Doing Business In.. 2020

Last Updated July 15, 2020


Law and Practice


Buren N.V. is an independent, internationally oriented firm of lawyers, notaries and tax lawyers with offices in Amsterdam, Beijing, The Hague, Luxembourg and Shanghai. It has more than 70 legal professionals providing a full range of legal services to domestic and international business clients who conduct business nationally and globally. The firm offers sound legal solutions combined with business acumen, which ensures a holistic perspective to every legal and tax challenge faced by clients. Buren works closely with its clients to tailor solutions in alignment with the clients’ business goals. Buren has carefully established a global network with premier and reputable law firms and other service providers. It also has dedicated regional practices (China, Japan, CIS/Russia, Germany, Hong Kong and Latin America) staffed by native speakers and professionals that have a profound knowledge of local business and culture.

Like in many other (European) countries, the legal system of the Netherlands is a civil law system. While legislation is the primary source of law, precedents developed in case law play an important role, as do the principles of reasonableness and fairness.

In addition to its own domestic legal system, the legal framework of the European Union applies in the Netherlands.

Judicial System for Civil and Criminal Cases

Eleven district courts (rechtbanken) deal with civil and criminal cases, and there are four courts of appeal (gerechtshoven). For civil and criminal cases, the Supreme Court of the Netherlands (Hoge Raad der Nederlanden) is the highest instance, but can overturn judgments of the courts of appeal on limited and specific legal grounds only, without reviewing the facts of a case.

Ranking high in The World Bank’s Rule of Law Index, the Dutch legal system is considered one of the most efficient civil law systems in the world. On average, legal proceedings in the Netherlands take 130 days. Urgent matters may be heard in summary proceedings, in which judgments are rendered in a time frame of a few weeks or even a few days.

For certain areas of law, the Netherlands has established courts with specific expertise. The courts that are most relevant in an international business law context are listed below:

  • the Netherlands Commercial Court, which allows parties to litigate in the English language entirely (from writ of summons to court hearing to judgment) in any international commercial dispute;
  • the Enterprise Court (Ondernemingskamer) of the Amsterdam court of appeal, which has exclusive jurisdiction over certain matters relating to corporate law;
  • the Maritime Court of the Rotterdam district court, which allows parties to litigate partly in English; and
  • a chamber of the district court of The Hague, specialised in intellectual property law, which allows parties to litigate partly in English.

Judicial System for Administrative Cases

As in civil and criminal cases, district courts have jurisdiction in administrative cases, in principle, provided that the applicable complaints procedure with the respective administrative body has been completed first. For appeals, there are a number of competent courts – which court has jurisdiction to handle the appeal depends on the type of case. Most appeals are heard by the Administrative Jurisdiction Division of the Council of State (Afdeling bestuursrechtspraak van de Raad van State), which in most cases is the highest court for matters of administrative law in the Netherlands. A final appeal to the Supreme Court is only possible in tax cases.

Unlike in other countries, judicial bodies in the Netherlands do not pass judgment on the constitutionality of legislation.

No Approval

Under Dutch legislation, foreign investments in the Netherlands generally do not require governmental approval. Certain sectors and industries (eg, banking or arms trade) are regulated regardless of the nationality or home state of the investor.

Notification and Other Requirements

The Electricity Act and the Gas Act require notification to the Dutch Ministry of Economic Affairs (and Climate Policy) in case of any change of control with respect to an electricity or gas company. A change of control may be prohibited, or may be subjected to certain conditions for reasons of public safety or supply security.

Legislation is being prepared for the telecommunications market. In addition, a broad investment test, regardless of sector, will be implemented in the future.

FDI Screening Regulation (EU)

The EU FDI Screening Regulation entered into force in 2019, and will apply to all foreign direct investments (FDI) in the European Union from October 2020. This means that FDI by investors from outside the European Union will have to be screened by the Dutch authorities if such FDI is likely to affect the security or public order of EU Member States or the EU as a whole. This concerns sectors like critical infrastructure, critical technology, supply of critical inputs including energy, raw materials and food security, access to, or control of, sensitive information, including personal data or freedom and pluralism of the media. In addition, FDI may be screened if the foreign investor is directly or indirectly controlled by a third country’s government, through its ownership structure or by significant funding, or if the foreign investor has already been involved in activities that affect security or public order in an EU Member State or if there is a serious risk that the foreign investor engages in illegal or criminal activities.

Legislation implementing such EU Regulation into Dutch law is in the making.

No procedures or sanctions yet apply for most foreign investments, but on the basis of the current legislation implementing the EU FDI Screening Regulation, a penalty for non-compliance may be imposed by the authorities, and non-compliance will be considered an economic offence.

If parties to a foreign investment in the electricity or gas sector fail to notify the Ministry, a transaction is voidable.

This section is not applicable.

This section is not applicable.

The legal entities most commonly used in the Netherlands are a private company with limited liability (besloten vennootschap or BV) or a public limited company (naamloze vennootschap or NV), which have legal personality, and a (limited or general) partnership (personenvennootschap), which is a contractual arrangement without legal personality.

The BV is a private limited liability company, whose key characteristics are as follows:

  • capital is divided into shares;
  • privately owned (ie, with a closed circle of shareholders);
  • no minimum capital is required; and
  • different types of shares can be created, which makes it possible to vary with regard to (among others) voting rights and profit-sharing rights.

A BV is more flexible than an NV and is consequently the most frequently used corporate entity form in the Netherlands. BVs are popular as holding companies in (international) group structures, and as operational and financing companies, and are also considered suitable for structuring joint ventures.

An NV is a public limited liability company, whose key characteristics are as follows:

  • a minimum share capital of EUR45,000;
  • all shareholders have voting rights and profit rights;
  • different types of shares are possible (including bearer shares); and
  • there are specific rules with regard to the proper functioning of the general meeting.

In general, an NV is subject to stricter capital and creditor protection rules than a BV. The NV is designed primarily as a public company, of which the shares can be listed on a stock exchange.

The two most common forms of a Dutch partnership are the general partnership (vennootschap onder firma or VOF), which is a partnership between two or more general partners, and the limited partnership (commanditaire vennootschap or CV), which is a partnership between one or more managing partners and one or more limited partners.

A Dutch partnership does not have legal personality, meaning that it cannot perform legal acts or own assets in its own name. Legal title to assets is generally held by the general partner or by all partners jointly.

The incorporation of a BV requires few formalities and can be carried out very quickly and easily.

BVs and NVs are incorporated by the execution of a notarial deed of incorporation (akte van oprichting) by a Dutch civil law notary (notaris). This deed of incorporation contains the initial articles of association and must be in the Dutch language.

The incorporation of an NV requires a bank statement providing evidence of the payment of the minimum paid-up capital (if in cash) or a description of the contribution drawn up and signed by the incorporators, and an auditor’s certificate attesting to such payment (if in kind).

The founders of an NV or a BV may be one or more individuals or legal entities, of any nationality and domiciled anywhere.

