With an overall DB 2021 score of 76.1, the Netherlands is among the most business-friendly countries. From starting your operations to resolving insolvency, the complexity of doing business in the Netherlands is minimized to a great extent. However, as expected, depending on the nature of the business, you may need to go through different processes to obtain and maintain licenses for your business. In this article, we’ll discuss how to start your own investment company in the Netherlands.
Choosing a Legal Structure
Investment services often range from individual providers to corporations that operate on a large scale. Depending on the complexity of such operations, several legal business structures are available to register yourself into the Netherlands Chamber of Commerce (KVK). A few of them are,
Sole Proprietorships
The essence of sole proprietorships is that the financial liabilities of the operations are yours only, including debt and profit realization. You also are responsible for managing the books and filing tax returns to the Chamber of Commerce. However, you may employ individuals to do the same. If you’re an independent investment service provider or consultant, you may like to open a sole proprietorship business in the Netherlands.
Commercial Partnership
In a commercial or general partnership business, you must have 2 or more partners contributing something to the business. The contribution may be limited to investment or handling the daily operations, but they must be involved somehow. However, each partner associated with the business is liable for their debts and profits, although a contract must bind them.
Professional Partnership
Self-employed individuals with other professionals working under the same name (e.g., consultancy firms) may go forward with a professional partnership structure. This is particularly effective for investment companies in different finance areas. Each partner is equally liable for possible debts and financial gains in a professional partnership setup.
Private Limited Company (BV)
A private limited company Dutch business structure is a structure with a legal personality. The debts and gains of the company are addressed to the company itself rather than falling upon individuals. While you may act as the only major shareholder or director in a private limited company, partners can join at any time in the future. Most businesses operating abroad choose this legal structure while registering a company in the Netherlands.
Registering With Dutch Business Register and Tax Administration
Any business, be it a sole proprietorship or a limited company, must be registered with the Dutch Business Register and the Netherlands Chamber of Commerce. For that, you must have a citizen service number (BSN). If you’re a permanent resident, you may enroll by registering with the Personal Record Database (BRP) before your BSN.
However, if you aren’t one, you need to go through the Non-resident Record Database for the same. Whatever the case, you need a Dutch address to start a business in the Netherlands. The only acceptable exception, in this case, is an individual who lives abroad and can perform activities in the Netherlands.
To register your finance business at KVK, you need a trading name, a legal business structure, and appropriate licenses.
Apply for a License
Every financial operator in the Netherlands needs to obtain regulatory licenses for their business. The application process must go with De Nederlandsche Bank or the AFM. However, if you offer various financial products or services, you may need to obtain different licenses for each of them. However, you need to go through a separate process for trading in crypto.
Apply for PSD2 Licence for Payment Services
Offering online payment services requires Dutch authorities’ approval to handle user payment accounts. PSD2 license is a unified European directive for digital transactions that empowers businesses to manage customer accounts with their permission. Consider checking eHerkenning requirements to apply via DLT.
The requirements mostly include,
- KVK registration
- Knowing the security level that you need to operate on
- Being informed about different financial rates
- Choosing an authorized provider
- Recording Authorized representatives
- And a few more basic operations
Financial Compliances and Laundering
The Dutch government is quite serious about fighting money laundering and terrorist funding through them. To comply with the Money Laundering and Terrorist Funding Act (Wwft), you must report unusual transactions of your customers through the Financial Intelligence Agency (FIU) and perform client due diligence. You can find more details about client due diligence here.
Mostly there are three types of due diligence checks are required,
- Normal: A nominal background check on clients through their financial stature and BSN. Most due diligence activities are done through normal proceedings.
- Simple: Simple due diligence is practiced for customers with a low risk of terrorism funding and laundering.
- Comprehensive: If a client is related to prominent political figures or is from a high-risk state, comprehensive due diligence is performed on them.
Appraisers aren’t required to conduct due diligence on clients, but they must report any unusual transactions to the intelligence department.
Comply With the Sanctions Act
Sanctions are imposed against organizations, individuals, or even countries to protect the peace, security, and justice. It’s a way to limit or block individuals or organizations from transacting or getting financial services from Dutch companies. During the due diligence and throughout your operations with a particular client, you must be aware of any sanctions imposed on them.
If your customer is enlisted in the UN or EU sanctions list, you must report it to the Dutch Authority for Financial Markets (AFM).
FAQ
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Do you need to contact an agent to set up your investment company in the Netherlands?
While you don’t explicitly need to contact an agent, they have the experience to guide you through the process and make it easier for you.
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How does the Dutch government take foreign investments?
The Dutch government is quite friendly towards foreign investments. However, you may need to assure them about your contribution to the economy of the Netherlands.
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How complex is it to file taxes in the Netherlands?
If you have registered yourself to the KVK, it’s mostly easy to file taxes in the Netherlands through online portals. But, depending on the complexity of your business, you may need to hire a professional for the same.
The Bottom Line
Starting an investment business in the Netherlands mostly involves knowing your rights and the financial rules you need to comply with. The most basic business setup procedures, like choosing a trading name or closing down on a legal structure, are similar to other industries. Financial licenses, PSD2 licenses, and complying with the sanctions act are the most critical steps to setting up an investment business in the Netherlands.
