office@lawyersnetherlands.com

  • [En]
  • [Fr]
  • [Es]
  • [ar]
  • [Cn]
  • [Ko]

Opening a Subsidiary vs. Branch in the Netherlands

Opening a Subsidiary vs. Branch in the Netherlands

Updated on Tuesday 09th August 2016

Rate this article

based on 5 reviews


When establishing a company in the Netherlands, investors may choose between setting up a subsidiary or a branch.

Different circumstances and the company’s interests may ultimately determine the choice between the two legal entities, but certain aspects need to be taken into consideration when making a choice between a branch and a subsidiary in the Netherlands.

You can observe below the main characteristics of branches and subsidiaries in the Netherlands.

subsidiary-vs-branch-in-Netherlands.png

 

Branches in the Netherlands

A branch is a permanent establishment that forms one entity with the foreign company.

This particularity offers both advantages and disadvantages.

Branch advantages:

  • -       it is relatively easy to set up and the costs are usually lower;
  • -       no withholding tax on remitted earnings;
  • -       no need to publish the financial result of the branch (with some exceptions);
  • -       the loss of the Dutch branch may be offset against taxes/profits of the head office;
  • -       no capital registration tax.

Branch disadvantages:

  • -       has no Dutch identity, operates as a foreign company;
  • -       the parent company is fully liable for the debts ad obligations of the Dutch branch;
  • -       acceptance may be harder to gain from Dutch nationals because of the foreign identity of the branch;
  • -       the problem of double taxation may arise in the case of a permanent establishment.

You can find below a short video on how to set up a branch in the Netherlands:

Subsidiaries in the Netherlands

The main advantage of a Dutch subsidiary is the shareholder’s limited liability but other aspects need to be taken into consideration. Some of the advantages and disadvantages are listed below:

Subsidiary advantages:

  • -       the shareholders are liable to the extent of their capital contribution;
  • -       unless agreed otherwise, the parent company is not liable for the Dutch subsidiary;
  • -       intangible assets can be amortized for Dutch tax purposes;
  • -       Dutch nationals may prefer dealing with a subsidiary;

Subsidiary disadvantages:

  • -       more complicated to set up ad more expensive;
  • -       withholding tax on remitted earnings;
  • -       medium and large companies must publish their financial statements;
  • -       the appointment of at least one director is required by law.

 

Foreign investors should consider this list of primary advantages and disadvantages when deciding between a subsidiary and a branch in the Netherlands. If you need more information or need help to decide what type of company is best to establish in the Netherlands, please contact our Dutch lawyers.

 

Comments

There are no comments

Comments & Requests


Please note that client queries should NOT be posted here but sent through our Contact page.