The Netherlands is one of the most open economies in the world, offering strong infrastructure, a competitive business climate and a strong treaty network.
The economy of the Netherlands is advanced, prosperous and outward-looking. It's also one of the USA's longest and most trusted business partners, a relationship that stems right back to the American Revolution. The Dutch tax system features several tax incentives to stimulate innovation and business activities. That business-friendly environment is not just there for Dutch companies; an internationally-oriented country, the Netherlands is both home to many highly-educated foreign workers, and acts as the European HQ for many US businesses, including Coca-Cola and UPS.
A trade gateway
The Netherlands is highly dependent on foreign markets, with over half of annual GDP coming from international trade. It is one of the world's 10 leading exporting nations, punching well above the weight of a country this size. Setting up in The Netherlands can provide a US company with a perfect strategic location from which to serve and service markets within the European Union, plus central and Eastern Europe, the Middle East and Africa.
However, around 65% of Dutch exports still head to just five countries: Germany, France, Belgium, the UK and the US. That's good news for US companies looking to develop relationships, but less good if you're looking to trade from The Netherlands on a larger multinational scale.
In fact, The Netherlands is often used by companies as a hub; many imports, including computers, are simply re-exported after arrival in the Netherlands with little or no processing. Every year, tens of millions of tonnes of Asian and North American imports arrive at Rotterdam or Amsterdam for distribution throughout Europe.
Business opportunities
There are some globally-known Dutch companies that do very well in their home market, too - from the likes of Shell and ING, to Philips, Unilever and Heineken. That said, don't let the presence of such large names put you off investing in The Netherlands, especially if you work in the services industry.
Demand for services has ballooned in recent years, and it's rapidly become The Netherlands' largest economic sector, accounting for up to 70% of GDP. The largest service industry is trade, followed by transport, telecommunications, construction, banking and insurance, and other financial services. Experts say the service poised for the greatest growth is information and communications technology (ICT). This could be because the Netherlands is considered one of the most "switched on" countries when it comes to electronic commerce, communications and outsourcing.
Labour relations
The Netherlands' stability stretches to its employment landscape, and any US company looking to do business in The Netherlands will need to be ready to work with employees, trade unions and works councils. Negotiation is in the Dutch blood, and trade unions enjoy a strong relationship with employers' organisations and the government.
There is no employment at will here; once an employee becomes permanent, there are workers rights to be mindful of, and employment regulation to follow. As part of the EU, The Netherlands also follows such regulation as the European Working Time Directive, which limits the hours an employee can be required to work to an average of 48 hours per week. Individuals, however, may choose to work longer by "opting out" of the regulation. US companies doing business in The Netherlands should seek advice to ensure employee relations are set up compliantly from the outset.
Dutch business culture
Some say the Dutch way of doing business is totally counter to the American way, but that's stereotyping and generalisations. The two countries wouldn't have worked together for so long if they didn't get along! However, there are some things for Americans to be mindful of when working with Dutch businesses.
The Dutch are serious, honest, straightforward, and very direct; this can come across as blunt and uncaring. Be concise and specific when dealing with Dutch business people, who get down to business quickly, with a minimum of socialising. Handshakes are meaningful. They don't make promises lightly, and this, in turn, means that if you give your word to do something, no matter how small, they will expect you to follow through. In negotiations, any form of secrecy, deception or evasiveness should be avoided at all costs as trust plays a huge role in the success of business relationships in the Netherlands.
Setting up in The Netherlands
The Netherlands is ranked 32 overall by the World Bank's Doing Business index. The legal form of a standardised company is the Besloten Vennootschap, or BV, and there is no requirement for paid-in minimum capital. It takes just 3.5 days to set up your business. Unsurprisingly, the Netherlands ranks top for trading across borders, reinforcing its role as a gateway to the rest of Europe - and, indeed, the world. There is plenty to know about doing business in The Netherlands; read more about the top challenges here.
TMF Group
TMF Group started its life as a trust company in The Netherlands, and knows the business environment intimately. Our offices in both Amsterdam and in the US can help American companies looking to set up or invest in the country. Get in touch with our local experts to see how we can help you explore the opportunities that await.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
