How to establish a branch/representative office?

Procedure

Branch or representative office

Registration requirements

Capital registration tax

Wage tax and VAT

Corporate income tax

What we can do for you?

Procedure

The establishment of a Branch can be done through a less formal procedure compared to the establishment of a BV. 

A Branch does not need to be incorporated, but exists as from the moment that its becomes active in the Netherlands, and the volume and nature of its activities in the Netherlands meet certain minimal standards. This will in essence also determine whether or not the foreign corporation must register for Dutch corporate tax and VAT purposes.    

In essence a Branch is recognized as from the day its activities are started, and it is registered as such in the Trade Register of the Chamber of Commerce.  

Branch or Representative Office

If we talk about a branch we mean a location or office from which business activities are carried out.  A Representative Office may also be a location or office, but generally speaking no business activities towards third parties are conducted there. A typical activity of a Representative Office is for instance market research, providing product information, etc.

The relevance of the distinction between a Branch and a Representative office is that the latter does generally not have to be registered with the Chamber of Commerce (in fact registration is not possible and will be denied) and furthermore a Representative Office does usually not constitute a taxable presence in the Netherlands for the levy of Dutch corporate income tax.

A Representative Office. like a Branch, can have employees. If so, the foreign entity needs to register itself as a withholding agent with the Dutch tax authorities, and will have the obligation to set up and maintain a Dutch payroll, a withhold salary taxes (wage tax and social security premiums), and pay them to the Dutch tax office. The registration as foreign employer, and the maintenance of a Dutch payroll in this capacity, does in essence no affect the status of the foreign corporation for the levy of Dutch corporate income tax. 

The Dutch VAT incurred by a representative office is under certain conditions eligible for refund. In order to get a refund, the foreign company should file a periodical request with the Dutch tax authorities.

Registration requirements

A branch should be registered with the Chamber of Commerce, the Dutch tax authorities and the social security office. The information to be provided upon registration mainly regards information about the foreign corporation (head office) and is very much the same as for a BV. The information to be provided includes a complete and concrete description of the actual business activities, services and/or products of the foreign corporation and the Dutch branch.

If the company is registered at the Chamber of Commerce, the company will receive a so-called legal person's information number (in Dutch: Rechtspersonen Samenwerkingsverbanden Informatienummer (RSIN)). The Chamber of Commerce will send the information of the company directly to the tax authorities. Based on the RSIN number, the tax authorities will determine whether the relevant company should be registered for corporate income tax purposes, VAT and/or wage tax purposes. The company will receive further information from the tax authorities after app. five working days (i.e. after registration at the Chamber of Commerce).

It is important to monitor the tax registration process in more detail. We can help you with this monitoring.

Capital registration tax

The establishment of a branch and in addition the contribution of capital to the branch does not attract Dutch capital registration tax (capital registration tax is abolished).

Wage tax and VAT

A branch is usually subject to the same wage tax and VAT regime as a BV. It will depend on the nature and volume of the activities of the branch whether or not the branch becomes subject to Dutch corporate income tax.

Corporate income tax

The Dutch criteria for a taxable presence are quite easy to comply to: usually if the branch is registered with the Chamber of Commerce it will according to the Dutch criteria be considered a taxable branch. However, under the tax treaties concluded with the country where the head office of the branch is located, special rules may apply which forbid the Netherlands to exercise their right on taxation.

We refer to the page Dutch tax treaties for an overview of the countries with which the Netherlands have concluded tax treaties. Every tax treaty contains its own special branch rules but most treaties are based on the same principles.

What can we do for you?

We have broad experience with foreign companies, which have set up a branch in the Netherlands. We can advise you on an appropriate strategy and deal with the registration requirements. Please feel free to contact us, if you require more information. Our services include:

• Advice on tax implications of the Dutch activities (taxable or not)
• Negotiate advance ruling on non-taxable status
• Advice on employee tax implications 
• Advice on VAT implications
• Deal with registration formalities
• Deal with tax compliance matters 
• Deal with VAT refund requests for foreign entrepreneurs

 If you are interested in our services, please feel free to contact us via e-mail or to call us at our offices in Rotterdam on the number +31 (10) 2010466 or Amsterdam + 31 (20) 5709440 

We will make time for you!