A partnership under Dutch law is set up by the execution of a partnership agreement between one or more partners. The partnership agreement must provide for a durable co-operation between the partners, and must be governed by Dutch law. The partners may be either individuals or legal entities.

A VOF must have at least two general partners, whereas a CV must have at least one managing partner and one limited (or "silent") partner. Each partner must contribute to the partnership.

Private companies must be registered with the trade register of the Dutch Chamber of Commerce within eight days of incorporation. The trade register holds publicly available information on companies, such as the names of the managing directors, supervisory directors and proxy holders (including the scope of their powers), if any, and the articles of association.

Amendments to the articles of association and certain amendments to the limited partnership agreement (change of company/partnership name, registered office, capital increase, etc), as well as certain changes in the company/partnership (appointment/dismissal of managing directors, change of business address, etc), must be filed and registered with the trade register.

If all issued and outstanding shares in the company are held by one individual or legal entity, certain basic data regarding this sole shareholder must also be registered.

Under newly proposed legislation for a variety of Dutch legal entities, the ultimate beneficial owner(s) (UBO) must also be registered. It is expected that the Dutch UBO register will become operational in the course of 2020.

Companies must maintain accounting records and prepare financial statements, which must constitute a true and fair representation of the company’s financial position. Additional accounting, auditing and publication requirements apply to small, medium and large companies, based on certain thresholds.

Dutch law contains no special requirements for the contents of the annual accounts of partnerships, unless all managing partners are corporations incorporated under foreign law, in which case that partnership is subject to the Dutch financial reporting requirements.

Dutch corporate law provides that a Dutch company must have at least (i) a management board consisting of managing directors, and (ii) a general meeting of shareholders. Dutch companies may also have a supervisory board, although this is not required for most Dutch companies. The management board is the executive body of the company, charged with the company’s day-to-day management.

The management board may consist of just one managing director, who can be a natural person or a legal entity. There are no requirements regarding the nationality or the place of residence of managing directors (although this may be a highly relevant issue for tax purposes).

Dutch corporate law offers companies a choice between a one-tier board consisting of executive and non-executive directors, and a two-tier board consisting of a management (executive) board and a supervisory (non-executive) board. Large companies that meet certain statutory criteria must have a one-tier board (with non-executive directors) or a supervisory board with considerable powers (as prescribed by law).

As for partnerships, VOFs are, in principle, managed by and may be represented by all partners. CVs are managed by the managing partner(s), who is/are responsible for the day-to-day affairs of the CV.

A distinction should be made between the internal and external liability of managing directors: internal liability exists towards the company, while external liability is a liability towards third parties, such as creditors of the company or the tax authorities.

As a general rule, managing directors are jointly and severally liable for mismanagement only in cases of serious culpability (ernstig verwijt).

Mismanagement can consist of acting (or failing to act) in violation of the law or the articles of association, or acting in a clearly unreasonable way.

Managing directors who enter into a contract on behalf of a company while knowing (or having reason to know) that the company will not be able to fulfil its contractual obligations, or will not have sufficient assets against which to take recourse, may be held liable (externally) for any resulting damages. The burden of proof rests with the prejudiced creditor.

If the managing director is a legal entity, the managing directors of that legal entity at the time the liability arises are jointly and severally liable together with the legal entity they manage.

As a general rule, shareholders are not personally liable for acts performed in the name of the company and are under no obligation to contribute to the losses of the company in excess of the amount to be paid on their shares. However, Dutch case law has recognised that there may be exceptional circumstances that allow the "corporate veil" to be lifted and shareholders to be held jointly liable for the company’s debts and obligations.

Partners in VOFs are jointly and severally liable for all obligations of the partnership. The liability of general partners in a CV is unlimited, while the liability of limited partners is limited to the amount of their capital contributions, provided they have not performed any acts of management or representation of the partnership.

The legal framework governing employment contracts is set out in the Dutch Civil Code (DCC). Additional terms and conditions may be agreed in an individual employment contract, provided they do not contradict the mandatory statutory provisions of the DCC. Furthermore, the legal relationship between an employer and employee may be governed by collective labour agreements between the trade unions and employers (or organisations of employers). Multiple other laws and regulations are also of influence – eg, the Equal Treatment Act.

In addition, case law provides an important series of precedents and principles, which often help to clarify ambiguous statutory or contractual provisions. The laws of the European Community and other international treaties and regulations form another important source of law.

Dutch employment law does not require employment contracts to be made in writing. Certain provisions, however, such as non-competition clauses or probation period clauses, need to be in writing in order to be valid. Also, employers must provide employees with a signed statement setting out the essential conditions of their employment – eg, the parties’ names, position or job title, commencement date, duration of contract etc, within one month of the commencement of the employment.

No legal provision dictates the language in which employment contracts should be concluded; they do not necessarily have to be in Dutch, with international companies commonly offering employees employment contracts in English. However, it is advisable to ensure that employees understand the specifics of their employment contract.

Employment contracts can be concluded for a definite period of time (fixed-term contracts) or an indefinite period of time (indefinite contracts). Consecutive fixed-term employment contracts, if extended, and once certain criteria are met, are automatically converted into indefinite contracts. This applies if the number of consecutive contracts exceeds three, or if the aggregate term of the consecutive contracts exceeds 36 months.

Under the Dutch Working Hours Act, employees are generally allowed to work a maximum of 12 hours per day and a maximum of 60 hours per week. Over a period of 16 consecutive weeks, employees may not work more than 48 hours per week on average. Over a period of four consecutive weeks, the weekly average may not be more than 55 hours.

Collective labour agreements or employee handbooks may contain provisions on the standard working hours in a company. Unlike many other countries, the Netherlands does not provide a national standard for overtime, which is usually agreed by individual employment contracts and collective agreements.

The dismissal of employees is governed by mandatory statutory dismissal provisions. The system differs substantially from most other (European) countries.

Fixed-term contracts end by operation of law on the agreed end date, and can only be terminated prematurely if the right to do so has been agreed upon in writing. If fixed-term contracts are concluded for six months or longer, employers have to inform their employees in writing at least one month before the end date whether or not their fixed-term contract will be renewed and, if so, on what conditions.

Employers may terminate indefinite contracts by giving notice of termination. The most striking difference to other jurisdictions is that employers must, in principle, first apply for a dismissal permit from the governmental agency called UWV Werkbedrijf before they can give notice, or they must request the court to terminate the contract. The manner of termination for employers is prescribed by law, depending on the reason for termination: termination for economic reasons or due to long-term incapacity for work must be effected through the UWV procedure, while dismissal on other grounds has to take place through termination by the court.

Unlike employers, employees do not require a permit from the UWV or have to go to court to terminate their employment contract. The statutory notice period for employees is one month. The statutory notice period for employers is between one and four months, and depends on the duration of the employment relationship.       

