How and why global startups should choose the Netherlands as a spot for business

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One of the most common questions I get asked in business is why did we select the Netherlands as the headquarters of Moqod? Isn’t it just a small country with high taxes and a lot of fun things to do? Well, it’s not only that. Here is my story of why Holland has become a paradise for business, especially tech.

The story of Moqod in Amsterdam started in 2013. At that time, we were a team of 15 people, ambitious and hungry for business. We thought about expanding to EU markets and establishing a basecamp somewhere in Europe. But where and how do we begin? 

In our early twenties, the adventure was all ahead! We looked at the map of Europe and picked 10 countries that we found interesting: Germany, Switzerland, Estonia, Ireland, the Czech Republic, the Netherlands, Luxembourg, and a few others. At the end of the day, we shortlisted Ireland, the Netherlands, and Germany. To make a choice, our criteria were the following:

  • Cost and process of establishing a company;
  • Ease of doing business;
  • Being able to speak English;
  • Interesting market for tech, VC, startups, and innovation;
  • General business culture and tradition.

The Netherlands has scored the highest on all these points. Here are my insights.

#1 cost and process of establishing a company

In 2013, the Netherlands was one of the few countries which allowed starting  a company with just 1 EUR in capital. The process is rather simple and you can read all details on the official government website, which I like for its clarity. But our particular case was way more fun. 

So I reached out to a dozen notaries in the Netherlands who specialised in international business. One of them responded and said that he was going to Odesa, Ukraine, with his girlfriend for the weekend. So it was a no-brainer. We hopped on a train next weekend and met with the notary in Odesa. Long story short and some beers later, Odesa, Ukraine is declared as the incorporation place of the company in our shareholders register. We are still friends with our notary and definitely recommend him. 

- A message from our partner -

In 2013, the process of new business registration was very smooth. A few things, however, took an extra effort:

  1. Banking system

Since the Netherlands is treated as one of the tax havens due to its rather loyal tax system, we had to go through a number of KYC and compliance procedures to get a bank account. Even today, in 2022, I must say the Dutch banking system is rather old-fashioned. 

  1. Dutch substance

In order to be treated as a Dutch company, it must have enough Dutch substance. The Dutch tax office (belastingdienst) needs to know if you should be treated as a Dutch taxpayer or not. This is a measure to avoid money laundering. 

In order to qualify, your company needs to have an office in the Netherlands, have its board decisions to be made on the territory of the Netherlands, pay enough salaries locally, conduct its business activities here, and a few more.

#2 Doing business in the Netherlands

The Netherlands has always scored the highest on multiple ratings for global business. In my opinion, the core factors for the success of the country are transparency of the tax system, high innovation levels, a culture of openness to the world, excellent infrastructure, and a highly educated workforce.

Dutch tax system. You might have heard about high taxes in the Netherlands. But not many entrepreneurs know that the country is also treated as one of the best tax havens – that’s one of the reasons why multinationals choose the Netherlands for their HQ. 

According to this interesting index, the Netherlands ranks very high. Here are my top 3 love points for the Dutch tax system:

  1. The tax authorities are easily accessible and willing to cooperate. Solving pretty much any tax question from importing your car to dealing with corporate tax is as easy as calling the tax office.
  2. Personal Holdings –  In the Netherlands, it’s possible to set up a personal private limited company that would hold shares of your operating company. This scheme is widely used by Dutch entrepreneurs. Not only it helps optimise taxes, but is also a way to hedge against risks. 
  3. 30% tax ruling — the biggest attraction that all expats love in the Netherlands. This tax benefit is given to all people relocating to the Netherlands from a distance of more than 150 km from its borders. Too bad for us it is only valid for 5 years, not 8 years as before.

Innovative economy. The Netherlands has been ranking at the top of the world innovation index. Here is the latest report from 2021. The top areas for the high scores of the Dutch economy are online participation, regulatory quality, and supportive R&D tax credits for innovation and sustainability.

Excellent infrastructure. When I look at the map, I see the Netherlands as the heart of Europe that’s connected via road, rail, sea, and air traffic, almost as the blood veins of the world. Indeed the little land is the gateway to the world via its ports, roads, and airports. 

Open to the world. The Netherlands has a business history of over 500 years. The Dutch have invented public companies with its VOC, the world’s oldest operating stock exchange. One of the reasons for the Dutch Golden Age was the openness of the country to immigrants. 

These bright minds helped build the best fleet, world trade, art, and much more that we still admire today. Today your entry points to the Netherlands would be such resources as RVO, KVK, and the government website.

Talent and skilled workforce. Attracting the best from all over the world, having some of the world’s best educational systems, and high standards of living, the Netherlands became the melting pot for global talent. On top of that, everyone speaks English — proficiency score is among the highest in the world. 

#3 VC and Startup Scene 

All the points above and access to capital make the Netherlands a perfect match for a lucrative startup scene. Booking.com, Adyen, and TomTom are a few of the dozens of Dutch unicorns. There are multiple opportunities for startups in the Netherlands on various levels — national programmes, and provincial and municipal funds. Here are my personal favourites:

Techleap.nl. The national platform aimed to support startups and scaleups. Fun fact: a member of the Dutch Royal Family is a liaison on the board of Techleap. This recognised community is your guide, bread-and-butter for the whole ecosystem of Dutch startups. Multiple events, programmes, guides – everything you need is there.

Startup Amsterdam. The city of Amsterdam invests heavily in supporting startups and making the city the startup capital. Yes, our 800-years old fishing village with a lot of fun things to do, is one of the world’s hot spots for startups. You never get bored in Amsterdam: business events, conferences, and workshops can be found almost daily. On top of that, there are co-working spaces with some of the best views!

Dutch Startup Association. At the time we created the company in the Netherlands, they did not yet exist. They appeared later, and have become now one of the largest startup communities. Moqod is a member of DSA. They are great for networking at the start of your business. They are also good for events, knowledge sharing and lobbying for startup-friendly policies.

To sum up

The Netherlands is a country with a long business tradition. And it is also great for tech entrepreneurs. Numerous incubators and science parks, universities interested in new projects, startup visas, as well as startup support programmes create all the conditions conducive for launching a business in the Netherlands.

Yes, there are a couple of points, that one might dislike about doing business in the Netherlands, such as:

  • There are some difficulties in assigning stock options, and capital gain taxes from them are rather high.
  • Labour laws could be more lenient, but they cause some pressure on me as an employer.
  • The tax system is rather complicated, so an established accountant is a must.
  • Generally, one might get a feeling that things are a bit slow in the Netherlands, such as waiting 2 weeks for the internet to be connected.

In my view, these are rather minor and the profits of doing business in the Netherlands are exceedingly greater than all the potential difficulties. I’d be excited to assist tech companies to establish connections in the Netherlands that will enable them to build their teams and products here without many complications.

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