Netherlands
At a glance

 About the Netherlands 

The Netherlands has an open economy that relies heavily on foreign trade, which is a sector that accounts for two-thirds of its gross domestic product (GDP). The country is an important European transport hub, with some of the biggest airports and ports in the continent. 

The Netherlands has excellent information and communications technology (ICT) connectivity, a highly educated English-speaking workforce and a favourable business climate. All of these factors, in addition to its strong domestic market and access to the rest of the European Union (EU), contribute to the Netherlands being an attractive investment destination.  

The Dutch government strongly supports foreign businesses through The Netherlands Foreign Investment Agency (NFIA), which offers advisory services to businesses at every stage of their operations in the country. The Netherlands has a large and interconnected financial system and the Dutch government has signed tax treaties with more than 100 countries, enabling investors from those countries to avoid double taxation on prescribed types of income, subject to complying with the relevant rules.  

Its main export partners are Belgium, China and Sweden. 

About the Netherlands

Corporate Treasury in the Netherlands 

The Netherlands is ranked as the 16th freest economy in the 2021 Index of Economic Freedom by the Heritage Foundation. It was one of the founding members of the EU. In this section, we highlight some of the key factors relevant to treasury and cash management in the Netherlands.  

Financial Market Development 

  • The city of Amsterdam is ranked 28th in the 2021 Global Financial Centres Index by Z/Yen Group.  
  • The Netherlands has an excellent business infrastructure, a highly educated and multilingual workforce and a sound legal environment.  
  • There are no foreign-exchange controls in the Netherlands.  
  • The central bank, De Nederlandsche Bank (Bank of the Netherlands or DNB), has a Sustainable Finance Platform through which the financial sector, supervisory authorities and government ministries can work together on sustainability initiatives and increase awareness of sustainable funding. 

Sophistication of Banking Systems 

  • There are more than 40 domestic banks in the Netherlands, and 45 branches of foreign banks. 
  • The Netherlands has a well-developed debt market with both government and corporate bonds available. Outstanding debt securities totalled USD2,403 billion at the end of 2020.  

  Regulatory Bodies 

  • The banking industry is regulated by the DNB and the Netherlands Authority for the Financial Markets (AFM). As a eurozone country, it is also covered by the Single Supervisory Mechanism (SSM).  

Tax 

  • The corporate income tax rate is 15% on the first EUR245,000 of taxable income and 25% on taxable income above this amount. 
  • Resident companies are subject to tax on their worldwide income, although certain income can be exempted. Non-resident companies are taxed on Dutch-sourced income. There is no branch profits remittance tax on the remittance of profits to the head office by the branch of a foreign company.  
  • The standard rate for Value Added Tax (VAT) is 21%, with certain goods and services qualifying for rates of 0% or 9%, while others are VAT-exempt.  
  • Interest income is taxed as ordinary income. Interest expenses are usually tax deductible, although the deduction of interest for intra-group loans is not allowed in certain circumstances under anti-abuse rules. There are no thin capitalisation rules in the Netherlands.  
  • There are no stamp duties in the Netherlands. 
  • The Netherlands does not levy capital gains tax on capital transactions.  
  • There are generally no withholding taxes on interest, although a rate of 25% may be charged in certain circumstances. For resident companies, withholding tax (WHT) of 0% or 15% is charged on dividends. For non-resident companies from countries where there is no tax treaty, WHT on dividends is 15%. Where a treaty is in place and the non-resident can provide a Certificate of Residence, WHT on dividends ranges from 0% to 15%, and WHT on interest ranges from 0% to 25%.  
  • The Netherlands has tax treaties with more than 100 countries and territories.  
  • The Netherlands is a signatory to the Organisation for Economic Co-operation and Development’s Multilateral Competent Authority Agreement, through which information is exchanged between tax administrations, to provide a single, global picture on some key indicators of economic activity within multinational enterprises. 

Benefits for Regional Treasury Centres 

  • Notional pooling and cash concentration are permitted between resident and non-resident accounts. Cross-currency pooling is also available.  
  • The Netherlands is an established global and regional cash pool centre due to its extensive tax treaty network, advance pricing agreement opportunities and limited withholding tax system.  
  • Offshore tax opportunities are available in the Dutch Caribbean islands of Bonaire, Saba and St Eustatius, collectively known as the BES islands. They are categorised as special Dutch municipalities and have their own tax codes (i.e., real estate tax and revenue tax). It should be noted that if a company does not meet the residency requirements under BES island tax codes, the tax laws of the Netherlands shall apply instead.  
  • The Netherlands is a eurozone country with trading hours that overlap with Asia, Europe and North America. 
Banking 

Bank Accounts

  • Residents may hold foreign-exchange and domestic-currency accounts both domestically and overseas. Domestic-currency accounts are freely convertible to foreign currency. 
  • Non-residents may hold foreign-exchange and domestic-currency accounts, and domestic-currency accounts may be held overseas and are freely convertible to foreign currency. 
  • Interest is available on current and demand deposit accounts. 