Several dismissal prohibitions apply. For example, sick employees may not be dismissed during the first two years of sickness.

Both fixed-term contracts and indefinite contracts can be terminated by mutual consent between the parties. Employers usually offer financial compensation, based on the "transition payment" (see below), and it is common to confirm the termination in a settlement agreement by which the parties grant each other full and final discharge.

Indefinite contracts and fixed-term contracts longer than six months may include a probationary period during which each party may terminate the employment contract with immediate effect, without the prior permission of the UWV or the court.

Employment contracts may be terminated with immediate effect and without prior permission from the UWV or the court if there is an "urgent cause" to do so. The DCC provides a non-exhaustive list of acts that may qualify as an "urgent cause", such as fraud and theft. Whether or not there is "urgent cause" is assessed on a case-by-case basis, taking into account all relevant facts and circumstances. The "urgent cause" must be communicated to the other party immediately, and the agreement must be terminated without notice. However, case law accepts a brief delay to the extent that such is necessary – for example, to consult a lawyer.

Employers are required to make a "transition payment" to employees if one of the following applies:

  • the employment contract is terminated by the employer by giving prior notice of termination;
  • the court terminates the employment contract at the employer’s request; or
  • the employer decides not to renew the employment contract after the expiration of the agreed fixed term.

Transition payments are equal to one third of a monthly gross salary for every full year of employment, regardless of the employee’s age or years of service and calculated pro rata, depending on the exact duration of employment. The payment never exceeds EUR83,000, or one annual salary for employees earning more than EUR83,000. Only employees who are seriously culpable for termination are not entitled to a transition payment.

Employers who intend to dismiss at least 20 employees within a period of three months (in one region) are subject to the Collective Redundancy (Notification) Act. Under that legislation, employers must notify the UWV and the relevant trade unions of the intended dismissals, and must first discuss the proposed decision and its social consequences with these trade unions. The UWV takes applications for individual dismissal permits under consideration one month after notification of the proposed collective redundancy, unless the trade unions have stated (in writing) that they have been informed and that they agree.

Again, employers can validly dismiss the individual employees concerned only with the prior approval of the UWV. In addition, the proposed decision to proceed with collective redundancy may require the prior advice of the works council (see below).

Under the Dutch Works Council Act (WCA), enterprises employing at least 50 persons must establish a works council for the purpose of consultation with and representation of the employees. The employees elect the members of the works council directly from amongst themselves. The number of members depends on the number of employees in the enterprise, and varies from three to a maximum of 25.

The WCA provides a number of rights for the works council, including the right to advise on certain matters and the right of approval. Companies must request the prior advice of the works council on certain decisions (and their implementation) about significant business matters, such as the transfer of control over the enterprise or any part thereof, the establishment, takeover or disposal of control over another enterprise, or the termination of operations or a substantial part thereof. In addition, companies must request the prior approval of the works council in respect of certain decisions concerning the introduction, modification or repeal of "social" regulations within the enterprise, such as regulations on pension schemes, on profit-sharing or saving plans, on working hours or leave, and on salary or job classification systems.

Furthermore, trade unions often represent their members in discussions about a collective labour agreement and in collective dismissals.

Taxes Paid by Employees

Personal income tax

Personal income tax is levied on Dutch tax residents (based on their income from various worldwide sources) and non-Dutch tax residents (based on certain income from Dutch sources).

For both Dutch tax residents and non-Dutch tax residents, personal income tax is levied on three different categories of income, referred to as "boxes". Box 1 concerns income from work and home, and includes, for instance, income from past and current employment, sole proprietorship, and an owner-occupied home; box 2 concerns taxable income from, in short, share interests of 5% or more in companies; and box 3 concerns income from savings and investments.

Wage tax is withheld by employers, and functions as a pre-tax to personal income tax (and social security contributions levied at the level of employees). Income from past and current employment (realised by Dutch and non-Dutch tax residents) is determined by the Dutch Wage Tax Act 1964. Except in certain specific cases (for instance, if the individual functions as a board member or supervisory board member of a Dutch company), individuals who work (almost) entirely outside the Netherlands are generally not considered "employees" for Dutch wage tax purposes.

Personal income tax for box 1 is levied at progressive rates on income, minus personal deductions and allowances. In 2020, the applicable rates for persons who are not retired are as follows:

  • 37.35% for income up to and including EUR34,712 (9.7% excluding social security contributions levied from employees);
  • 37.35% for income ranging between EUR34,713 and EUR68,508; and
  • 49.5% for income exceeding EUR68,508.

Income tax in box 2 is levied at a rate of 26.25% in 2020.

Income tax in box 3 is payable annually based on a deemed return on investments. The effective box 3 rates for 2020 are:

  • 0.54% for net box 3 assets up to EUR72,797 (EUR145,594 for tax payers with a tax partner);
  • 1.27% for net box 3 assets of EUR72,797 to EUR1,005,572 (EUR145,594 to EUR2,011,144 for tax payers with a tax partner); and
  • 1.6% for net box 3 assets of EUR1,005,572 and more (EUR2,011,144 and above for tax payers with a tax partner).

In 2020, the first EUR30,846 (EUR61,692 for taxpayers with a tax partner) of net box 3 assets are tax-exempt.

Subject to certain conditions, employees hired outside the Netherlands can apply for a ruling allowing employers to pay 30% of the wage tax-free, including allowances.

Employee social security contributions

Individuals are subject to social security contributions levied on income up to and including EUR34,712. The applicable rate is 27.65%.

Taxes Paid by Employers

Wage tax

Employers qualifying as a "withholding agent" must withhold wage tax and social security contributions (levied at the level of employees) in respect of wages paid to employees for Dutch wage tax purposes.

Employer social security contributions

In summary, the rates of employer social security contributions in 2020 are as follows:

  • General unemployment insurance (AWF): 2.94% for contracted workers with an indefinite term and 7.94% for flex workers and temporary workers;
  • Occupational disability insurance (WAO/WIA): 6.77%;
  • Health Insurance Act contribution (ZVW): 6.7%;
  • Childcare allowance contribution: 0.50%; and
  • the Return to Work Fund (Werkhervattingskas – Whk): 1.25% (approximate amount).

Only income up to and including EUR57,232 is subject to the above contributions.

Corporate Income Tax

Dutch tax-resident companies (or companies deemed to be tax residents) are subject to Dutch corporate income tax based on their worldwide income.

Non-Dutch tax-resident companies are subject to corporate income tax from certain Dutch sources, which may include:

  • income derived from a Dutch permanent establishment or a Dutch permanent representative;
  • income derived from shareholdings of at least 5% in Dutch companies, if they cannot pass either the subjective or objective test – the subjective test decides whether non-resident corporate shareholders hold shares in Dutch taxpayers with the main purpose or one of the main purposes of avoiding Dutch personal income tax by another, while the objective test decides whether the situation qualifies as an artificial arrangement or transaction; and
  • some other specific sources, such as Dutch real estate, services provided as director, or the exploration of natural resources.

