The Netherlands is the fifth largest economy in the Economic and Monetary Union (after Germany, France, Italy and Spain) and boasts the third highest GDP per capita in the Eurozone, after Luxembourg and Ireland (Eurostat). According to the World Bank’s “Doing Business 2020” report, they are ranked 24th out of 190 countries for ease of opening and running a business and 42nd for ease of doing business in general. According to the World Economic Forum’s Global Competitiveness Report 2019, they are the fourth largest economy in the world by competitiveness.
The overall trade of goods of the Netherlands with the rest of the world amounted to 1,113.75 billion euros, of which 527.16 billion were imports, an increase of +24.4% (including 253.7 billion euros from EU countries) and 586.59 billion euros of exports, an increase of +21.5% (of which 382.9 billion euros to EU countries). The trade surplus amounted to 59.4 billion, with a slight increase compared to 58.9 billion in 2020. It is worth noting that, confirming the positive situation in the Dutch economy, imports and exports grow at rather similar rates. Compared to 2020, in fact, CBS indicates an increase in the total value of imports of 24.4% and also that of exports of 21.5%.
Since 2014, the share of exports in GDP has practically always exceeded 80%. According to Eurostat, in 2021 it stood at 84%, recovering after a temporary drop in 2020 in which a share of 77.9% was recorded. In the 1990s, it was around 40%. Furthermore, they are the second world exporter in the agricultural sector, after the United States of America, for a total value of 104.7 billion euros in 2021 (9.4% more than the 95.7 billion in 2020). The role of re-exports of products from non-EU countries is fundamental, mainly through the port of Rotterdam (first in Europe and tenth in the world for commercial handling in 2020). The strong European vocation of the Dutch economy is confirmed by the fact that, in 2021, the percentage of exports destined for EU countries stood at around 65.3% (CBS data reprocessing), with a value of 382.86 billion EUR.
Since 2014, the Dutch economy has been in a condition of stable and solid growth. The recovery from the 2008 financial crisis was dictated (and consolidated) by the contribution of endogenous and exogenous causes to the Dutch economic system: first of all, it is worth mentioning the excellent business climate, budget consolidation, the high level of private investment high technology; on the latter, the low price of oil and the expansive monetary policy of the European Central Bank, although the latter has been partly criticized by the Dutch financial sector due to low interest rates.
Main sectors of economy
1. Agriculture and the food industry
One of the oldest and most innovative sectors in the Netherlands is agriculture. There are many factors that contribute to the huge success of this sector, such as the mild climate in the Netherlands, the mechanization of agriculture, the geographical location, innovative technology and the very fertile soil. This not only places the Dutch at the forefront of agricultural innovation and technology, but also a leading exporter of food and other agricultural products worldwide. The Netherlands has held the 1st position in all of the EU when it comes to international agricultural exports for a long time, but it also ranks 2nd in the whole world with only the US ahead of the Dutch.
2. The computer and technology industry
Directly opposite agriculture and farming is the highly advanced Dutch technology and technology sector. Due to the large amount of citizens living on a small space of land, the Netherlands is the most wired country in the whole EU. This proves to be a fantastic environment for technology innovators and IT companies as it is an ideal testing ground for new ideas. But it’s not just the sheer amount of connected people that make the country an attractive option for your start-up or expansion. As technology is a hot topic in the country, the entire workforce itself is tech savvy and in almost all cases bilingual or even trilingual. Besides that, you can expect a high-quality digital infrastructure, a very innovative way of thinking and culture, and many subsidies granted by the government and semi-governmental organizations.
3. The Logistics Sector
The Netherlands is considered a world leader in the logistics sector, covering trade and industry. A large part of the Dutch national income is earned abroad, thanks to the constant and sustainable economic growth in this sector and the continuous room for improvement. With the Port of Rotterdam and Schiphol Airport within a two-hour drive of each location, the entire globe is at your disposal if you choose to set up a logistics company in the Netherlands. The EU is also perfectly accessible in any direction by regular means of transport.
The logistics sector is mainly focused on providing the best products and services through innovation, attracting talent and well-positioning the sectors nationally and internationally.
4. The energy industry
The energy industry is actually one of the main exports of the Netherlands and offers many attractive options when it comes to employment. About 25% of the gas reserves of the entire European Union are located in this small country, since large deposits of natural gas were discovered in 1959. However, the government has significantly reduced natural gas production, after extraction caused problems such as tremors and sinking land in the northern part of the Netherlands. However, it remains an export product. In addition to natural gas, the Netherlands is also a pioneer in areas such as clean and sustainable energy, wind energy, greenhouse farming and biomass processing.
