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Opening a Subsidiary vs. Branch in the Netherlands

Opening a Subsidiary vs. Branch in the Netherlands

Updated on Tuesday 09th August 2016

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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.



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.



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