In 2020, the Dutch corporate income tax rate is 16.5% for taxable profits up to and including EUR200,000, and 25% for taxable profits exceeding this amount.

Under the Dutch participation exemption, dividends received by Dutch resident corporate taxpayers from shares in subsidiaries and capital gains realised upon the alienation of such shares are exempt from Dutch corporate income tax, provided that certain conditions are met.

Dividend Withholding Tax

Shareholders of Dutch tax-resident companies are, in principle, subject to 15% Dutch dividend withholding tax in respect of dividend distributions (and other payments treated as dividends for Dutch tax purposes) paid by Dutch tax-resident companies (or companies deemed to be tax residents). In principle, distributing companies should withhold and pay any Dutch dividend withholding tax due.

An exemption applies to dividends distributed to corporate shareholders who own a share interest of at least 5% in the relevant Dutch tax-resident company if, in short, the corporate shareholder is a tax resident of the EU or a jurisdiction with which the Netherlands has concluded a tax treaty, or is the beneficial owner of the dividend, or if it is not a hybrid transaction and certain other anti-abuse tests are met.

Application of the extensive Dutch tax treaty network or EU directives may result in a reduction or refund of Dutch dividend withholding tax.

Interest and Royalty Withholding Tax

The Netherlands does not currently levy withholding tax on interest and royalty payments, but a withholding tax on interest and royalty payments will apply from 1 January 2021 onwards, at a rate of 21.7%. The withholding tax would apply to intra-group interest and royalty payments by Dutch resident companies to related entities residing in jurisdictions that are either on the blacklist issued by the Dutch Ministry of Finance (including consisting of low (less than 9%) or tax jurisdictions and jurisdictions that are on the EU blacklist of non-cooperative jurisdictions) or in abusive situations.


The Netherlands levies Value Added Tax (VAT) on the supply of goods and services as part of the domestic implementation of the EU VAT Directive (Directive 2006/112/EC). The current Dutch VAT system, therefore, is comparable to VAT systems of other EU Member States, though the Netherlands uses certain optional measures to facilitate trading.

Under Dutch VAT law, in principle any person or entity can qualify as an "entrepreneur" (taxable person) if they act independently and perform (preparatory acts to) economic activities on a continuing base, whatever the purpose or result of those activities. Entrepreneurs acting as such are, in principle, required to file VAT returns and are entitled to a refund of (input) VAT charged, provided they are engaged in VAT taxable transactions within the territory of a Member State of the European Union.

In the Netherlands, the following VAT rates apply to supplies of goods and services:

  • general rate: 21%;
  • reduced rate: 9%; and
  • zero rate (0%).

Furthermore, entrepreneurs must meet certain administrative obligations in the Netherlands when rendering VAT taxable or exempt transactions (eg, invoicing, keeping proper accounts, filing VAT returns, EU Sales Listing reporting).

Innovation Box Regime

In their annual corporate income tax returns, Dutch taxpayers can apply an "innovation box regime" to qualifying profits derived from benefits from certain self-developed intangible fixed assets.

Under the innovation box regime, profits are included only in the tax base of a taxpayer for 7/25 part, resulting in an effective tax rate of 7%. This beneficial rate applies only to the extent that the qualifying income exceeds the cost related to the creation of the self-developed intangible fixed assets.

Qualifying profits are benefits from qualifying self-developed intangible fixed assets (see below) multiplied by a nexus ratio. The nexus ratio consists of 130% of the taxpayers’ operating expenses and third-party outsourcing expenses incurred in relation to the creation of the relevant asset (ie, the nominator), divided by any expenses incurred in relation to the creation of the relevant assets (ie, the denominator), with a maximum of 100%. Expenses in the current tax year and previous tax years are taken into account.

For small taxpayers, qualifying assets are intangible fixed assets developed by research and development (R&D) activities for which a so-called R&D certificate was issued. Taxpayers are considered small if their five-year average group turnover is less than EUR50 million per year and the five-year average benefits derived from the intangible assets are less than EUR37.5 million per year.

For large taxpayers, qualifying assets are intangible fixed assets developed by R&D activities falling within the scope of the following categories:

    1. patent or breeder’s rights;
    2. applications for patent or breeder’s rights;
    3. software;
    4. EU licence for marketing certain pharmaceutical certifications;
    5. supplementary protection certificates;
    6. utility models;
    7. assets related to a) to f); and
    8. exclusive licences regarding a), c), d) and f).

R&D Wage Tax Credit Regime

The R&D wage tax credit regime enables companies that engage in R&D activities to pay less wage tax and social security contributions than they withhold from their employees.

In 2020, the amount of the reduction is equal to 32% of the first EUR350,000 in R&D costs and 16% of R&D costs exceeding this amount. For start-ups, a 40% rate can be applied to the first EUR350,000 in R&D costs. The amount of the reduction is limited to the total amount of wage costs and social security contributions. R&D costs may include both wages and other costs related to self-developed R&D.

In order to qualify for the R&D wage tax credit regime, companies have to apply for a permit from the Netherlands Enterprise Agency, a department of the Ministry of Economic Affairs, via

The granting of the permit is subject to the following conditions:

  • the R&D activities (eg, development of a product, production process, software or technical research) will be performed in-house by the applicant;
  • the innovation is new to the organisation of the applicant;
  • the applicant seeks to solve technical difficulties of the development process;
  • the R&D activities are performed within the EU; and
  • the R&D permit is requested in advance.

In addition, the granting of the permit is subject to the available funding.

Business Incentives

The small-scale investment incentive provides for tax deductions for corporate income tax and personal income tax purposes in connection with the acquisition of one or more new qualifying business assets. In 2020, the deduction amounts to:

  • 28% of the amount of the investment between EUR2,401 and EUR58,238;
  • EUR16,307 for investments between EUR58,239 and EUR107,848; and
  • EUR16,307 minus 7.56% of the amount of the investment exceeding EUR107,848.

The investment incentive for environment-improving assets provides for tax deductions in connection with the acquisition of one or more new environment-improving assets. The deduction generally amounts to 45% of the amount of the investment, which should be included on a list published by the Netherlands Enterprise Agency (RVO), and requires the issuance of a notification from the RVO.

Under conditions similar to those of the investment incentive for environment-improving assets, it is possible to apply the random depreciation regime to environment-improving assets or energy-improving assets. Under this regime, taxpayers can randomly depreciate 75% of the investment made in the qualifying asset.

The incentive for energy-improving assets has benefits and conditions that are similar to the investment incentive for environment-improving assets, and can be applied together with the random depreciation regime mentioned above.

Some investments are excluded from the application of the above-mentioned incentives, such as investments of EUR450 for the small-scale investment incentive and investments of at least EUR2,500 per asset for the investment incentive for environment-improving assets, energy-improving assets, and investments in certain categories of assets (eg, residential property, land, animals, vessels for representation purposes, shares, receivables, goodwill and permits, certain cars, business assets intended for lease or use outside of the Netherlands, contributed assets or assets acquired from relatives).