  Legal and Regulatory  

  • The Netherlands’ central bank, DNB, is a member of the European System of Central Banks (ESCB). The European Central Bank (ECB) supervises banks within the eurozone that are regarded as 'significant' through the SSM, and other ‘less significant’ banks are supervised by the national central bank, such as the DNB. 
  • The AFM supervises transactions between financial institutions and clients. 
  • A company is resident if it is incorporated in the Netherlands or is managed or controlled in the Netherlands. 
  • Foreign-exchange controls are not applied in the Netherlands. 
  • The Netherlands has set up a financial intelligence unit, the FIU-Netherlands, which is a member of the Egmont Group. 

 

Payments 

The Payment Services Directive (PSD2), law across all EU Member States, provides enhanced consumer security in the developing financial technology (fintech) environment i.e., for electronic payments such as mobile payments, credit transfers, online payments and direct debits.   

Measures include: 

  • Prohibition of surcharges on credit/debit card payments. 
  • Imposition of strict security requirements, including the protection of financial data. 
  • Increased competition between European payment service providers.
  • Greater consumer rights, such as ‘no questions asked’ refunds on direct debits in euros.

Payment Systems

  equensWorldline Clearing and Settlement System (CSS)  Multilateral net settlement system 
  • Processes low-value, non-urgent and bulk EUR-denominated retail payments (no value threshold). 
  • 31 direct participants. 
  • Linked to selected European payment and clearing systems and the US Federal Reserve for cross-border, multi-currency clearing. 
  • Settlement of payments for participants of the equensWorldline CSS are done by equensWorldline participant payment centres. Settlement of payments for participants of equensWorldline CSS linked to the CSS is done via the European Automated Clearing House Association (EACHA). 
  • Payments for any other banks are done through the Euro Banking Authority (EBA) as a STEP2 participant. Final settlement is done through TARGET2. 
STEP1  Pan-European net settlement system 
  • Operated by EBA Clearing. 
  • Processes low-value (no minimum value threshold) and non-urgent Euro-denominated commercial payments. 
  • STEP1 is open to all banks in the EU and has access to EURO1 platform. 
  • Operates Society for Worldwide Interbank Financial Telecommunications (SWIFT) messaging. 
STEP2 Pan-European Automated Clearing House (ACH) 
  • Operated by EBA Clearing. 
  • Processes low-value, non-urgent and bulk Euro-denominated retail payments. Provides straight-through processing for interbank transactions. 
  • Settlement done within the same or the next day, depending on time of submission. 
  • A pan-European real-time infrastructure for EUR-denominated transactions is under development by EBA Clearing and Italy's SIA Group (one of the operators of STEP2). 
  • Cross-border transactions can be processed through SWIFT and overseas correspondent banks. 

SEPA 

Single Euro Payments Area 

Pan-European payment infrastructure 
  • Initiated by the European Payments Council (EPC). Operates a common set of payment instruments, infrastructures, procedures and standards for euro transactions within Europe.   
  • Electronic retail payments within SEPA are regarded as domestic payments.  
  • SEPA is not applicable to urgent, high-priority payments or cheques. SEPA countries include 28 EU member states and four European Free Trade Association member states (Iceland, Liechtenstein, Norway and Switzerland). 
  • The Europe-wide legal framework for payments, PSD2, provides security for electronic payments inside and outside of the European Economic Area (EEA). 
  • There are two SEPA payment instruments: SCT Inst and SDD (see below). 

SCT Inst 

SEPA Instant Credit Transfers 

Pan-European instant payments system 
  • Operated by the EPC. 
  • 585 participants. 
  • This scheme provides EUR-denominated credit transfers up to a maximum of EUR15,000 within ten seconds. Available 24/7, year-round. 
  • Currently there are eight participating countries: Austria, Estonia, Germany, Italy, Latvia, Lithuania, the Netherlands and Spain. The network will progressively cover all 34 European countries with access to SEPA.

