2022 Investment Climate Statements: The Netherlands
The Netherlands consistently ranks among the world’s most competitive industrialized economies. It offers an attractive business and investment climate and remains a welcoming location for business investment from the United States and elsewhere.
Strengths of the Dutch economy include the Netherlands’ stable political and macroeconomic climate, a highly developed financial sector, strategic location, well-educated and productive labor force, and high-quality physical and communications infrastructure. Investors in the Netherlands take advantage of its highly competitive logistics, anchored by the largest seaport and fourth-largest airport in Europe. In telecommunications, the Netherlands has one of the highest levels of internet penetration in the European Union (EU) at 96 percent and hosts one of the largest data transport hubs in the world, the Amsterdam Internet Exchange.
The Netherlands is among the largest recipients and sources of foreign direct investment (FDI) in the world and one of the largest historical recipients of direct investment from the United States. This can be attributed to the Netherlands’ competitive economy, historically business-friendly tax climate, and many investment treaties containing investor protections. The Dutch economy has significant foreign direct investment in a wide range of sectors including logistics, information technology, and manufacturing. Dutch tax policy continues to evolve in response to EU attempts to harmonize tax policy across member states.
Until the COVID-19 crisis, economic growth had placed the Dutch economy in a very healthy position, with successive years of a budget surplus, public debt that was well under 50 percent of GDP, and record-low unemployment of 3.5 percent. This allowed the Dutch government significant fiscal space to implement coronavirus relief measures. In response to COVID, the Dutch government implemented wide-ranging support for businesses affected by the COVID crisis, including support to cover employee wages, benefits to self-employed professions to bridge a loss of income, and compensation for fixed costs other than wages. The financial support measures added up to about $70.5 billion (€60 billion) in the first year of the crisis. These programs prevented a wave of bankruptcies – bankruptcy filings in 2020 and 2021 were the lowest in two decades.
The new coalition government announced in early 2022 plans to be climate neutral by 2050. The government said it would adjust domestic climate goals to at least 55 percent CO2 reduction by 2030 compared to 1990, with ambitions to aim higher for a 60 percent reduction. The government has named a Minister for Climate and Energy Policy to work on domestic issues in addition to a Climate Envoy focused on international efforts. The Netherlands joined the U.S.-EU Global Methane Pledge and promised to end all investment in new coal power generation domestically and internationally. In April 2022, the government joined the AIM for Climate initiative.
The 2019 National Climate Agreement contains policy and measures to achieve climate goals through agreements with various economic sectors on specific actions. The participating sectors include electricity, industry, “built environment,” traffic and transport, and agriculture.
The Netherlands business community suffered a two-pronged loss in the planned departure of two of its major national corporate champions. Energy leader Shell and food and household products conglomerate Unilever announced in 2021 a relocation of their corporate headquarters from The Hague and Rotterdam, respectively, to London. The companies cited concerns with Dutch tax law relative to dividend taxation and need for consolidated management structure. (Note: Both companies previously split their corporate governance between the Netherlands and the UK. End Note.)
In March 2022, the Dutch Central Planning Bureau (CPB) published its 2022 economic projections. Due to the Russian invasion of Ukraine, the outlook was marked by uncertainty and flagged “even higher” energy prices as the most important economic consequence. Because of increased energy prices and high inflation from the COVID pandemic, CPB estimates a 5.2% inflation rate for 2022 with a range of 6.0% and 3.0% depending on how long energy prices remain high. CPB estimated economic growth of 3.6% in 2022 and 1.7% in 2023. CPB predicted unemployment at 4 percent in 2022, down from 4.2% in 2021. The low unemployment rate reflects a similar challenge also faced by the United States – businesses are finding it difficult to recruit qualified staff. Government debt is expected to rise to 61 percent of GDP by 2025 due to increased spending under the new coalition government, including on defense, outlays to support an aging population, and support to low-income families to offset inflation in energy and food prices.
According to the U.S. Bureau of Economic Analysis (BEA), when measured by country of foreign parent, the Netherlands is the second largest destination for U.S. FDI abroad in 2020 after the UK, holding $844 billion out of a total of $6.1 trillion total outbound U.S. investment – about 14 percent. Investment from the Netherlands contributed $484 billion FDI to the United States, making it the fourth largest investor at the end of 2020 of about $4.6 trillion total inbound FDI to the United States– about 10.5 percent. Measured by ultimate beneficial owner (UBO), the Netherlands was the seventh largest investor at $236 billion. For the Netherlands, outbound FDI to the United States represented 14 percent of all direct investment abroad.
