Doing Business In... 2022

Last Updated July 12, 2022


Law and Practice


BUREN 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. It has carefully established a global network with premier and reputable law firms and other service providers. It also has dedicated regional practices (China, Japan, 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 it 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 following courts are most relevant in an international business law context:

  • 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. There are a number of competent courts for appeals – 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.


The approval requirements in the Netherlands have always been rather limited but that is about to change as a result of the EU FDI Screening Regulation (Regulation (EU) 2019/452), which entered into force in 2019. Certain sectors and industries are regulated regardless of the nationality or home state of the investor. Drinking water companies are by law required to be directly or indirectly held by Dutch public persons.

Electricity Act, Gas Act and Telecommunications Act

The Electricity Act, the Gas Act and, since 1 October 2020, the Telecommunications Act require notification to the Dutch Ministry of Economic Affairs (and Climate Policy) of any change of control with respect to an electricity, gas or telecommunications company. This screening obligation applies to any change of control that leads to a change of “predominant control” in any of the above sector-specific (electricity, gas or telecommunications) companies, regardless of the identity of the investor. A transaction triggering a change of control may be prohibited or be subject to certain conditions for reasons of public safety or supply security. If parties fail to notify the Ministry, a transaction is voidable.

Financial Supervisions Act

Certain changes of control in companies and institutions that are subject to the Financial Supervisions Act are to be reported to the Authority for Financial Markets (Autoriteit Financiële Markten) or the Dutch Central Bank (De Nederlandsche Bank).

European Union FDI Screening Regulation

The FDI Screening Regulation applies to all foreign direct investments (FDI) into each of the EU member states effective from 11 October 2020, with retrospective effect on all such investments back to 10 April 2019. This means that FDI by investors from outside the EU must 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; thereby, the screening framework aims to protect the following strategically significant sectors, among others:

  • critical infrastructure (physical or virtual) – energy, transport, water, health, communications, media, data processing or storage, aerospace, defence, electoral or financial infrastructure and sensitive facilities, including land and real estate crucial for the use of such infrastructure;
  • critical technologies – AI, robotics, semiconductors, cybersecurity, aerospace, defence, energy storage, quantum and nuclear technologies, as well as nanotechnologies and biotechnologies;
  • the supply of critical inputs, including energy, raw materials and food security;
  • access to, or control of, sensitive information, including personal data; and
  • freedom and pluralism of the media.

Dutch implementation of screening mechanisms

On 30 June 2021, the new Investments, Mergers and Acquisitions Security Test Act (Wet Veiligheidstoets investeringen, fusies en overnames) (Security Test Act) was submitted to the Dutch House of Representative. The Security Test Act will require a change of control in certain Dutch companies to be notified to and approved by the future Bureau for Investment Screening (Bureau Toetsing Investeringen – BTI). Companies that are active in the Netherlands in supplyingvital infrastructure or undertakings, or that are active in sensitive technology, fall under the scope of the Security Test Act.

The term “control” refers to the ability to exercise decisive influence on a target company, either through shareholding or on a de facto basis once the investment has taken place. Upon receipt of the notification, the BTI will examine whether the transaction can lead to a risk to national security, particularly the continuity of vital processes, the prevention of undesirable strategic independencies and the integrity and exclusivity of knowledge and information.

In principle, the approval time is within eight weeks of receipt of the notification. If a formal assessment is required, the BTI has an additional eight weeks for further investigation. Each phase can be extended separately but the maximum period is six months in total, unless any additional information is required from the parties involved.

Pending BTI approval of the transaction, a standstill obligation applies to the parties involved.

If the Security Test Act enters into force in its current form, the screening mechanism will apply retroactively to investments made after 8 September 2020.

On the basis of current legislation, a transaction is voidable if parties to a foreign investment in the electricity, gas or telecommunications sector fail to notify the Ministry.

Failure to comply with the notification obligations under the Security Test Act may lead to a direct suspension of all voting rights of the investor, pursuant to the transaction. The company will be obliged make all efforts to co-operate.

Furthermore, the BTI may require the parties to make a certain notification within three months of the transaction becoming known. In the meantime, the rights of the investor will be suspended. The BTI may also impose an administrative fine, with the maximum being 10% of the turnover.

If the transaction has taken place without the approval of the BTI, the Security Test Act stipulates that the acquisition shall be declared null and void.

Foreign investors are required to fulfil the notification requirements described in 2.1 Approval of Foreign Investments.

This section is not applicable in the Netherlands.

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


The key characteristics of a BV 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.


The key characteristics of an NV 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, the shares of which can be listed on a stock exchange.


