country without the need toconvert it into a Dutch legal entity. They will, however,be required to deal with both international andDutch law. All foreign companies with establishmentsin the Netherlands must be registered withthe Trade Register (Handelsregister) at theChamber of Commerce (Kamer van Koophandel).