1. Openness To, and Restrictions Upon, Foreign Investment
Policies Towards Foreign Direct Investment
In 2020, the Netherlands was the 18th largest economy in the world and is the fifth largest economy in the European Union with a gross domestic product (GDP) in 2020 of over $913 billion according to the World Bank. The Netherlands consistently ranks among the world’s most competitive industrialized economies in global rankings that measure competitiveness, innovation, and access to infrastructure. According to the OECD and the International Monetary Fund (IMF), in 2020 the Netherlands was the second largest source and recipient for foreign direct investment (FDI) in the world, although the Netherlands is not the ultimate destination for the majority of this investment. Similarly, in its 2020 investment report, the UN Conference on Trade and Development (UNCTAD) identified the Netherlands as the world’s fourth largest destination of global FDI inflows and the third largest source of FDI outflows.
The government of the Netherlands maintains liberal policies toward FDI, has established itself as a platform for third-country investment with some 145 investment agreements in force, and adheres to the Organization for Economic Cooperation and Development (OECD) Codes of Liberalization and Declaration on International Investment, including a National Treatment commitment and adherence to relevant guidelines.
The Netherlands is the recipient of eight percent of all FDI inflow into the EU. The Netherlands has become a key export platform and pan-regional distribution hub for U.S. firms. Roughly 60 percent of total U.S. foreign-affiliate sales in the Netherlands are exports, with the bulk of them going to other EU members. The nearly 3,000 U.S. owned corporations represent more than 20% of all foreign owned firms in the Netherlands and they create more than 200,000 jobs. Foreign owned firms operate predominantly in business services, wholesale, and retail sectors.
Although policy makers feared that Brexit would have an extremely negative impact on the Dutch economy, the Netherlands is benefitting from companies exiting the United Kingdom in search of an anchor location inside the EU Single Market. The European Medicines Agency (EMA) also relocated from London to Amsterdam. According to the Netherlands Foreign Investment Agency (NFIA), since the referendum in 2016, 316 companies have chosen to relocate to the Netherlands. The companies are mainly from the health, creative industry, financial services, and logistics sectors. The Dutch Authority for the Financial Markets (AFM) expects Amsterdam to emerge as a main post-Brexit financial trading center in Europe for automated trading platforms and other ‘fintech’ firms, as more of these companies cross the Channel to keep their European trading within the confines of the EU regulatory oversight.
Dutch tax authorities provide a high degree of customer service to foreign investors, seeking to provide transparent, precise tax guidance that makes long-term tax obligations more predictable. Advance Tax Rulings (ATR) and Advance Pricing Agreements (APA) are guarantees given by local tax inspectors regarding long-term tax commitments for a particular acquisition or greenfield investment. Dutch tax policy continues to evolve as the EU seeks to harmonize tax measures across member states. A more detailed description of Dutch tax policy for foreign investors can be found at https://investinholland.com/why-invest/incentives-taxes/ .
Dutch corporations and branches of foreign corporations are currently subject to a corporate tax rate of 25 percent on taxable profits, which puts the Netherlands in the middle third among EU countries’ corporate tax rates and below the tax rates of its larger neighbors. Corporate income tax rates in the Netherlands are currently 15% for the first €395,000 of taxable profits and 25.8% for taxable profits exceeding €395,000 in 2022.
Dutch corporate taxation generally allows for exemption of dividends and capital gains derived from a foreign subsidiary. Surveys of the corporate tax structure of EU member states note that both the corporate tax rate and the effective corporate tax rate in the Netherlands are around the EU average. Nevertheless, the Dutch corporate tax structure ranks among the most competitive in Europe considering other beneficial measures such as the possibility for the tax authorities to provide corporations with clarity on future treatment of taxes via “advance” rulings and agreements such as ATR and/or APA. The Netherlands also has no branch profit tax and does not levy a withholding tax on interest and royalties.
Maintaining an investment-friendly reputation is a high priority for the Dutch government, which provides public information and institutional assistance to prospective investors through the Netherlands Foreign Investment Agency (NFIA) ( https://investinholland.com/ ). Historically, over a third of all “greenfield” FDI projects that NFIA attracts to the Netherlands originate from U.S. companies. Additionally, the Netherlands business gateway at https://business.gov.nl/ – maintained by the Dutch government – provides information on regulations, taxes, and investment incentives that apply to foreign investors in the Netherlands and clear guidance on establishing a business in the Netherlands. The NFIA maintains five regional offices in the United States (Washington, DC; Atlanta; Chicago; New York City; and San Francisco). The American Chamber of Commerce in the Netherlands ( https://www.amcham.nl/ ) also promotes U.S. and Dutch business interests in the Netherlands.
Limits on Foreign Control and Right to Private Ownership and Establishment
With few exceptions, the Netherlands does not discriminate between national and foreign individuals in the establishment and operation of private companies. The government has divested its complete ownership of many public utilities, but in a number of strategic sectors, private investment – including foreign investment – may be subject to limitations or conditions. These include transportation, energy, defense and security, finance, postal services, public broadcasting, and the media.