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

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. An English translation is commonly provided.

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 must be filed and registered with the trade register, as must certain changes in the company/partnership.

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.

As of 27 March 2022, companies and legal entities must register persons who have an interest of more than 25% in the company (the ultimate beneficial owner(s) – UBO) with the UBO register.

Companies must maintain accounting records and prepare financial statements. 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 a management board consisting of managing directors, and 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 exists 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.

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, need to be in writing in order to be valid, such as non-competition clauses or probation period clauses.

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.

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, are automatically converted into indefinite contracts, once certain criteria are met. 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.

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 UWV Werkbedrijf governmental agency 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 nor 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, depending 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.

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 EUR86,000 (as of 2022), or one annual salary for employees earning more than EUR86,000. 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.

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 a minimum of 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;
  • profit-sharing or saving plans;
  • working hours or leave; and
  • 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 (on income from various worldwide sources) and non-Dutch tax residents (on income from Dutch sources).

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 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 employee social security contributions). 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 2022, the applicable rates for non-retired persons are:

  • 37.07% for income up to and including EUR35,472 (9.42% excluding social security contributions levied from employees);
  • 37.07% for income ranging between EUR35,472 and EUR69,398; and
  • 49.5% for income exceeding EUR69,398.

Income tax in box 2 is levied at a rate of 26.9% in 2022.

Income tax in box 3 is payable annually based on a deemed return on investments. The effective box 3 rates for 2022 are:

  • 0.56% for net box 3 assets up to EUR50,650 (EUR101,300 for tax payers with a tax partner);
  • 1.35% for net box 3 assets of EUR50,650 to EUR962,350 (EUR101,300 to EUR1,924,700 for tax payers with a tax partner); and
  • 1.71% for net box 3 assets of EUR962,350 and above (EUR1,924,700 on and above for tax payers with a tax partner).

In 2022, the first EUR50,650 (EUR101,300 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 EUR35,129. The applicable rate is 27.65%.

Taxes Paid by Employers

Wage tax

Employers qualifying as "withholding agents" 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 2022 are as follows:

  • general unemployment insurance (Algemeen werkloosheidsfonds – AWF) – 2.7% for contracted workers with an indefinite term and 7.7% for flex workers and temporary workers;
  • occupational disability insurance (Wet op de arbeidsongeschiktheidsverzekering – WAO or Wet werk en inkomen naar arbeidsvermogen – WIA) – 7.05% for large employers and 5.49% for small employers;
  • Health Insurance Act contribution (Zorgverzekeringswet – ZVW) – 6.75%;
  • childcare allowance contribution: 0.5%;
  • government unemployment insurance (Uitvoeringsfonds voor de overheid – UFO) – 0.68%; and
  • the Return to Work Fund (Werkhervattingskas – Whk) – 1.52% (approximate amount).

Only income up to and including EUR59,706 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, including:

  • Dutch permanent establishments or permanent representatives;
  • shareholdings of at least 5% in Dutch companies that cannot pass certain anti-abuse tests; and
  • other specific sources, including Dutch real estate, directorship services and the exploration of natural resources.

The Dutch corporate income tax rate in 2022 is 15% for taxable profits up to and including EUR395,000, and 25.8% for taxable profits exceeding this amount.

Under the Dutch participation exemption, income (eg, dividends and capital gains) derived by Dutch resident corporate taxpayers from qualifying subsidiaries is exempt from Dutch corporate income tax.

In 2022, the term of the loss carry forward facility is expanded to an unlimited period. The carry back period is one year. Profits of up to EUR1 million can be fully reduced under the application of the loss carry forward and backward facility. For profits exceeding EUR1 million, only 50% of the profit can be reduced under these facilities.

Dividend Withholding Tax

Shareholders of Dutch tax-resident companies are generally subject to 15% Dutch dividend withholding tax in respect of dividends (and other payments treated as dividends) 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 owning a share interest of at least 5% in the relevant distributing company if, in short, the corporate shareholder is a tax resident of the EU or a Dutch tax treaty jurisdiction, and is the beneficial owner of the dividend, provided it is not a hybrid transaction and certain other anti-abuse tests are met.

Application of the extensive Dutch tax treaty network 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, with the exception of a specific levy in intragroup abusive situations.

In 2022, a conditional withholding tax at a rate of 25.8% is due on 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 low tax jurisdictions (less than 9%) and jurisdictions that are on the EU blacklist of non-co-operative 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 the VAT systems of other EU member states, although 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 basis, 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 in 2022:

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

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

Innovation Box Regime

Dutch taxpayers can apply an "innovation box regime" to qualifying profits from certain self-developed intangible fixed assets.