Fiscal Unity for Dutch Corporate Income Tax Purposes

Companies that are part of a "fiscal unity" for Dutch corporate income tax purposes may file a consolidated corporate income tax return, and are taxed on a consolidated basis as if they were just one company. As a result, transactions between companies belonging to the fiscal unity are, in principle, ignored and not subject to taxation on profits or gains.

However, for purposes of certain anti-abuse rules (eg, for the anti-base erosion rules included in article 10A of the Dutch Corporate Income Tax Act 1969), transactions between entities within a fiscal unity are taken into account.

The Dutch fiscal unity rules include other anti-abuse rules, which can be triggered by the formation or dissolution of a fiscal unity, for example.

Companies belonging to the fiscal unity are jointly and severally liable for payments of corporate income tax over the period of the fiscal unity.

Parent companies and their subsidiaries can, upon request, form fiscal unities if a number of requirements are met, including the following:

  • ownership requirement – the parent company must hold the economic and legal ownership of at least 95% of the shares in the nominal paid-up capital of its subsidiary, which provides entitlement to at least 95% of the statutory voting rights in that subsidiary, and in all circumstances provides entitlement to at least 95% of the profits and 95% of the capital of the subsidiary; and
  • residency requirement – the applying companies should be residents of the Netherlands for tax treaty purposes.

In addition to the above, a parent company can form a fiscal unity with an indirectly held subsidiary if both companies are tax residents of the Netherlands and the intermediate company (or companies) between the parent company and the indirectly held subsidiary resides in another EU or EEA Member State. Furthermore, two Dutch tax resident subsidiaries can form a fiscal unity if their joint parent resides in another EU or EEA Member State.

Fiscal Unity for Dutch VAT Purposes

A VAT group can be created by two or more persons established within an EU Member State, who, while legally independent, are closely bound to each other by financial ties (ie, more than 50% shareholding), organisational ties (ie, central management) and economic ties (ie, same or related activities or suppliers). In that case, they can opt to be treated as one VAT entrepreneur.

Transactions between the members of a VAT group are not subject to VAT. The right to deduct input VAT is based on the activities of the VAT group as a whole. The VAT group regime only applies if each member of the VAT group qualifies as an entrepreneur for VAT purposes.

The Dutch earning stripping rules limit the deduction of excessive interest expenses related to intra-group and third-party payables for Dutch corporate income tax purposes.

Under these rules, the starting point is to determine the Dutch taxpayers’ so-called interest expense excess, which is the amount by which the Dutch taxpayers’ tax-deductible interest expenses exceed their taxable interest income. The deductibility of the interest expense excess is limited to 30% of the taxpayers’ EBITDA (carving out tax-exempt income) or a safe harbour threshold of EUR1 million, whichever is higher.

Interest disallowed under the earnings stripping rule can be carried forward to later years without any time limitations.

For the sake of completeness, Dutch corporate income tax law includes several other rules based on which deduction of interest may be denied, including the anti-tax base erosion rules – see 5.7 Anti-evasion Rules.

For Dutch tax purposes, transactions between affiliated entities must be performed under the same terms and conditions as would be agreed between non-affiliated entities under similar circumstances (the so-called "arm’s length principle"). If the terms and conditions of an affiliated party transaction are not at arm’s length, the transaction is taxed as if they had been.

For Dutch transfer pricing purposes, companies are considered to be affiliated if one entity participates – directly or indirectly – in the management, control or capital of another entity, or if the same person participates – directly or indirectly – in the management, control or capital of two entities.

All Dutch taxpayers must have documentation available showing that the terms and conditions applied to affiliated party transactions are at arm’s length. In addition, multinationals with a consolidated group turnover of at least EUR750 million in the preceding year are required to file country-by-country (CbC) reports containing detailed information on the transfer pricing policy and the allocation of assets and personnel within the group. CbC reports are then exchanged automatically with the tax authorities of all countries in which the multinational group operates.

Furthermore, Dutch taxpayers that are part of a multinational group with a consolidated turnover of at least EUR50 million in the preceding year must prepare both so-called "master files" and "local files".

Dutch corporate income tax law includes various rules aimed at the prevention of tax evasion, such as limitation of interest deduction rules preventing tax base erosion, CFC legislation, exit taxation and the non-resident corporate income tax rules (see 5.2 Taxes Applicable to Businesses). In addition, there are various Dutch dividend withholding tax rules aimed at the prevention of tax evasion, such as anti-dividend stripping rules and anti-abuse rules by which the exemption from Dutch dividend withholding tax may be denied (see 5.2 Taxes Applicable to Businesses). Finally, Dutch tax law includes an unwritten general anti-abuse rule (fraus legis). Some of the main anti-evasion rules are listed below.

Limitation of Interest Deduction Rules – Anti-tax Base Erosion Rules

Under the Dutch anti-tax base erosion rules, the deduction of interest expenses (including currency results and other costs) is limited to related party loans that have been used to finance the following:

  • profit distribution or repayment of capital to related parties;
  • capital contributions to related parties; or
  • the acquisition or increase of share interests in entities that are or become related parties.

There are, however, exceptions under which the interest deduction limitation rule does not apply (eg, if the loan and the transaction are based primarily on business reasons).

CFC Legislation

Under the CFC rules, undistributed “tainted” (passive) income derived from subsidiaries or permanent establishments that are tax resident in certain blacklisted jurisdictions (ie, the jurisdictions listed under 5.2 Taxes Applicable to Businesses: Interest and Royalty Withholding Tax) is, in principle, annually included in the taxable basis of the Dutch taxpayer (subject to certain conditions). Only interests of 50% in direct or indirect subsidiaries or permanent establishments of Dutch taxpayers together with related companies are targeted by the CFC rules.

Exit Taxation

If Dutch resident corporate taxpayers transfer their tax residencies to other jurisdictions or transfer assets to non-Dutch permanent establishments, the assets and liabilities must be stated at their fair market value. Any gains (ie, hidden reserves, goodwill and/or currency exchange gains) will, in principle, be subject to corporate income tax. Under certain conditions, it is possible to apply an extended payment deadline.

General Anti-abuse Rule (Fraus Legis)

Under the application of fraus legis, transactions can be eliminated for Dutch tax purposes or replaced by other transactions that fall within the scope of relevant legal provisions. Fraus legis can be applied if the Dutch tax authorities can prove that the sole or predominant motive for a transaction is tax avoidance, and that the envisaged tax consequences of a transaction would conflict with the purposes and rationale of the relevant law.

EU Mandatory Disclosure Directive (DAC6)

Under DAC6, taxpayers and intermediaries such as tax advisers, accountants, trust offices and (in certain cases) lawyers that design, promote or implement tax planning schemes are required to report potentially aggressive tax arrangements to the tax authorities. In the event of non-compliance, these parties may be subject to a maximum penalty of EUR830,000 or, in certain situations, criminal prosecution.