Even though the Netherlands is a relatively small country, you can visit a lot of interesting places. For example, the country is known worldwide for its beautiful flower fields in spring and the tourist attraction “the Keukenhof” which offers spectacular shows every spring. Alongside the flowers are vibrant cities such as Rotterdam, Amsterdam and The Hague, the latter of which also has its own seaside resort also known as Scheveningen, home to the Kurhaus. All in all the country is well known for its historical heritage and outstanding art, which you can find in many museums. The tourism sector may be small compared to other countries, but it still contributes almost 10% of the country’s total employment and more than 5% of the GDP. You can also find seven UNESCO World Heritage Sites in the Netherlands. It’s a fun industry that offers possibilities if you have a creative and professional mind.
Taxation for businesses in The Netherlands
In the Netherlands, among others, the following taxes exist:
1. Corporate income tax
2. Income tax
4. Income tax
Corporate income tax
The corporate tax is similar to the Italian IRES (Corporate Income Tax) and is levied on the profits of the B.V. (private company, similar to Italian limited liability companies) and N.V. (public company, similar to the Italian S.p.A.).
Up to a profit of €200,000 there is a corporate tax of 20%. Exceeding that sum goes to 25%.
A loss in a given year can be offset in two ways, namely with the taxable profit relating to the previous year (carry-back of the loss compensation) or with the gains relating to up to nine subsequent years ( carry forward or carry forward of previous losses).
Italian limited liability companies or spas that have a permanent establishment in the Netherlands are also required to pay Dutch corporate income tax on the profit attributable to that permanent establishment.
Profits that a Dutch BV or NV receives from a shareholding are generally exempt from corporation tax. The same goes for the capital gain on the sale of shares.
Corporations that are not in the form of a legal entity, such as a BV or NV, but instead are in the form of a sole proprietorship or general partnership, are required to pay income tax.
In general it can be said that smaller companies are mainly sole proprietorships or general partnerships while larger companies are in the form of a BV or NV.
Especially for new small businesses, it can be advantageous to be subject to income tax rather than corporation tax. This is because the income tax facilitates new businesses with a series of measures that reduce the effective tax burden; such measures are not foreseen for the corporation tax.
It is generally straightforward to convert a sole proprietorship or general partnership into a BV or NV.
The standard rate in the Netherlands is 21%. In addition, a reduced rate of 6% applies.
It is also easy for foreign companies to apply for a Dutch VAT number. This number is automatically and immediately registered as your EU VAT number. Even if you don’t have a branch or address in the Netherlands, you can apply for a Dutch VAT number.
Investing in The Netherlands
Computer and electronic and optical products; electromedical equipment, measuring equipment and watches
Considered one of the most wired countries in the world, the Netherlands is an important hub in Europe for major companies in the information and communications technology sector, thanks to a strong IT infrastructure, a competitive tax climate and a workforce English-speaking expert in the sector. According to the DHL Global Connectedness Index 2020, the Netherlands is the most connected country in the world out of a total of 169 countries.
The Netherlands is the second country in Europe for high quality broadband network and the fourth world exporter of ICT services. Furthermore, together with Finland, they are one of the two countries in Europe with the largest percentage of inhabitants with high digital skills (50%). The level of digital skills is four times higher among young people (78%).
Electricity, gas, steam and air conditioning (also from renewable sources)
The Netherlands, the first natural gas producing country in the EU thanks to the Groningen basin, has considerably reduced production over the years with the prospect of a definitive conclusion of natural gas production by 2030. According to the “klimaatakkord”, the country intends reduce fossil fuel sources to 49% in 2030 and 95% in 2050, increase the production of renewables and reduce current energy needs through the application of various technologies.
Transportation and storage
The excellent transport network that includes Schiphol airport and the ports of Rotterdam and Amsterdam, but also a dense network of transport by rail, road and water, make the Netherlands an important logistics hub for the movement of goods across Europe.
Professional, scientific and technical activities
The “Life Science” sector includes various subject areas such as medicine, biology, chemistry, biological systems, plant and animal health and bio-resources and counts, among product development, R&D service companies and service providers and particular machinery, about 1800 active companies of which about 680 dedicated to research and development. If the companies dedicated to the medical technology section are added to these, the total number of companies rises to 2,900, of which around 430 are biopharmaceutical companies. In total, the sector provides 65,000 jobs, an annual turnover of €33 billion and a production value of approximately €29 billion.