Under the innovation box regime, profits are included in the tax base of a taxpayer only for 9/25 part, resulting in an effective tax rate of 9%.

Qualifying profits are benefits from qualifying self-developed intangible fixed assets 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, divided by any expenses incurred in relation to the creation of the relevant assets, with a maximum of 100%.

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 net group turnover is less than EUR250 million in the respective financial year and the four preceding years combined, and the benefits derived from the intangible assets are less than EUR37.5 million in the respective financial year and the four preceding financial years combined.

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

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.

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 (RVO).

The granting of this 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.

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 45.5% of the amount of the investment, which should be included on a list published by the 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.

Some investments are excluded from the application of the above-mentioned incentives.

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 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 considered.

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 to at least 95% of the profits, and represents at least 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. A new tax consolidation system is currently under discussion.

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). A VAT group is 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 a VAT entrepreneur.

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.

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.

Dutch taxpayers must have documentation available showing that the conditions of 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 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".

New rules apply based on which hybrid mismatches that arise under the application of the arm’s-length principle are neutralised from 1 January 2022 onwards. Based on these new rules, downwards fiscal profit adjustments, recognition of losses and value increases of assets acquired from affiliated parties (the value increases are also referred to as "informal capital contributions" or "deemed dividend distributions") under the application of the arm’s-length principle will be denied if, in short, the taxpayer cannot reasonably prove that a corresponding upwards adjustment will be included in the tax base in the jurisdiction of the affiliated party.

Dutch corporate income tax law includes various rules targeting tax evasion, such as limitation of interest deduction rules preventing tax base erosion, controlled foreign companies (CFC) legislation, exit taxation and the non-resident corporate income tax rules (see 5.2 Taxes Applicable to Businesses). Furthermore, there are various Dutch dividend withholding tax rules targeting tax evasion, such as anti-dividend stripping rules and certain other anti-abuse rules (see 5.2 Taxes Applicable to Businesses). Finally, Dutch tax law includes an unwritten general anti-abuse rule (fraus legis). Some of these 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:

  • profit distributions or repayments of capital to related parties;
  • capital contributions to related parties; or
  • the acquisition of certain share interests.

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 referred to 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.

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 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. Fraus legis can be applied if the Dutch tax authorities prove that the sole or predominant motive for a transaction is tax avoidance, and that the envisaged tax consequences of a transaction conflict with the purposes and rationale of the relevant law.

Anti-hybrid Rules

Dutch tax law includes anti-hybrid rules implementing the amended Anti-Tax Avoidance Directive (ATAD2). These rules include limitation of deduction rules under which hybrid mismatches between "associated enterprises", head offices and their permanent establishments or between two or more permanent establishments of an entity and mismatches under a so-called "structured arrangement" are neutralised. A hybrid mismatch is generally present if there is a double deduction of costs or a deduction of costs without inclusion of the corresponding benefit. These rules apply for the following hybrid mismatches.

  • Hybrid entity mismatches: an entity is treated as non-transparent in one jurisdiction and transparent in another jurisdiction.
  • Hybrid financial instruments: an instrument that includes debt and equity is treated as non-transparent in one jurisdiction and transparent in another jurisdiction.
  • Hybrid financial transfers: an arrangement to transfer a financial instrument causes a hybrid mismatch.
  • Imported hybrid mismatches: a hybrid mismatch situation between parties in non-EU jurisdictions is shifted to an EU member state through the use of a non-hybrid instrument.
  • Hybrid PEs: a permanent establishment is treated differently between jurisdictions as regards the presence or attribution of profit to business activities in the jurisdictions.
  • Dual resident mismatch: a payment made by a dual resident company may be deductible in multiple jurisdictions.

A separate anti-mismatch rule applies to "reversed hybrid situations", which concern entities that are treated as transparent in the jurisdiction of incorporation or registration, and that are treated as non-transparent in the jurisdictions of their participants. In 2022, reverse hybrid entities are subject to corporate income tax in the Netherlands. Furthermore, a reverse hybrid entity may also be subject to dividend withholding tax and withholding tax on interest and royalties.

Taxpayers are required to have information in their administration substantiating whether or not any hybrid mismatch rules are met. If such information is not present, the tax inspector could request the provision of such documentation and the tax payer would have the burden of proof that no hybrid situation would be present.

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.

The Dutch law refers to Annex IV of DAC6 for the definition of the reportable cross-border arrangements.

Since1 January 2021, reportable arrangements should be reported within 30 days, starting the day after:

  • the reportable arrangement is made available for implementation;
  • the reportable arrangement is ready for implementation; or
  • when the first step of the implementation is made, whichever occurs first.