Air transport is governed by EU regulation and subject to the U.S.-EU Air Transport Agreement. U.S. nationals can invest in Dutch/European carriers as long as the airline remains majority-owned by EU governments or nationals from EU member states. Additionally, the EU and its member states reserve the right to limit U.S. investment in the voting equity of an EU airline on a reciprocal basis that the United States allows for foreign nationals in U.S. carriers.
Other Investment Policy Reviews
The Netherlands has not recently undergone an investment policy review by the OECD, World Trade Organization (WTO), or UNCTAD.
The Dutch American Friendship Treaty (DAFT) from 1956 gives U.S. citizens preferential treatment to operate a business in the Netherlands, providing ease of establishment that most other non-EU nationals do not enjoy. U.S. entrepreneurs applying under the DAFT do not need to satisfy a strict, points-based test and do not have to meet pre-conditions related to providing an innovative product. U.S. entrepreneurs setting up a sole proprietorship only have to register with the Chamber of Commerce and demonstrate a minimum investment of 4,500 euros. DAFT entrepreneurs receive a two-year residence permit, with the possibility of renewal for five subsequent years.
In order to sustain the top ten ranking of the Netherlands among the world’s largest exporting nations, the Minister for International Trade and Development Cooperation within the Ministry for Foreign Affairs coordinates with the government and private sector trade promotion agencies in setting an annual ‘overseas trade mission’ agenda. The Netherlands Enterprise Agency (https://english.rvo.nl/) has the lead in organizing a custom-tailored and topical format of trade missions to accompany State visits and other official delegations abroad. Participation in these missions is open to any enterprise established in the Netherlands.
2. Bilateral Investment and Taxation Treaties
The Netherlands has bilateral investment treaties (BITs) or treaties that include investment chapters with about 100 countries or regions.
Follow these links for a continuously updated list, the legal status, and texts of these agreements:
The Netherlands is a member of the OECD Inclusive Framework on Base Erosion and Profit Shifting and party to the Inclusive Framework’s October 2021 deal on the two-pillar solution to global tax challenges, including a global minimum corporate tax.
3. Legal Regime
Transparency of the Regulatory System
Dutch commercial laws and regulations accord with international legal practices and standards; they apply equally to foreign and Dutch companies. The rules on acquisition, mergers, takeovers, and reinvestment are nondiscriminatory. The Social Economic Council (SER)–an official advisory body consisting of employers’ representatives, labor representatives, and government appointed independent experts–administers Dutch mergers and acquisitions rules. The SER’s rules serve to protect the interests of stakeholders and employees. They include requirements for the timely announcement of mergers and acquisitions (M&A) and for discussions with trade unions.
As an EU member and Eurozone country, the Netherlands is firmly integrated in the European regulatory system, with national and European institutions exercising authority over specific markets, industries, consumer rights, and competition behavior of individual firms.
Financial markets are regulated in an interconnected EU and national system of prudential and behavioral oversight. The domestic regulators are the Dutch Central Bank (DNB) and the Netherlands Authority for the Financial Market (AFM). Their EU counterparts are the European Central Bank (ECB) and the European Securities and Markets Authority (ESMA).
The Dutch Civil Code requires boards’ statements of large companies to include non-financial performance indicators in their annual report. EU law is relevant in the Netherlands. Companies often voluntarily disclose ESG-related issues and refer to the GRI Sustainability Reporting Guidelines and the Task Force on Climate-related Financial Disclosures recommendations on its website. Some sectors such as the pension sector have committed to the 2018 Covenant on International Socially Responsible Investing (IMVB). In December 2021, the Netherlands became the latest European government to announce plans to introduce mandatory human rights and environmental due diligence (HREDD) legislation at a national level should the EU continue to delay an introduction of mandatory HREDD legislation.
Traditionally, public consultation in drafting new laws is achieved by invitation of various civil society bodies, trade associations, and organizations of stakeholders. In addition, the SER has a formal mandate to provide the government with advice, both solicited and of its own accord. Recently, the SER has provided the government with advice on emissions reduction of greenhouse gases, energy transition, and pension reforms. New laws and regulations are subject to legal review by the Council of State and must be approved by the Second and First Chambers of Parliament. The World Bank scores the Netherlands at 4.75 out of 5 on its Global Indicators of Regulatory Governance which assesses transparency around proposed regulations and access to enacted laws. All proposed regulations are published publicly including on a unified website and on the website of the relevant ministry or regulator.
International Regulatory Considerations
The Netherlands is a member of the WTO and does not maintain any measures that are inconsistent with obligations under Trade Related Investment Measures (TRIMs).
Legal System and Judicial Independence
Dutch contract law is based on the principle of party autonomy and full freedom of contract. Signing parties are free to draft an agreement in any form and any language, based on the legal system of their choice. Dutch corporate law provides for a legal and fiscal framework that is designed to be flexible. This element of the investment climate makes the Netherlands especially attractive to foreign investors.