Reportable arrangements (on the basis of so-called hallmarks) also include arrangements that do not necessarily have obtaining a tax advantage as a main objective. The adopted legislative proposal refers to Annex IV of DAC6 for the definition of the reportable cross-border arrangements.

On 1 July 2020, the Dutch rules implementing DAC6 will enter into force. The reporting obligations pursuant to DAC6 apply retrospectively to transactions implemented as of 25 June 2018, which shall have to be reported on or before 31 August 2020.

Mergers can be subject to either EU or Dutch merger control rules. The rules in the Dutch Competition Act are based on or essentially resemble the EU competition rules.

The EU Commission must be notified of any merger with an EU dimension prior to its implementation. If the EU notification thresholds are met, companies have the "one-stop shop" benefit of notifying only the Commission. If the Dutch notification thresholds are met, then companies must comply with the Dutch notification requirements.

In principle, the Commission only examines larger mergers with an EU dimension, if the merging firms reach certain turnover thresholds. There are two alternative ways to reach turnover thresholds.

The first alternative requires:

  • a combined worldwide turnover of all the merging firms of more than EUR5 billion; and
  • an EU-wide turnover for each of at least two of the firms of more EUR250 million.

The second alternative requires:

  • a worldwide turnover of all the merging firms of more EUR2.5 billion;
  • a combined turnover of all the merging firms of more than EUR100 million in each of at least three Member States;
  • a turnover of more than EUR25 million for each of at least two of the firms in each of those three Member States; and
  • an EU-wide turnover of each of at least two firms of more than EUR100 million.

In both alternatives, the EU dimension requirement is not met if each of the firms achieves more than two thirds of its EU-wide turnover within one and the same EU Member State.

Mergers without an EU dimension are subject to Article 29 of the Dutch Competition Act, under which the Dutch Authority for Consumers and Markets (Autoriteit Consument en Markt or ACM) must be notified of a concentration if both the combined turnover of the firms involved is more than EUR150 million in the calendar year before the concentration, and at least two of the companies involved earned at least EUR30 million in the Netherlands.

According to Article 27(1) of the Dutch Competition Act, the following types of transactions (concentrations) are subject to merger control:

  • the merger of two or more previously independent companies; and
  • the acquisition of direct or indirect control by:
    1. one or more natural persons or legal entities which already control one company; or
    2. one or more companies of the whole or parts of one or more other companies, through the acquisition of a participating interest in the capital or assets, under an agreement or by any other means.

Control is defined as the ability to exercise decisive influence on the activities of a company on the basis of factual or legal circumstances.

Long-term joint ventures performing all functions of an autonomous economic entity are seen as concentrations under section 27(b)(1) of the Dutch Competition Act.

Sector-specific thresholds apply to credit and financial institutions, and to the concentrations in respect of two healthcare companies.

The Dutch Competition Act is enforced by the ACM, which is an autonomous administrative authority that operates independently of the Ministry of Economic Affairs. The ACM is also the local competent authority for matters relating to Regulation (EC) 139/2004 on the control of concentrations between undertakings (Merger Regulation).

Transactions meeting the thresholds of the Dutch Competition Act must be notified to the ACM. The intended transaction must be notified before its completion, and the concentration may not be effected before four weeks have passed after the notification (Article 34(1) Dutch Competition Act).

Under certain conditions (eg, unresolved legal questions, large economic interests or impact on consumers), the ACM is prepared to give informal, non-binding advice prior to a notification.

The ACM assesses concentrations in two phases. During Phase I, which starts with the notification, the ACM must decide within four weeks whether the transaction requires a licence. If no licence is required, the parties can execute the transaction.

If the ACM decides that a licence is required, the parties can apply for the licence at their own discretion and timing. However, the transaction cannot be completed without a licence. Phase 2 is initiated with the submission of a licence application, after which the ACM conducts a more in-depth analysis of the effects of the concentration. The ACM must decide on the application within 13 weeks, failing which the concentration is deemed approved. However, the Phase 2 procedure often takes more time, mainly due to stop-the-clock requests for additional information. If the ACM decides not to grant a licence, the applicants are not allowed to execute the transaction.

If the proposed concentration involves a healthcare company employing 50 or more healthcare providers, the companies involved must first notify the Dutch Healthcare Authority (Nederlandse Zorgautoriteit or NZa) of the intended transaction so that it can assess the possible effects of the concentration.

The rules in the Dutch Competition Act governing anti-competitive agreements, decisions and concerted practices essentially resemble the EU rules. Agreements between companies, decisions by associations of companies and concerted practices that restrict competition or aim to do so are prohibited; this includes both horizontal and vertical restrictions of competition.

Under certain conditions, anti-competitive agreements are exempted from this prohibition. The respective national provisions, again, reproduce the conditions required under EU law. Exemptions include agreements that serve to improve the production of goods or promote technical progress while allowing consumers a fair share of the resulting benefit. The European Commission’s block exemptions, such as the EU vertical agreements block exemption regulation, apply mutatis mutandis. Agreements or concerted practices in violation of rules governing anti-competitive agreements and practices are, in principle, null and void.

The cartel prohibition is enforced by the ACM, which can impose fines of up to EUR900,000 or 10% of a company’s worldwide group turnover in the past calendar year, whichever is higher. In addition, the amount of the fine can be multiplied by the number of years that the violation lasted, up to a maximum of four years. Therefore, for infringements that have lasted four years or more, the maximum fine can be as high as 40% of the undertaking’s worldwide group turnover. In case of recidivism within five years, the maximum fine can be doubled and can therefore be as high as 80% of the undertaking’s worldwide group turnover. The maximum fine that the ACM can impose on natural persons who have played a leading role in a cartel is EUR900,000, which can be doubled if that person committed a similar violation in the preceding five years.

Under EU Council Regulation No. 1/2003, the ACM is required to apply EU rules (ie, Article 101 TFEU) if an agreement or concerted practice can affect trade between Member States. Conduct allowed under EU rules cannot be prohibited under Dutch national law under such circumstances.

Under Article 24 of the Dutch Competition Act and Article 102 TFEU, companies that have a position of economic strength are prohibited from abusing that dominant position. In line with European Court of Justice case law, Article 1(i) of the Dutch Competition Act defines a dominant position as a position in which one or more companies is able to prevent effective competition from being maintained on the Dutch market or part thereof, by giving them the power to behave to an appreciable extent independently of their competitors, their suppliers, their customers or end-users. As a rule of thumb, a market share of less than 40% does not constitute a dominant position. Above 50%, however, a rebuttable presumption of dominance exists.

Market shares are not decisive by themselves; other relevant factors may include the existence of intellectual property rights, the level of concentration of the market and barriers to entry. Abuse is not defined, and may consist of charging unreasonably high prices, refusing to supply, or charging extremely low prices ("predatory pricing") to force competitors out of the market.

