Your company would like to expand and your choice is to set up branch office in the Netherlands. How to set up this branch office in the Netherlands?
Registration Branch office with Dutch Chambers of Commerce
A company is registered in the Netherlands with the Chambers of Commerce. In case of a branch registration, the Chambers of Commerce will make an identical registration of your company like it is in your home country. This implies that the same managing directors are being mentioned. You cannot appoint only for the Netherlands a managing director which is not managing director of the home country company registration. You can appoint a person that can represent the company under a power of attorney that is registered with the Chambers of Commerce.
The registration with the Dutch Chambers of Commerce make the branch company equal to other companies registered in the Netherlands.
Registration Branch office at Dutch tax office
The registration of the company with the Dutch tax office is done upon the registration with the Chambers of Commerce. Your branch company will be registered for corporate income tax. Most likely your company is registered for Value Added Tax (VAT) purposes, unless your business is exempted in the Netherlands/EU from VAT. You can chose to be registered for wage tax purposes. The latter applies when you employee a staff, which is most of the time the case.
The Dutch tax office will ask you to file the wage tax return on a monthly basis, the VAT return on a quarterly basis and the corporate income tax return on an annual basis.
Advantage branch office
The advantage of a branch office is that the loss made for the setup of the branch or for the period of representation is part of the world wide result of the head office. The costs of the branch immediately influences the world wide result. This is not possible if you incorporate a BV company.
Ready for business
The branch office is now ready for business. If the business is purely representation of the company and no actual business is conducted in the sense that your representatives are not processing actual services/goods, then no transfer pricing is required.
Transfer pricing
However, should the branch office do process services and goods, then a transfer agreement with the head office is required. Silly as it may sound, but making transfer pricing payments via invoices between the two entities without a transfer agreement as its base, implies that no transfer pricing has been applied.
Converting branch office into BV company
Should the branch office be successful and the company can generate enough income to cover the costs and make a good result, the head office could change the branch office into a BV company. From the moment of conversion the companies can only act between each other on At arm’s length principles.
Termination branch office
Should the branch office not have the expected result and the head office would like to terminate this operation, then this is done via an update with the Dutch Chambers of Commerce. Please note that a deregistration with the Chambers of Commerce not implies a termination with the Dutch tax office. That needs to be done separately. Not filing tax returns under the assumption that also the tax registration was deleted, will result in fines for late filing and late payment.
Orange Tax Services
We can assist you with the registration of your branch with the Dutch Chambers of Commerce at a fixed fee. The follow up registration, the bookkeeping, tax filing and administrative services we can all perform for your branch office.