The Dutch civil court system has a chamber dedicated to business disputes, called the Enterprise Chamber. The Enterprise Chamber includes judges who are experts in various commercial fields. They resolve a wide range of corporate disputes, from corporate governance disputes to high-profile shareholder conflicts over mergers or hostile take-overs.
Since 2019, the Enterprise Chamber houses an English-language commercial court. The Netherlands Commercial Court (NCC) and its appellate chamber (NCCA) offer parties the opportunity to litigate in English and will provide judgments in English. Both the NCC and NCCA will focus primarily on major international commercial cases. See also: https://www.rechtspraak.nl/English/NCC/Pages/default.aspx
Laws and Regulations on Foreign Direct Investment
The Dutch government has demonstrated a growing concern with the protection of its open, market-based economy against foreign state malign activity. The Netherlands is in the process of establishing a formal domestic investment screening mechanism as per EU directive. In May 2020, the long-awaited investment screening law in the telecommunications sector came into force. In December 2020, the law on establishing a framework for investment screening for all critical sectors came into force, aimed at protecting Dutch national security.
In concert with the European Union, the Dutch government is considering how to best protect its economic security and also continue as one of the world’s most open economies. The Netherlands has foreign investment and procurement screening mechanisms in place for certain vital sectors that could present national security vulnerabilities. The first such laws (one on investment screening per EU directive and one on unwanted outside influence in the telecommunications sector) passed in 2020. The government is in the process of expanding screening measures to cover sensitive technologies more broadly, and a new law, which will apply retroactively from September 2020, is expected to be passed by Parliament in 2022. Among policymakers, foreign investment and procurement screening is considered a non-partisan issue with support across the political spectrum. There is no requirement for Dutch nationals to have an equity stake in a Dutch registered company.
Competition and Antitrust Laws
Structural and regulatory reforms are an integral part of Dutch economic policy. Laws are routinely developed for stimulating market forces, liberalization, deregulation, and tightening competition policy.
As an EU and Eurozone member, the Netherlands is firmly integrated in the European regulatory system with national and European institutions exercising authority over specific markets, industries, consumer rights, and competition behavior of individual firms.
The Authority for Consumers and Markets (ACM) provides regulatory oversight in three key areas: consumer protection, post and telecommunications, and market competition.
Expropriation and Compensation
The Netherlands maintains strong protection on all types of property, including private and intellectual property rights, and the right of citizens to own and use property. Expropriation of corporate assets or the nationalization of industry requires a special act of Parliament, as demonstrated in the nationalization of ABN AMRO during the 2008 financial crisis (the government returned it to public shareholding through a 2016 IPO). In the event of expropriation, the Dutch government follows customary international law, providing prompt, adequate, and effective compensation, as well as ample process for legal recourse.
The U.S. Mission to the Netherlands is unaware of any recent expropriation claims involving the Dutch government and a U.S. or other foreign-owned company.
ICSID Convention and New York Convention
As a member of the International Center for the Settlement of Investment Disputes (ICSID), the Netherlands accepts binding arbitration between foreign investors and the state. The Netherlands is one of the initial signatories of the New York Convention on Recognition and Enforcement of Foreign Arbitral Awards (UNCITRAL) and permits local enforcement of arbitration judgments decided in other signatory countries.
The Hague is the seat of the Permanent Court of Arbitration (PCA), an intergovernmental organization that is not a court, but like the ICSID, is a facilitator of independent arbitral tribunals to resolve conflicts between PCA member states, including the United States.
International Commercial Arbitration and Foreign Courts
The Netherlands has maintained a Treaty of Friendship, Commerce, and Navigation with the United States since 1957 that provides for national treatment and free entry for foreign investors, with certain exceptions. The Embassy is not aware of any American company raising an investment dispute with the Netherlands over the last 10 years.
Dutch bankruptcy law is governed by the Dutch Bankruptcy Code, which applies both to individuals and to companies. The code covers three separate legal proceedings: 1) bankruptcy, which has a goal of liquidating the company’s assets; 2) receivership, aimed at reaching an agreement between the creditors and the company; and 3) debt restructuring, which is only available to individuals.
4. Industrial Policies
General requirements to qualify for investment subsidy schemes apply equally to domestic and foreign investors. Industry-specific, targeted investment incentives have long been a tool of Dutch economic policy to facilitate economic restructuring and to promote economic priorities. Such subsidies and incentives are spelled out in detailed regulations. Subsidies are in the form of tax credits disbursed through corporate tax rebates or direct cash payments if there is no tax liability. For an overview of government subsidies and investment programs, see: http://english.rvo.nl/subsidies-programmes.
