Expanding into a new country is an exciting step. Whether you are entering a new market, supporting existing customers or creating a European hub, establishing a presence in the Netherlands can offer significant business opportunities.
The Netherlands continues to attract international businesses thanks to its strategic location, strong infrastructure (such as Schiphol Airport and Port of Rotterdam) and business-friendly environment. It is often seen as a gateway to Europe, making it a logical next step for companies looking to expand internationally.
How to structure the business activities in the Netherlands is one of the first questions businesses face. Would a VAT registration be sufficient? Is registration of a branch required? Or is a local subsidiary desirable?
There is rarely a one-size-fits-all answer. The right choice depends not only on what your business looks like today, but also on the goals and plans for the coming years.
Taxation used to be a decisive factor. In our experience, this has changed over the years with a stronger focus on operational needs. The tax profile follows automatically.
Setting up the correct business structure requires looking further than the initial setup as it may become restrictive once you start hiring employees, signing local contracts or expanding your operations. We encourage companies to look beyond the immediate setup and consider the bigger picture.
Why your business structure matters
Choosing a business structure is not just an administrative exercise. Your business structure impacts how you operate, how you are perceived by customers and suppliers, and how your tax and compliance obligations are managed. It can also affect how easily you can grow.
We regularly have conversations with companies that initially selected the simplest solution available, only to discover later that their activities are no longer fully supported. Restructuring is possible, but it may lead to additional costs, administrative work and unnecessary complexity.
A well-considered setup from the start helps create a solid foundation for future growth.
Option 1: Starting with a VAT registration
In our experience, a Dutch VAT registration of your foreign entity is many times overlooked. For some businesses, this may provide the solution they are looking for.
You can think of selling goods into the Netherlands, import products through Dutch ports, or use the Netherlands as part of their wider European supply chain without establishing a local legal entity.
Compared to a branch or subsidiary, a VAT registration is relatively straightforward to obtain and carries fewer ongoing obligations.
One of the reasons international businesses frequently choose the Netherlands for import activities is the possibility to apply for an Article 23 license which allows postponed accounting of VAT. Import VAT will be reported through the periodic VAT return instead of being paid at the border, creating a significant cash flow advantage.
However, a VAT registration does not result in a separate business entity. It does not create a local organization and can offer less flexibility once activities become more substantial.
Option 2: Operating through a branch
From an operational perspective, a branch may be appropriate when a company wants a more visible operational presence in the Netherlands. Your foreign company will be registered in the Business Register of the Dutch Chamber of Commerce. This registration will show your presence in the Netherlands for your clients.
Unlike a subsidiary, a branch does not have its own legal identity. This can make implementation relatively straightforward. However, it also means that liabilities and obligations generally remain with the foreign parent company.
A branch can work well for businesses that need local activities and a local presence, but do not necessarily require a separate Dutch company.
Whether this would be a suitable structure for your company depends heavily on the nature of the activities, the level of local decision-making and the long-term growth plans of the business.
Option 3: Establishing a Dutch subsidiary
A subsidiary is often chosen by businesses that see the Netherlands as a strategic market for long-term growth. Unlike a branch, a subsidiary is a separate legal entity. This creates a clearer distinction between the Dutch activities and those of the parent company.
In practice, a subsidiary is frequently considered when businesses plan to hire employees, enter into contracts with local customers, attract investments or establish a permanent presence in the Dutch market.
While the setup of this business structure takes more effort and ongoing compliance requirements, it also offers great flexibility and often aligns better with larger growth ambitions.
In practice, for many international organizations, a subsidiary becomes the go-to next step once activities move beyond the initial market-entry phase.
Looking beyond day one
One of the most common misconceptions we encounter is that the decision should be based solely on today's activities. In reality, today's activities are often the least important factor. The more relevant question is:
Where do you expect your business to be in three to five years? Will you be hiring staff? Expanding your customer base? Managing inventory locally? Establishing a regional headquarters?
The answers to these questions often influence the optimal structure more than the current situation does.
We have seen businesses start with a VAT registration and later transition to a subsidiary. We have also seen companies establish a subsidiary from the outset because they already knew where they were heading.
Neither approach has to be inherently right or wrong. What matters is that the structure supports your broader business objectives.
Conclusion
The Netherlands offers an attractive environment for international businesses, but choosing the right structure requires careful consideration. Whether a VAT registration, branch or subsidiary is the best fit depends on your activities, growth plans and operational needs.
By taking the time to assess these factors upfront, you create a business structure that not only supports market entry, but also provides a solid foundation for sustainable growth.
Thinking about expanding to the Netherlands? Our specialists would be happy to discuss your plans and help you determine the most suitable path forward.