Article 25 of the Dutch Competition Act provides for the possibility of an exemption from Article 24 for companies entrusted with providing services of general economic interest. Special rules also apply to the telecommunications, electricity and gas, postal and transportation sectors.

Under Dutch patent law, technical inventions – defined as products or operating procedures in any technological field – are eligible for patent protection if they meet three material criteria:

  • Novelty – the product or process may not have been made public anywhere in the world before the date of submitting the patent application, not even through the activities of the inventor himself.
  • Inventive step – the invention must not seem obvious to a professional.
  • Industrial application – the invention must relate to a technically demonstrable functioning product or production process.

Patents can be applied for in the following ways:

  • by filing a national application with the Netherlands Patent Office (Octrooicentrum Nederland);
  • by filing a European application with the EPO designating the Netherlands as a country for which patent protection is desired (as one of more than 30 possible countries in the EU); or
  • by filing an application with the WIPO under the Patent Cooperation Treaty.

Dutch patents are valid for a maximum of 20 years from the filing date, provided that the annual fees are paid. If certain requirements are met, the term of protection for medicinal and plant protection products can be extended by up to five years through a supplementary protection certificate.

Patent owners can prevent others from unlicensed use of the patented technology (manufacturing, offering, placing on the market, using, possessing or importing infringing goods). In addition, patent owners can demand information, the disclosure of records, the destruction of infringing products and damages from infringers. Damages can be calculated on the basis of lost profits of the patent owner, a licence analogy or the profits of the infringer. Punitive damages cannot be claimed in the Netherlands.

The District Court of The Hague has a specialised patent division, and has exclusive jurisdiction in patent litigation. It is possible to appeal judgments of The Hague District Court to the Appeal Court in The Hague, which will review the dispute in full and has specialised IP justices. Appeal judgments can be reviewed by the Supreme Court of the Netherlands, albeit only on issues of law, not fact.

The Netherlands has three different systems for trade mark protection:

  • the Benelux Convention on Intellectual Property (trade marks and designs);
  • Regulation (EU) 2017/1001 of the European Parliament and of the Council of 14 June 2017 on the European Union trade mark; and
  • the Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks (Madrid Protocol).

Trade marks can consist of any signs, particularly words, including proprietary names, or designs, letters, numerals, colours, the shape of goods or of the packaging of goods, or sounds, provided that such signs are capable of:

  • distinguishing the goods or services of one business from those of other businesses; and
  • being represented in the register in a manner that enables the competent authorities and the public to determine the clear and precise subject matter of the protection afforded to its proprietor.

Benelux trade marks offer protection in Belgium, the Netherlands and Luxembourg, and may be applied for at the BOIP (Benelux Office for Intellectual Property). European trade marks that provide protection for all EU Member States have to be applied for at the EUIPO (European Union Intellectual Property Office). The international registration of Benelux and European trade marks is also possible under the Madrid Protocol through the WIPO (World Intellectual Property Organization).

Dutch trade marks are initially protected for ten years. Protection may be prolonged for an indefinite number of times upon the timely payment of the extension fees.

Not only is the unlicensed use of registered trade marks forbidden, but taking "unfair advantage" of the reputation of trade marks also constitutes an infringement. To enjoy the exclusivity rights of trade marks, trade mark owners must put the trade marks to genuine use for the goods or services for which they have been registered, within five years of filing. In the event of trade mark infringements, trade mark owners may claim injunctive relief, rendering of account, damages, product recall and even destruction of the infringing goods.

Benelux trade marks are enforceable through the civil courts. Both Dutch district courts and courts of appeal have broad experience in IP issues.

The district court of The Hague (the EUTM court in the Netherlands) has a chamber of judges specialising in IP law, and has exclusive jurisdiction for litigation related to EU trade marks.

As with trade mark protection, the Netherlands has three different systems for the protection of industrial design:

  • the Benelux Convention on Intellectual Property (trade marks and designs);
  • Regulation (EC) No 6/2002 of 12 December 2001 on Community Designs; and
  • The Hague System for the International Registration of Industrial Designs.

The terms "design" or "drawing" relate to the appearance of products or parts of products. To claim a design right, the design must be novel and have an individual character.

Benelux designs offer protection in Belgium, the Netherlands and Luxembourg, and may be applied for at the BOIP. European designs that provide protection for all EU Member States have to be applied for at the EUIPO. The Hague System for the International Registration of Industrial Designs allows for the registration of designs in 70 contracting states by filing one single international application with the WIPO.

Design registrations are initially valid for five years from the date of filing, and can be renewed in blocks of five years up to a maximum of 25 years.

Unregistered designs are protected against copying for a period of three years from the date on which the design was first made available to the public within the territory of the European Union. After the expiry of these three years, protection cannot be extended.

In the case of design right infringements, the owners can claim injunctive relief, rendering of account, damages, product recall and even destruction of the infringing goods.

Benelux design protection is enforceable through civil courts. The district court of The Hague has a chamber of judges specialising in IP law, and has exclusive jurisdiction for litigation related to EU designs.

The Dutch Copyright Act (Auteurswet) automatically protects the copyright of works of literature, science or art from the moment the work is created, on the condition that the work in question is an original work. The term "work" embraces many materials, such as books, brochures, films, photographs, musical works, works of visual art and geographical maps. Software is also protected under the Copyright Act. A work must be "the author’s own intellectual creation" in order to qualify for copyright protection.

Upon the death of the author, the copyright automatically devolves to the heirs. Copyright ends 70 years after the death of the work’s creator.

Copyright owners have the exclusive right to publish and copy the copyrighted works, including translations.

The Dutch Copyright Act stipulates that employers own the copyrights in works created by employees in the course of their employment.

Copyright owners have the right to take legal action against persons infringing their copyrights. Dutch civil law and Dutch copyright law provides, among other things, for the possibility of injunctions, full damages, the surrender of profits made on the infringement, to be accounted for by the infringing party, the transfer or destruction of infringing products, cost order and withdrawal from the market, or the destruction of materials predominantly used for the manufacturing of the infringing products.

In addition to copyright, there are "neighbouring rights", which are also known as "related rights" and protect the work of performers, music and film producers, and broadcasting companies.

Plant Breeders’ Rights

Plant breeders can invoke plant breeders’ rights to protect new plant varieties. The Board for Plant Varieties (Raad voor Plantenrassen) is responsible for granting plant breeders’ rights in the Netherlands.

First, the Netherlands Inspection Service for Horticulture (also known as Naktuinbouw) conducts an investigation and inspection to determine whether applications are admissible. If the results are positive, the Board grants plant breeders’ rights to the applicant.

Database Rights

Databases consisting of collections of ordered data can be protected by database rights under the Dutch Database Act.

Semiconductor Topography Rights

Semiconductor topography rights protect the design of electronic circuits on computer chips (also known as the topography of semiconductor products). These rights protect circuits designed to perform specific functions.