FDI tends to be concentrated in growth sectors including information and communications technology (ICT), biotechnology, medical technology, electronic components, and machinery and equipment. Investment projects are predominantly in value-added logistics, machinery and equipment, and food.
Since 2010, the government shifted from traditional industrial support policies to a comprehensive approach to public/private financing agreements in areas where investment is deemed of strategic value. Government, academia, and industry work together to determine recipient sectors for co-financed (public and private) R&D. The government’s industrial policy focuses on nine “Top Sectors”: creative industries, logistics, horticulture, agriculture and food, life sciences, energy, water, chemical industry, and high tech. (For more information, see https://www.government.nl/topics/enterprise-and-innovation/contents/encouraging-innovation.)
Foreign Trade Zones/Free Ports/Trade Facilitation
The Netherlands has no free trade zones (FTZs) or free ports where commodities can be processed or reprocessed tax-free. However, FTZs exist for bonded storage, cargo consolidation, and reconfiguration of non-EU goods. This reflects the key role that transport, transit, logistics, and distribution play in the Dutch economy. Dutch Customs oversee a large number of customs warehouses, free warehouses, and free zones along many of the Netherlands’ trade routes and entry points.
Schiphol Airport handles around 1.7 million tons of goods per year for distribution, making it the third largest cargo airport in Europe. In 2021, a relaxation of COVID-19 measures and rebound in global trade activity combined to boost air freight volumes in cargo operations. Specific parts of Schiphol are designated customs-free zones. The Port of Rotterdam is Europe’s largest seaport by volume, handling over 37 percent of all cargo shipping on Europe’s Le Havre-Hamburg coastline and processing nearly 470 million tons of goods and handling a record 15.3 million twenty-foot equivalent unit (TEU) containers in 2021. Port of Rotterdam’s throughput in 2021 matched the pre-pandemic level of 2019 and rose by over seven percent compared with 2020. Many agents operate customs warehouses under varying customs regimes on the premises of the Port of Rotterdam.
Performance and Data Localization Requirements
There are no trade-related investment performance requirements in the Netherlands and no requirements for employment of local capital or managerial personnel.
The Dutch government does not follow a “forced localization” policy and does not require foreign information technology (IT) providers to turn over source code or provide access to surveillance. The Dutch Data Protection Authority (DPA) monitors and enforces Dutch legislation on the protection of personal data (https://autoriteitpersoonsgegevens.nl/en). The Dutch DPA is active in the EU’s Article 29 Working Party, the collective of EU national DPAs. The primary law on protection of personal data in the Netherlands is the Dutch law implementing EU directive 95/46/EC. The European General Data Protection Regulation (GDPR), which is directly applicable in member states, entered into force May 25, 2018, as part of the EU’s comprehensive reform on data protection. The Dutch DPA recognized U.S. firms that registered and self-certified with the U.S.-EU Safe Harbor program that began in 2000 and focused on safe transfer of personal data between the European Union and the United States.
On July 12, 2016, the European Commission issued an adequacy decision on the EU-U.S. Privacy Shield framework which replaced the Safe Harbor program, providing a legal mechanism for companies to transfer personal data from the EU to the United States. Although the Dutch government strongly supported Privacy Shield, a 2020 verdict of the European Court of Justice declared the Privacy Shield framework inadequate for the protection of personal data as it found that U.S. intelligences services have overly broad powers of access. In March 2022, the United States and European Union announced a political agreement, following over a year of negotiations, on a new Trans-Atlantic Data Privacy Framework to replace the invalidated Privacy Shield instrument. The new framework will enter into force through a series of legal adoptions within the EU and an Executive Order in the United States.
5. Protection of Property Rights
The Netherlands fully complies with international standards on protection of real property. The number of procedures involved is at the OECD average, while the processing time of 2.5 days is nearly ten times faster than the OECD average.
The Netherlands’ Cadaster, Land Registry, and Mapping Agency (Cadaster) was established in 1832 to collect and register administrative and spatial data on real property. The Cadaster is publicly available and can be accessed online (https://www.kadaster.com/).
Intellectual Property Rights
The Netherlands is a member of the World Intellectual Property Organization (WIPO) and party to many of its treaties, including the Berne Convention, the Paris Convention, the Patent Cooperation Treaty (PCT), the WIPO Copyright Treaty (WCT), and the WIPO Performances and Phonograms Treaty (WPPT). The Netherlands generally conforms to accepted international practice for intellectual property rights (IPR), including the World Trade Organization (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). Despite participating in negotiations on the Anti-Counterfeiting Trade Agreement (ACTA) treaty, the Netherlands, like other EU member states, has stated it will not sign the treaty in its current form. The EU has requested the European Court of Justice to advise on the compatibility of ACTA with existing European treaties, in particular the EU Charter of Fundamental Rights of the European Union.
