The Netherlands is an open economy, carried along by international economic trends. In addition, global warming, the uncertainties surrounding the war in Ukraine and a volatile energy crisis are also presenting new challenges. However, these have a relatively limited direct real impact on Dutch exports. It is still difficult to estimate how far Brexit will really affect Dutch exports and hence the Dutch economy. At the same time we can see that because of Brexit international companies are settling or expanding their existing operations in the Netherlands in view of their EU interests.
The Dutch economy is not immune to the consequences of the conflict in Ukraine and the knock-on effects of the global coronavirus pandemic. Supply-chain problems persist, while the sharp rise in energy prices, continued inflationary pressures and associated monetary measures, such as interest rate rises, are presenting an obstacle to business profitability and finance, as well as investment. At the same time, these risks are also opening up economic opportunities for innovation, in the field of sustainability for example, and for new business activities. Companies and knowledge institutions are coming together to work in these areas. The Dutch economy generally seems to be withstanding the above challenges relatively well.
For many companies and certainly companies operating internationally it can also be said that the financial situation of these companies (profitability and solvency) is on average in good health. This underlines the attractive investment climate in the Netherlands.
For a number of years the Netherlands has adjusted parts of its fiscal regime in line with the worldwide attempt to combat tax avoidance and undesirable use of national legislation and mismatches in the fiscal treatment of income and cost deductions between countries’ fiscal regimes. The Dutch government has decided as far as possible to link the fiscal benefits to the real economic activities from which the Dutch economy benefits. For example the Netherlands wants to shake off its reputation as a fiscal ‘transfer country’, by reorganising its corporation and dividend tax regime such that tax avoidance by involving the Netherlands is discouraged. Not only by fiscal adjustments, but also by introducing measures that lead to more government control and more transparency regarding the activities of these companies. By gradually pursuing this more the Dutch government wants to place a greater emphasis on the fiscal stimulation of real activity and maintaining its status as an attractive host country.
Country and Government
The Netherlands has a total population of 17.8 million inhabitants (January 2023) and is governed by a monarchy. The ministers are the people’s representatives with respect to the actions of the government. The head of state does not bear political responsibility and can therefore not be held politically accountable by the parliament. In principle, elections are held every four years and, in practice, the government is made up of a coalition of parties, ensuring a certain degree of continuity as regards policy and business climate, from both a national and international perspective. The Netherlands also has 12 provinces, each with its own local authorities. The Netherlands, together with the countries of Aruba, Curacao and Sint-Maarten, form part of the Kingdom of the Netherlands. The islands of Bonaire, Sint-Eustatius and Saba all have a separate status and belong to the Caribbean part of the Kingdom.
Most of the major industries in the Netherlands are situated in the country’s western regions. The Port of Rotterdam is one of the biggest ports in the world. The railway line, the ‘Betuweroute’, ensures fast and efficient transport from the port to the European hinterland, including Germany, Central and Eastern Europe and even China. Utrecht is a central traffic junction and Schiphol is also home to the main Dutch airport, which is also one of the world’s biggest hub-airports. Eindhoven, in the southern part of the Netherlands, is known as a ‘Brainport’ for high-tech companies. The Netherlands plays an extremely important role in the functioning of key transport arteries. Amsterdam is considered as the country’s main financial centre, while The Hague is known as the legal capital of the world. Around 160 international organisations now have offices in The Hague.
The country’s perfect location and healthy financial policy have helped to ensure that the Netherlands has grown into an important import and export nation. The country’s most important industrial activities include oil refineries, chemicals, foodstuff processing and the development of electronic products. Germany, Belgium, Luxembourg, China, Great Britain, France, Russia and the United States are the country’s main import partners. All the above-mentioned countries, including Italy, are also the country’s most influential export partners. It should be noted, however, that exports to and imports from Russia are currently restricted by a number of international sanctions packages.
Below you find the full publication of Doing Business in the Netherlands. For more detailed information, please do not hesitate to contact your personal Crowe Foederer accountant.