An exception applies to "marketable arrangements", which should be reported every three months.

Mergers can be subject to either EU or Dutch merger control rules. The rules in the Dutch Competition Act are based on and 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 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:
    1. a combined worldwide turnover of all the merging firms of more than EUR5 billion; and
    2. an EU-wide turnover for each of at least two of the firms of more EUR250 million.
  • The second alternative requires:
    1. a worldwide turnover of all the merging firms of more than EUR2.5 billion;
    2. a combined turnover of all the merging firms of more than EUR100 million in each of at least three member states;
    3. a turnover of more than EUR25 million for each of at least two of the firms in each of those three member states; and
    4. 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 – 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 that 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 concentrations in respect of 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 (the "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) of the Dutch Competition Act).

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 – 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 of the 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 of the TFEU, companies that have a position of economic strength are prohibited from abusing that dominant position. Article 1(i) of the Dutch Competition Act defines a dominant position as a position in which one or more companies are 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, but a rebuttable presumption of dominance exists above 50%.

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.

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 themselves;
  • inventive step – the invention must not seem obvious to a professional; and
  • 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. 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 Benelux Office for Intellectual Property (BOIP). European trade marks that provide protection for all EU member states have to be applied for at the European Union Intellectual Property Office (EUIPO).

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.

The unlicensed use of registered trade marks is forbidden, and 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 orders 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.

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 refer to any information 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;
  • is subject to appropriate confidentiality measures by the lawful holder; and
  • the holder has a legitimate interest in the confidentiality thereof.

An owner of trade secrets must enforce "appropriate measures" and establish the confidentiality of said trade secrets in order to ensure protection.

The Dutch Trade Secrets Act 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 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 EU and EEA, 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), either directly or indirectly. 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;
  • be kept secure; and
  • 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).

The ePrivacy Directive and the Dutch Cookie Act

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.

Under the Cookie Act, informed consent is required for the use of cookies, unless the cookies are:

  • needed to facilitate communication;
  • strictly necessary for the service requested by users; or
  • 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 for Switzerland, Canada, Israel and Japan, for example), 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).

On 16 July 2020, the Court of Justice of the European Union (CJEU) issued its decision in Data Protection Commissioner v Facebook Ireland, Maximillian Schrems, commonly referred to as “Schrems II”. The decision invalidates the EU-US Privacy Shield Framework, which was designed to provide companies on both sides of the Atlantic with a mechanism to comply with data protection requirements when transferring personal data from the European Union to the United States in support of transatlantic commerce.

The CJEU’s decision in Schrems II also creates considerable uncertainty around another legal mechanism that legitimises transfers of personal data out of the EU: Standard Contractual Clauses (SCCs). The SCCs are a standard set of contractual terms and conditions that require both the exporter and importer of personal data to offer an equal level of protection for EU personal data. The CJEU upheld the validity of the SCCs, but noted that transferred data must receive an equivalent level of protection provided by the GDPR and the EU Charter of Fundamental Rights.

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 supervising the processing of personal data in accordance with the provisions of the GDPR and the law.

The functions of the Dutch Data Protection Authority include:

  • providing guidance to individuals and organisations in the form of information and advice;
  • supporting organisations by offering practical tools;
  • reviewing requests for prior consultations and licence applications for processing data relating to criminal convictions and offences; and
  • promoting the creation of codes of conduct.

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.

Exit Tax for Dutch Dividend Withholding Tax (DWT) Purposes

In the near future, the Dutch tax rules regarding exit taxation (see 5.7 Anti-evasion Rules) may be amended with retroactive effect. Cross-border restructurings (including cross-border changes of seat, mergers, share mergers and demergers) by a Dutch resident company (Agent) performed from 18 September 2020 onwards would be subject to DWT under certain conditions, including that the Agent has profit reserves exceeding EUR50 million. The DWT will be claimed if the Agent performs a distribution (a dividend distribution, liquidation proceeds, etc) after the cross-border restructuring.

BVm – the Dutch “B-Corp”

Dutch legislators are working on a new type of Dutch private limited liability company that is specifically aimed at social entrepreneurs: the so-called “maatschappelijke BV” (BVm). In March 2021, a regulation outline was published by the Dutch government for public consultation on the basis of which the following four key characteristics can be distinguished in order for a BV to qualify as a BVm:

  • social objectives;
  • the designation of profit in line with the social objectives/limitation on distributions;
  • the safeguarding of rights of stakeholders and organisations that serve a common interest; and
  • social reporting requirements.

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