The Netherlands is a signatory to the European Patent Convention and so is a contracting state of the European Patent Organization. In the Netherlands, patents for foreign investors are granted retroactively to the date of the original filing in the home country, provided the application is made through a Dutch patent lawyer within one year of the original filing date. Dutch patents are valid for 20 years, in line with EU regulations. Because the Netherlands and the United States are both party to the PCT, U.S. inventors may file for rights in the Netherlands using the PCT application. Legal procedures exist for compulsory licensing if the patent is inadequately used after a period of three years, but these procedures have rarely been invoked.
With the implementation of EU Directive 2004/48 on the enforcement of IPR, rights holders have a number of instruments at their disposal to enforce their rights in civil court. In addition to possible civil remedies, all IPR laws contain penal bylaws and reference to the Criminal Code. In 2012, the Dutch Parliament passed legislation that strengthened oversight and coordination of seven different collective institutions that oversee control, administration, and remuneration for commercial use of IPR. Policymakers agree on the need to raise public awareness of IPR rules and regulations and to strengthen enforcement. The Dutch government has recognized the need to protect IPR, and law enforcement personnel have worked with industry associations to find and seize pirated software. Current Dutch IPR legislation explicitly includes computer software under copyright statutes.
The Netherlands has resisted criminalizing online copyright infringement for personal use, instead placing a surcharge on the sales of blank media, such as CDs, DVDs, and USB storage devices, to remunerate rights holders for the downloading of material from legal and illegal sources alike.
The Netherlands is not included in the USTR Special 301 Report but is mentioned as hosting infringing websites in the 2021 Notorious Markets List.
The Netherlands is home to the world’s oldest stock exchange – established four centuries ago – and Europe’s first options exchange, both located in Amsterdam. The Amsterdam financial exchanges are part of the Euronext group that operates stock exchanges and derivatives markets in Amsterdam, Brussels, Lisbon, and Paris. Dutch financial markets are fully developed and operate at market rates, facilitating the free flow of financial resources. The Netherlands is an international financial center for the foreign exchange market, Eurobonds, and bullion trade.
The flexibility that foreign companies enjoy in conducting business in the Netherlands extends into the area of currency and foreign exchange. There are no restrictions on foreign investors’ access to sources of local finance.
Money and Banking System
The Dutch banking sector is firmly embedded in the European System of Central Banks, of which the Dutch Central Bank (DNB) is the national prudential banking supervisor. AFM, the Dutch securities and exchange supervisor, supervises financial institutions and the proper functioning of financial markets and falls under the EU-wide European Securities and Markets Authority (ESMA). The highly concentrated Dutch banking sector is over three times as large as the rest of the Dutch economy, making it one of Europe’s largest banking sectors in relation to GDP. Three banks, ING, ABN AMRO, and Rabobank, hold nearly 85 percent of the banking sector’s total assets. The largest bank, ING, has a balance sheetof just over $1 trillion (€937 billion).
The DNB does not consider Bitcoin and similar cryptocurrencies to be legitimate currency, as they do not fulfill the traditional purpose of money as a stable means of exchange or saving, and their value is not supported via central bank guarantee mechanisms. DNB considers current cryptocurrencies to be risky investments that are especially vulnerable to criminal abuse and has begun requiring that providers of financial services related to exchange and deposit of cryptocurrencies register with the DNB, per anti-money laundering (AML) legislation.
The DNB acknowledges that, in the future, cash transactions will likely be replaced with digital transactions that require central bank-issued and -guaranteed cryptocurrencies. Dutch society has already embraced cash-less commerce to a high degree – seventy percent of over-the-counter shopping is via PIN transactions and contactless payment – and DNB is participating with central banks from Canada, Japan, England, Sweden, Switzerland, and the Bank for International Settlements in research about a possible central bank-issued cryptocurrency.
Foreign Exchange and Remittances
The Netherlands is a founding member of the EU and one of the first members of the Eurozone. The European Central Bank supervises monetary policy, and the president of the Dutch Central Bank (DNB) sits on the European Central Bank’s Governing Council.
There are no restrictions on the conversion or repatriation of capital and earnings (including branch profits, dividends, interest, royalties), or management and technical service fees, with the exception of the nominal exchange-license requirements for nonresident firms.
The Netherlands does not impose waiting periods or other measures on foreign exchange for remittances. Similarly, there are no limitations on the inflow or outflow of funds for remittance of profits or revenue. The Netherlands, as a Eurozone member, does not engage in currency manipulation tactics. The Netherlands has been a member of the Financial Action Task Force) FATF since 1990 and – because of the membership of its Caribbean territories in the Caribbean FATF (C-FATF) – strongly supports C-FATF.