Tradename Law

Tradename law protects the names under which enterprises operate. Tradenames come into being automatically, as soon as enterprises start operating; owners do not have to register tradenames in the Commercial Register. The protection of tradenames is regulated in the Tradenames Act.

Trade Secrets

The Dutch Trade Secrets Act (Wet bescherming bedrijfsgeheimen) entered into force on 23 October 2018, and implements the EU Trade Secrets Directive (Directive 2016/943/EU), which sets out rules for the protection of trade secrets.

Trade secrets mean any information (i) that is not generally known or readily accessible to persons in the circles who normally deal with this type of information and is therefore of economic value, (ii) that is subject to appropriate confidentiality measures by the lawful holder, and (iii) in whose confidentiality the holder has a legitimate interest. Therefore, any owner of trade secrets must enforce "appropriate measures" and establish the confidentiality of said trade secrets to ensure protection.

The Dutch Trade Secrets Act further stipulates the actions allowed for discovering trade secrets: so-called reverse engineering is permissible, provided it does not violate contractual obligations or other mandatory statutory law. In addition, there are certain exemptions that protect whistle-blowers, journalists and employees.

In the case of infringements, trade secrets owners can demand the cessation or prohibition of the use or disclosure of the trade secret, and even product recalls regarding the infringing goods and/or their destruction, as well as damages.

The main regulations applicable to personal data protection in the Netherlands are:

  • Regulation (EU) 2016/679 of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data (GDPR); and
  • the Dutch GDPR Implementation Act (Uitvoeringswet AVG) of 16 May 2018.

The GDPR is a uniform and unitary data protection law applicable throughout the European Union and European Economic Area, and is directly applicable in the Netherlands. It allows EU Member States to enact additional implementing provisions – eg, in relation to special categories of personal data as referred to in Article 9(1) of the GDPR and providing for certain exemptions for scientific or historical research or statistical purposes, for authentication and security purposes, etc. The Netherlands has exercised this right by introducing the GDPR Implementation Act.

The GDPR defines "personal data" as any data that can be traced back to specific individuals (the data subjects) directly or indirectly. Examples of personal data include names, pseudonyms, key codes, email addresses, Internet Protocol (IP) addresses, vehicle number plates or session IDs stored in a cookie. Health data, genetic data, data about race or ethnicity, and other special categories of personal data, as well as personal data relating to criminal convictions and offences, enjoy additional protection.

The GDPR defines a controller as the party who determines the purpose and means of processing, and a processor as the party who processes personal data on behalf of a controller. Both controllers and processors are subject to the rules in the GDPR.

The GDPR stipulates that, in order to be able to demonstrate compliance, controllers must adopt internal policies and implement measures that satisfy the principles of data protection by design and data protection by default.

The processing of personal data (including disclosure to third parties) must be lawful, transparent and fair. It must be limited to specific purposes and to the data necessary for these purposes (data minimisation). Other principles are that the data must be accurate, must be kept secure and must not be stored for any longer than needed (storage limitation). The GDPR also requires businesses to inform data subjects of how their data is used and to document their compliance with the GDPR. Data subjects have the right to access their personal data, to request corrections, and to have their data deleted (or restricted) under certain conditions.

Controllers and processors must designate data protection officers (DPO) in the following circumstances:

  • if they are public authorities;
  • if their core activities consist of the regular and systematic monitoring of data subjects on a large scale; or
  • if their core activities consist of processing sensitive personal data on a large scale (including processing information about criminal offences).

Additional provisions regarding data protection and privacy in the context of telecommunications are set out in Directive 2002/58/EC of the European Parliament and of the Council of 12 July 2002 concerning the processing of personal data and the protection of privacy in the electronic communications sector EU (ePrivacy Directive) and in the Dutch Cookie Act.

The ePrivacy Directive has been implemented in the Dutch Telecommunications Act, which prohibits unsolicited communication by email (as well as faxes and automated communication systems) for commercial, non-commercial or charitable purposes, unless senders can demonstrate the recipient's prior consent. The identity of the sender, an opt-out address and e-commerce information must be provided.

Under the Cookie Act, informed consent is required for the use of cookies, unless the cookies are needed to facilitate communication, are strictly necessary for the service requested by users, or are aimed at obtaining information about the quality and/or effectiveness of the services provided and have little or no impact on the users’ personal lives. These rules apply to both first-party cookies and third-party cookies.

Pursuant to Article 3(1), the GDPR applies to the processing of personal data in the context of the activities of an establishment of a controller or a processor in the EEA, regardless of whether or not the processing takes place in the EEA. The term "establishment" extends to any real and effective activity – even a minimal one – exercised through stable arrangements in the EEA.

Businesses not established in the EEA will also be subject to the GDPR if they offer goods and services to individuals in the EEA, or if they monitor the behaviour of data subjects who are in the EEA. Non-EEA businesses that do this on a regular basis or in combination with certain high-risk activities will have to designate a representative in the EEA. Under these rules, websites directed at an EEA audience or tracking visitors from the EEA must comply with the GDPR.

No special requirements apply to data transfers from the Netherlands to other EEA countries. Transfers of personal data to countries outside the EEA, however, require – with just a few exceptions – either a decision of the European Commission that the destination country ensures an adequate level of protection (this is the case, eg, for Switzerland, Canada and Japan as well as – limited to the EU-US Privacy Shield framework – the United States), or appropriate safeguards to protect the data subjects’ rights (such as the Commission’s standard data protection clauses or binding corporate rules approved by a supervisory authority).

The Dutch Data Protection Authority (Autoriteit Persoonsgegevens) was established by the GDPR Implementation Act as an independent supervisory authority, as referred to in Article 51(1) of the GDPR. The Authority is charged with the supervision of the processing of personal data in accordance with the provisions of the GDPR and the law.

The Dutch Data Protection Authority provides guidance to individuals and organisations in the form of information and advice, supports organisations by offering practical tools, reviews requests for prior consultations and licence applications for processing data relating to criminal convictions and offences, and promotes the creation of codes of conduct, among other things.

It has the power to investigate violations, to issue orders to stop violations and to impose fines of up to EUR20 million or 4% of the worldwide annual turnover, whichever is higher.

Buren N.V.

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Buren N.V. is an independent, internationally oriented firm of lawyers, notaries and tax lawyers with offices in Amsterdam, Beijing, The Hague, Luxembourg and Shanghai. It has more than 70 legal professionals providing a full range of legal services to domestic and international business clients who conduct business nationally and globally. The firm offers sound legal solutions combined with business acumen, which ensures a holistic perspective to every legal and tax challenge faced by clients. Buren works closely with its clients to tailor solutions in alignment with the clients’ business goals. Buren has carefully established a global network with premier and reputable law firms and other service providers. It also has dedicated regional practices (China, Japan, CIS/Russia, Germany, Hong Kong and Latin America) staffed by native speakers and professionals that have a profound knowledge of local business and culture.

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