SDD 

SEPA Direct Debits 

Pan-European direct debit system 
  • Operated by the EPC. 
  • 585 participants. 
  • There are two types of SDD: SDD Core for consumers and SDD B2B for businesses.  
  • Operates whereby the payer gives approval via a mandate provided by the biller electronically or on paper. Otherwise known as creditor-driven mandate flow. 
RT1  Pan-European real-time EUR credit transfer system 
  • Operated by EBA Clearing, which also operates EURO1, STEP1, STEP2 and Italy's SIA Group. 
  • 28 participants. 
  • A pan-European real-time infrastructure for EUR-denominated SEPA transactions. 
  • Supports transactions compliant with SCT Inst scheme. 
  • Messaging is in line with ISO 20022 or SWIFT FIN standard. 
EURO1  Pan-European real time gross settlement (RTGS)-equivalent net settlement system 
  • Operated by EBA Clearing. 
  • Processes high-value (no maximum value threshold) and urgent Euro-denominated domestic and cross-border payments. 
  • Payments processed with immediate finality and are irrevocable. 
  • Operates SWIFT messaging. 


Credit Transfers Payment Instruments   

  •   Credit transfers can be paper-based or automated, and electronic transactions currently make up about a third of all cashless transactions. 
  • Used for payroll, supplier and third-party payments and government transfers. 
  • The European Credit Transfer (Europese Overschrijving) is based on SCT Inst. 
  • High-value and urgent electronic transactions are settled through TARGET2-NL in real time. Low-value and non-urgent SEPA transactions are processed through equensWorldline and can be done within the same day or the next day through STEP2. 
  • Telegiro Nieuwe Stijl (TNS) payments cater for low-value and urgent credit transfers and are settled within 1.5 hours between 33 participating banks. 

  Direct Debits (auto debits) 

  • Used for low-value transactions and most regular payments, such as utility bills. It is a widely used form of payment in the Netherlands and places the country third for direct debit usage in Europe.   
  • SEPA direct debits provide same-day or next-day payments (through equensWorldline CSS). 
  • In 2020, 16.5% and 1.1% of cashless payment volume and value were through direct debits respectively.  

Card Payments 

  • Cards, especially debit cards, are the most common form of cashless payment for retail transactions. Debit card usage has exceeded cash since 2015. 
  • For cashless payments in 2020, cards accounted for 51.7% of transaction volume but only 0.6% of transaction value. 
  • The main card brands in use are Visa and MasterCard, with American Express and Diners Club also well-established. They are all SEPA and Europay, MasterCard and Visa (EMV)-compliant. 
  • Almost all card payments are processed through equensWorldline CSS, with Visa and MasterCard also cleared through their international card schemes. 

Online Payments 

  • With its mature and active financial industry and a sophisticated ICT sector, the Netherlands is well positioned to develop its fintech industry, which is still in a relatively early stage of development. 
  • The government has yet to develop a specific regulatory framework for fintech, but the digitalisation of the economy is high on its agenda, and it has launched business initiatives for startups. The DNB and AFM established ‘The InnovationHub’ to support technology and to assist fintech companies and startups on the regulatory and supervisory aspects regarding financial services and products. 
  • Electronic payments make up more than 50% of total transactions, more than the EU average of 46%. Smartphone and contactless payments make up a large part of these transactions.  
  • The e-commerce market is worth EUR22.5 billion, 20% of which is mobile commerce. Bank transfers dominate online payment methods, making up 60% of total e-commerce transactions. 
  • Approximately 90% of Dutch bank customers access banking services through mobile devices or internet banking.      

Digital Currencies 

  • The Netherlands’ established blockchain and cryptocurrency industry receives government and industry support in terms of research, startups, innovation, and investment. Two of the main developments to come out of this partnership are the National Blockchain Agenda and the Dutch Blockchain Coalition. 
  • The EU’s overall view of bitcoin is that “no member state can introduce its own currency”. Cryptocurrency exchanges are legal, depending on the country, and should be operated under the Anti-Money Laundering Directive, according to the European Commission. 

Cash, Cheques and Money Orders 

  • According to the ECB, the Dutch are the least likely of all European eurozone citizens to use cash. Cashless payments now outstrip cash, which makes the Netherlands unique in the eurozone. 
  • Banks stopped issuing cheques in 2001, and their use was phased out within the year. 
  • Money orders are available from most banks as well as the major remittance providers, such as Western Union. 

Sources (Intro & Corporate Treasury):
IMF, World Economic Forum, PwC, Bank for International Settlements, Trading Economies, CIA World Factbook, the Bank of the Netherlands, DBS. 

Sources (Banking & Payments):
IMF, Statista, DBS, the Bank of the Netherlands, Foreign Bankers’ Association, OECD, Association for Finance Professionals, Dutch Payments Association (Betaalvereniging Nederland), Ecommerce News Europe, European Central Bank, TheBanks.EU, J.P. Morgan. 

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