With the promulgation of additional, preventative anti-money laundering and counterfeiting legislation, the Netherlands has remedied many of the deficiencies revealed in a 2011 Mutual Evaluation Report. As a result, FATF removed the Netherlands from its “regular follow-up process” in February 2014. The State Department’s Bureau of International Narcotics and Law Enforcement’s International Narcotics Control Strategy Report (INCSR) notes the Netherlands is a major trade and financial center and, consequently, an attractive venue for money laundering but the Netherlands is generally making progress addressing money laundering vulnerabilities.
The Dutch government maintains an equity stake in a small number of enterprises and some ownership in companies that play an important role in strategic sectors. In particular, government-controlled entities retain dominant positions in gas and electricity distribution, rail transport, and the water management sector. The Netherlands has an extensive public broadcasting network, which generates its own income through advertising revenues but also receives government subsidies. For a complete list of government-owned entities, please see: https://www.rijksoverheid.nl/onderwerpen/staatsdeelnemingen/vraag-en-antwoord/in-welke-ondernemingen-heeft-de-overheid-aandelen
Private enterprises are allowed to compete with public enterprises with respect to market access, credits, and other business operations such as licenses and supplies. Government-appointed supervisory boards oversee state-owned enterprises (SOEs). In some instances involving large investment decisions, SOEs must consult with the cabinet ministry that oversees them. As with any other firm in the Netherlands, SOEs must publish annual reports, and their financial accounts must be audited. The Netherlands fully adheres to the OECD Guidelines on Corporate Governance of SOEs.
There are no ongoing privatization programs in the Netherlands.
8. Responsible Business Conduct
The Netherlands is a global leader in corporate social responsibility (CSR). Principles of CSR are promoted and prescribed through a range of corporate, governmental, and international guidelines. In general, companies carefully guard their CSR reputation and consumers are increasingly opting for products and services that are produced in an ethical and sustainable manner. The Netherlands adheres to OECD Guidelines for Multinational Enterprises, and the Dutch Ministry of Economic Affairs and Climate Policy houses the National Contact Point (NCP) that promotes OECD guidelines and helps mediate concerns that persons, non-governmental organizations (NGOs), and enterprises may have regarding implementation by a specific company. For more information, visit http://www.oecdguidelines.nl.
The Dutch government strongly encourages foreign and local enterprises to follow UN Guiding Principles on Business and Human Rights, which states that businesses have a social responsibility to respect the same human rights norms in other countries as they do in the Netherlands.
Under the law, there is no differentiation for men and women regarding equal access to investment. Furthermore, no groups are excluded from participating in financial markets and the financial system.
The Netherlands has strong standards for corporate governance. Publicly listed companies are required to publish audited financial reports. As of 2017, the EU requires these companies to include a chapter on Responsible Business Conduct.
The government has national strategies for climate and natural capital. The Netherlands’ 2019 Climate Act sets legally binding targets to reduce greenhouse gas (GHG) emissions 49 percent by 2030 compared to 1990 levels, and 95 percent by 2050. The 2019 National Climate Agreement contains the policy and measures to achieve these climate goals through agreements with various economic sectors on specific actions. In addition, a lower court ruling later upheld by the Supreme Court requires the government to reduce GHG emissions 25 percent by 2020 from 1990 levels. The case set an international precedent for climate-related legal action and argued that not addressing harmful climate change endangered the human rights of Dutch citizens. The 2017 Dutch Nature Conservation Act protects nature reserves as well as certain plants and animals. The government published in 2014 its strategy on managing the natural environment up to 2025 entitled “The Natural Way Forward: Government Vision 2014.” A central part of the strategy and legislation is the National Ecological Network, which is made up of existing and planned nature areas. The government commissions work on monitoring and accounting for biodiversity and ecosystem services from Statistics Netherlands and Wageningen university.
The 2019 National Climate Agreement contains the policy and measures to achieve climate goals through agreements with various economic sectors on specific actions. The participating sectors include electricity, industry, “built environment,” traffic and transport, and agriculture.
The government has designated 10 percent of the Netherlands land area as “Natura 2000” areas under the EU’s Habitats Directive. These areas are subject to ceilings on nitrogen depositions. Around 80 percent of Dutch legislation on the environment is derived from EU legislation. The National Environmental Management Act, which sets out how the environment is to be protected, is based on EU legislation and regulations.
The government has published an extensive National Plan on Sustainable Public Procurement for 2021-2025 with seven lines of action to address environmental and social concerns.
The 2021 National Trade Estimate of the Office of the U.S. Trade Representative (USTR) referred to some Dutch sustainability criteria that can bring about trade impediments: “The Sustainable Trade Initiative (IDH) and the Forest Stewardship Council (FSC) have developed standards for soybeans and wood pellets, respectively, that have been supported by the Dutch government and effectively require U.S. producers to meet onerous certification requirements. [… ] These criteria include a requirement for sustainability certification at the forest level, which effectively precludes reliance on the U.S. risk-based approach to sustainable forest management. As a result of the implementation of the criteria, wood pellet exports to the Netherlands have not kept pace with demand.”
