Company Formation in the Netherlands: BV vs Branch Office

Most US companies reach the Dutch market having already made the commercial decision. What remains is structural, and the question is usually framed too narrowly: as a choice between setting up an entity and not setting one up. However, even without having made that choice, under Dutch law you may already have a taxable presence in the Netherlands before you incorporate anything.

A branch office is not a way of avoiding Dutch corporate income tax. It is a way of paying it without a separate legal entity. What the choice between a BV and a branch really settles is liability, funding, credibility and administrative weight. The tax consequences follow from those different aspects.

This article sets out both possibilities as they apply to a US parent company, shows where the tax consequences differ, and explains how we advise in practice.

Quick answer: BV or branch office?

A Dutch BV is a separate legal entity. It isolates liability to the Dutch operation and opens access to the participation exemption and the innovation box. A branch office is your US company itself, operating here through a fixed place of business: cheaper to open, but the US balance sheet carries the risk and the Dutch profit has to be attributed before it can be reported.

Both routes are taxed in the Netherlands, at the same rates. For a lasting Dutch presence we default to the BV. The branch earns its place when the presence is genuinely temporary or genuinely small.

1. What is the difference between a Dutch BV and a branch office?

A BV (besloten vennootschap met beperkte aansprakelijkheid) is a Dutch private limited company. It is a legal person in its own right: it owns its own assets, signs its own contracts, employs its own staff and is liable for its own debts. Your US company holds the shares but is not itself a party to what the BV does. It is the closest Dutch equivalent to a US corporation or a limited liability company that has elected corporate treatment.

A branch office (filiaal, for tax purposes a vaste inrichting) is not a separate legal person at all. It is your US company, operating in the Netherlands through a fixed place of business. Contracts signed at the branch are contracts of the US entity. Debts incurred by the branch are debts of the US entity. Dutch creditors and Dutch employees can look straight through to the US balance sheet.

The practical differences follow from that single distinction:

The liability line is the one that decides most cases. Where the Dutch activity involves employees, customer contracts, product risk or premises, running it directly on the US balance sheet is rarely a considered choice..

2. How do you form a company in the Netherlands as a US business?

Incorporating a BV

Incorporation of a BV runs through a civil-law notary (notaris), who executes the deed of incorporation containing the articles of association. This is mandatory; there is no self-filing route. The notary also performs identification and anti-money-laundering checks on shareholders and directors, which for a US parent means producing corporate documents, evidence of the signatory's authority and identification of the ultimate beneficial owners.

The steps, in order:

1. Decide on the structure — a single BV, or a holding BV above an operating BV (see section 7).

2. Check name availability at the Commercial Register.

3. Prepare the US parent's corporate documentation: certificate of incorporation, register of shareholders, a board resolution authorising the Dutch investment, and the signatory's identification. Documents normally have to be apostilled.

4. Execute the deed of incorporation before the notary. This can be done by proxy — nobody needs to fly to Amsterdam.

5. Register with the Commercial Register (KvK). The BV comes into existence on execution of the deed; registration follows.

6. Register the ultimate beneficial owners in the UBO register.

7. Obtain the tax numbers: corporate income tax, VAT, and payroll tax if the BV will employ staff.

8. Open a Dutch bank account. In practice this is the step most likely to hold matters up for a foreign-owned entity.

There is no minimum share capital requirement: one eurocent is legally sufficient. In practice you capitalise the BV to match what the business actually needs, because directors carry personal exposure if the company enters into obligations it demonstrably cannot meet.

Registering a branch

A branch does not need to be incorporated, because there is nothing new to bring into existence. You register the Dutch establishment of the existing US company with the Commercial Register, supplying the parent's corporate documents and articles, details of its directors, and information on the Dutch activities and the person managing them. No notary is involved.

The lighter process is genuinely lighter. It does, however, put the US company itself on the Dutch public register, with the transparency consequences that follow. Depending on the parent's legal form and size, filing obligations may extend to the US company's own financial statements.

Practical tip

Start the apostille and bank-account steps early. Notarial execution can be arranged within days once the documentation is complete; obtaining apostilled US corporate documents and opening a Dutch bank account for a foreign-owned entity routinely take several weeks each, and they can run in parallel with everything else.

