Homework when doing business

Legal homework when doing business in The Netherlands

More and more German and British companies have the intention of entering the Dutch market. Doing business in The Netherlands is attractive and quite simple for foreign companies. However, be aware of some essential legal issues. With the following tips you can prevent complicated legal conflicts.

1. Register your Dutch subsidiary at the Dutch Chamber of Commerce

Companies that are established in The Netherlands are obliged by law (handelsregisterwet) to be registered at the Dutch Chamber of Commerce. For this there is no need to choose a specific Dutch legal form, such as BV or NV. The existing German legal form may be kept. Not being registered at the Dutch Chamber of Commerce is an economic offense and thus punishable.

2. Consider foundation of a Dutch company

The foundation of a Dutch company can nowadays be done quickly and cheap. The advantages are vast. A Dutch company can contribute to fiscal transparency. In this way your legal liability and damage risks can be drastically constrained. Dutch residents are familiar with doing business with Dutch companies. Nowadays to start up a Dutch company you don’t need a start-up capital anymore. It is also possible to organize mutual control in a flexible manner. More detailed information you can find elsewhere on our website.

3. Adapt your terms and conditions to the Dutch law

Most companies use their own terms and conditions. It is common to mention in these terms and conditions the terms of payment and to constrain possible liability risks. In the order conformation it is often forgotten to make a clear choice for a specific legal system, as well as the competence of a judge in a specific country. Should this not be secured correctly, trans-boundary legal conflicts may get unnecessarily complicated. Therefore, make sure that in the order confirmations you use in The Netherlands it is well determined whether you choose for Dutch law or German law and adapt the competence of the Dutch judge or the German judge accordingly.

4. Consider offering your employees a Dutch employment contract

As an employer you have according to European law limited possibilities with regard to choosing a specific law system when concluding employment contracts. Should you consider offering Dutch employment contracts it is to be advised to include as much flexibility in them as possible, for example by starting offering on-call employment contracts, contracts for a limited period of time, including a probation clause and a unilateral changes clause. More tips you can find elsewhere on our website. Furthermore it is of the utmost importance that you consider closing sickness insurance in case of sickness of you employees. It is also recommended to close employer liability insurance in The Netherlands.

5. Determine according to which legal system social premiums and salary-tax have to be paid

Main rule is that social premiums and salary-tax have to be paid in the country where or where from activities are usually being performed. In cases in which this is not so clear the place of establishment of the company or the residence of the employee may play a part. In practice mistakes are frequently made with respect to this, resulting in annoying bureaucratic complications and potential financial risks.

SMART Advocaten have knowledge and experience to advise and guide German companies that are considering to get established in The Netherlands. Especially in cases of trans-boundary issues, such as fiscal aspects, payroll administration and insurances we work with expert partners. We cordially invite you to give us a call and explore your possibilities.

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