The Netherlands fully complies with international standards on combating corruption. Transparency International ranked the Netherlands eighth in its 2020 Corruption Perception Index. Anti-bribery legislation to implement the 1997 OECD Anti-Bribery Convention (ABC) entered into effect in 2001. The anti-bribery law reconciles the language of the ABC with the EU Fraud Directive and the Council of Europe Convention on Fraud. Under the law, it is a criminal offense if one obtains foreign contracts through corruption.
At the national level, the Ministry of the Interior and Kingdom Relations and Ministry of Justice and Security have both taken steps to enhance regulations to combat bribery in the processes of public procurement and issuance of permits and subsidies. Most companies have internal controls and/or codes of conduct that prohibit bribery.
Several agencies combat corruption. The Dutch Whistleblowers Authority serves as a knowledge center, develops new instruments for tracking problems, and identifies trends on matters of integrity. The Independent Commission for Integrity in Government is an appeals board for whistleblowers in government and law enforcement agencies.
The Netherlands signed and ratified the UN Anticorruption Convention and is party to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions.
Although political violence rarely occurs in the highly stable and consensus-oriented Dutch society, public debate on issues such as immigration and integration policy has been contentious. While rare, there have been some politically and religiously inspired acts of violence.
The Dutch economy derives much of its strength from a stable business climate that fosters partnerships among unions, business organizations, and the government. Strikes are rarely used as a way to resolve labor disputes.
11. Labor Policies and Practices
The Netherlands has a strongly regulated labor market (over 75 percent of labor contracts fall under some form of collective labor agreement) that comprises a well-educated and multilingual workforce. Labor/management relations in both the public and private sectors are generally good in a system that emphasizes the concept of social partnership between industry and labor. Although wage bargaining in the Netherlands is increasingly decentralized, there still exists a central bargaining apparatus where labor contract guidelines are established.
The terms of collective labor agreements apply to all employees in a sector, not only union members. To avoid surprises, potential investors are advised to consult with local trade unions prior to making an investment decision to determine which, if any, labor contracts apply to workers in their business sector. Collective bargaining agreements negotiated in recent years have, by and large, been accepted without protest.
Every company in the Netherlands with at least 50 workers is required by law to institute a Works Council (“Ondernemingsraad”), through which management must consult on a range of issues, including investment decisions, pension packages, and wage structures. The Social Economic Council has helpful programs on establishing employee participation that allow firms to comply with the law on Works Councils. See https://www.ser.nl/en/SER/About-the-SER/What-does-the-SER-do.
The working population consists of 9 million persons. Workers are sought through government-operated labor exchanges, private employment firms, or direct hiring. At 50 percent, the Netherlands has the highest share of part-time workers in its workforce of all EU member states (in 2017, the EU average of part-time workers was 19 percent). A rise in female participation in the workforce led to a 37 percent increase in the share of part-time workers in the total working population. Three-quarters of women and one quarter of men work less than a 36-hour week. Labor market participation, especially by older workers, is growing, and the number of independent contractors is rapidly increasing.
To ensure continued economic growth and address the impact of an aging population, increased labor market participation is critical. The age to qualify for a state pension (AOW) will increase from age 66 to 67 by 2024. Governmental labor market policies are targeted at increasing productivity of the labor force, including the expansion of working hours. For example, access to daycare is improving in order to raise the average number of hours per week worked by women (28 hours), which is 11 hours below the average of hours worked by men.
Effective January 1, 2022, the minimum wage for employees older than 21 years is €1,725 ($1,850) per month.
12. U.S. International Development Finance Corporation (DFC), and Other Investment Insurance or Development Finance Programs
The U.S. International Development Finance Corporation (DFC) does not operate in the Netherlands. However, DFC insurance and funding are available for U.S. companies that partner with Dutch companies in third-country markets where DFC operates. The Netherlands is a member of the World Bank Group’s Multilateral Investment Guarantee Agency (MIGA).
Dutch-registered companies investing abroad can insure their investments against non-commercial risks through the privately owned Atradius Dutch State Business, N.V., which issues export credit insurance policies and guarantees to businesses on behalf of the Dutch government. The legal basis for investment insurance is contained in the Framework Act for Financial Provisions. Insurance covers assets and cash, as well as loans related to an investment. Both new and (under certain circumstances) existing investments are eligible.
13. Foreign Direct Investment and Foreign Portfolio Investment Statistics
Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy
Host Country Statistical source*
USG or international statistical source
USG or International Source of Data: BEA; IMF; Eurostat; UNCTAD, Other
Host Country Gross Domestic Product (GDP) ($M USD)