3. How are a Dutch BV and a branch office taxed differently?

The intuition of most US founders is wrong here, so some precision is needed.

Both routes are taxed in the Netherlands

A Dutch BV is a resident taxpayer for Dutch corporate income tax (vennootschapsbelasting) and is taxed on its worldwide profit. A branch is not a Dutch resident, but the US parent becomes a non-resident taxpayer, taxed on the profit attributable to its Dutch permanent establishment.

The rates are identical either way. For 2026:

A branch is not a cheaper structure. It is the same tax on a narrower base.

Where the two routes differ

Profit repatriation. A BV distributing profit to its US shareholder withholds Dutch dividend withholding tax at 15%. Under the Netherlands–US tax treaty that rate is typically reduced for corporate shareholders, and eliminated in defined cases — but the reduction depends on satisfying the treaty's limitation-on-benefits conditions, which a newly formed holding chain does not automatically pass. A branch has no equivalent: remitting branch profit to head office is an internal transfer and attracts no Dutch withholding tax.

Loss relief. Branch losses arise in the US company and may, subject to US rules, be usable against US income immediately. BV losses are trapped in the BV and carried forward for Dutch purposes only. For a business expected to run at a loss in its first years this is a genuine argument for the branch, and one of few.

Profit attribution. A branch has no separate accounts as a matter of law, so the profit allocated to the Netherlands is determined by analysis: which functions are performed, which assets used, which risks borne in the Dutch establishment. Head-office costs, financing and intercompany charges all have to be allocated on a defensible basis. That is more contestable, and in practice more expensive to defend, than the BV alternative, where transactions run between two separate legal persons and leave a paper trail by default.

The participation exemption. A Dutch BV holding at least 5% of the paid-up nominal capital of a subsidiary is, subject to the statutory conditions, exempt from Dutch tax on dividends and capital gains from that subsidiary. If your Dutch entity will hold interests elsewhere in Europe this is a significant structural benefit, and one available only to the BV.

Innovation box. Profit attributable to qualifying self-developed intangibles can be taxed at 9% rather than the headline rate, provided the entry conditions are met. Where R&D genuinely sits in the Netherlands, this is worth assessing while the structure is still open.

US treatment. How the Dutch entity is classified for US federal purposes (corporation, disregarded entity or partnership) materially changes the combined outcome, as do the controlled foreign corporation rules and the foreign tax credit position. This has to be settled with US counsel alongside the Dutch analysis. A structure that is optimal in isolation on either side can be poor once the two are combined.

4. Does a branch office create a permanent establishment in the Netherlands?

In almost all cases, yes. This is also the point at which the plan to "just sell into the Netherlands without setting anything up" usually falls apart.

Dutch law and the OECD Model Convention define a permanent establishment as a fixed place of business through which the enterprise's activities are wholly or partly carried on. An office, a shop, a workshop, a factory: all permanent establishments. A building site qualifies once it runs beyond twelve months.

Some things are expressly carved out. A storage facility, a goods depot, or premises used only for preparatory or auxiliary activities (research, advertising, the supply of information) do not constitute a permanent establishment. The carve-out is narrower than it sounds: once the Dutch location does anything that forms part of the core business instead of merely supporting it, the exception falls away.

The issue of the so called dependent agent. You can have a Dutch permanent establishment without any Dutch premises at all. Where a person is dependent on your company, is authorised to conclude contracts in its name, regularly exercises that authority, and performs work corresponding to the company's own business, that person constitutes a permanent representative, and Dutch taxing rights follow. A US company that hires a single Netherlands-based salesperson with signing authority, working from home, has created a Dutch taxable presence without registering anything. An independent intermediary acting for several principals does not have that effect. Dependence is what decides the question; the job title is irrelevant.

Important distinction
The VAT concept of a fixed establishment is not the corporate income tax test. For VAT, what matters is whether there are sufficient human and technical resources in the Netherlands to receive and use services independently. It is entirely possible to have a fixed establishment for VAT and not one for corporate income tax, or the reverse.

