Your company wants to broaden its market and is looking for sales opportunities outside of the Netherlands. International business starts in the Netherlands and requires good preparation. Your company imports, exports or is perhaps active abroad through an employee, a branch office or through a foreign subsidiary. Or do you enter into a contract with a foreign commercial agent, local distributor or are you looking for a partnership with a local (joint venture) party?
Many aspects are linked to international business, such as marketing, legal, logistics, financial / banking, and tax aspects. Tax rules, both in the Netherlands and abroad, can have a huge impact on the success of your international activities. Thanks to the intensive cooperation with colleagues from our worldwide UHY network, located in almost 100 countries, we are able to guide you and your company in the world of regulations and to point out the opportunities and pitfalls in the various countries you wish to operate in. We can advise you and your company and ensure that you, as a Dutch small, medium or larger sized enterprise, will meet all Dutch and certainly local, foreign registration- and compliance obligations.
If an (Dutch) employee is seconded or employed abroad to explore the local market or to perform service activities, for example, as an employer you may, under certain circumstances, be faced with deduction of foreign wage tax and foreign social security contributions. The result may be that you, as a Dutch company, must have a foreign payroll administration. In practice, we regularly see that these situations are not handled correctly or on time, resulting in additional charges and fines. In addition, an administration will have to be set up with retroactive effect. As an employer, you must also be aware that the income tax position of your employee, for example with regard to the mortgage interest deduction or residency, can change.
As a Dutch company you can easily be confronted with required foreign VAT registrations. Suppose you as a Dutch company buy goods abroad, for example from a German supplier and, instead of transporting these goods to the Netherlands, you sell them to a German customer, then you as a Dutch company can be faced with the requirement to register your company for German VAT purposes and to including German VAT on the invoice. This is also the case if a Dutch company maintains a warehouse in an EU Member State and goods are transported from the Netherlands to that foreign warehouse.
Another example is a company with a web shop, which supplies goods to private individuals in other EU countries, which can result in your company being liable for VAT in the other EU member state through the distance selling scheme. VAT regulations are very strict in international situations. In our experience, the formal invoice requirements of various countries may often require your undivided attention.
Your company wishes to open an (sales) office, branch or factory abroad. You are faced with the choice to set up a local legal entity (such as a German GmbH, French SA, UK Ltd or American Inc.) or to act through a so-called "permanent establishment”, such as an office or factory abroad. Legal reasons-, such as limitation of liability, commercial- and tax reasons may determine your choice. Issues such as a planned conversion of the permanent establishment into a local entity in the future, a possible termination of the foreign branch or the possibility of transferring funds to the (Dutch) parent company the without withholding taxes should be taken into account. In both cases – be it a permanent establishment or a local entity – foreign taxation such as profit tax, VAT, wage tax and possible other local taxes will have to be dealt with.
If you have questions about international business, you can contact our specialists from the international desk to discuss or schedule a free meeting without any obligations.
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