Companies that conclude they are "not established in the Netherlands" on one test and carry that conclusion across to the other end up filing incorrectly, sometimes for years. VAT obligations follow the activity and should be assessed on their own merits.

If you supply goods or services here, see our note on VAT registration for foreign companies.

5. What does it cost to set up a Dutch BV?

Formation cost is the smallest number in this decision, and a poor basis on which to choose a structure.

Incorporating a BV involves notarial fees, a Commercial Register filing fee and, for a foreign parent, the cost of obtaining and apostilling corporate documents. Registering a branch avoids the notarial fee entirely, which accounts for most of the difference.

The costs that actually matter are annual and recurring:

• Dutch bookkeeping and annual accounts. A BV prepares and files its own accounts. A branch keeps Dutch records too, and the parent may face a filing obligation of its own in the Dutch register.

• Corporate income tax compliance. Required either way. The branch return is often the more expensive of the two, because the profit attributed to the Netherlands has to be substantiated.

• VAT compliance, where applicable — typically quarterly.

• Payroll administration, from the first Dutch employee onwards.

• Transfer pricing documentation for dealings between the Dutch operation and the US parent. This applies to both routes and is frequently underestimated.

If cost is the deciding factor, the difference between the two structures is unlikely to be large enough to justify accepting unlimited parent liability. Where the numbers genuinely are decisive, the underlying question is usually whether the Dutch activity is large enough to warrant any structure at all.

6. When is a branch office the better choice than a BV?

A branch is the better route in a narrow but real set of cases:

• A short, defined project. A twelve- to twenty-four-month contract with a fixed end date, after which the Dutch presence closes. Incorporating and then liquidating a BV is disproportionate to that.

• A genuine market test, with no employees and no local contracting, where you want a registered presence before committing.

• Loss-making start-up years where US relief is available. If the Dutch losses can be used against US income now rather than carried forward in a Dutch entity indefinitely, the timing benefit is real. This works only where the US treatment cooperates, so verify it before relying on it.

• Regulated activity where the parent's licence extends to the branch but would not extend to a separate Dutch subsidiary. This is most relevant in financial services.

Set against that, the branch is the wrong choice as soon as any of the following applies: you are hiring in the Netherlands beyond one or two people; you are signing customer contracts with meaningful liability exposure; you want Dutch or EU investors, or intend to sell the Dutch business separately later; you need the credibility of a Dutch counterparty with Dutch customers or public-sector clients; or you want to keep US and Dutch risk apart.

7. When is one BV not enough?

Many US groups establish two Dutch entities rather than one: a holding BV owning the shares in an operating BV that runs the business. Operating risk sits in the operating company, while accumulated profit, intellectual property and any Dutch real estate sit above it, insulated from operating creditors. The participation exemption allows profit to move from the operating BV to the holding BV without a second layer of Dutch tax.

It is not always worth it. Two entities mean two sets of accounts, two tax returns and two sets of directors' obligations. Where the Dutch operation is small and low-risk, a single BV is the proportionate answer and the holding layer can be added later.

The question deserves particular care where individuals, and not a corporation, sit above the US parent, because of the way US anti-deferral rules can apply to foreign holding entities. If that is your situation, read our note on Dutch holding companies and PFIC considerations before deciding.

8. Our view: this decision is usually made on the wrong number

Three patterns come up often enough in inbound work to be worth naming.

The structure is chosen on formation cost. The notarial fee is the one number visible at the outset, so it does more work in the decision than it deserves. The recurring costs run in the opposite direction: the branch return is generally the more expensive to prepare and considerably more expensive to defend, because the attribution has to be argued. And formation cost is paid once, where attribution risk lasts as long as the branch does.

The two tax analyses are run sequentially. The Dutch structure is settled first and put to US counsel afterwards, at which point classification, controlled foreign corporation exposure and the foreign tax credit position can turn a clean Dutch outcome into a poor combined one. The Dutch answer and the US answer belong in the same conversation. This is also why we set out the US points here only as context: we advise on Dutch and international tax law, and work alongside US counsel.

For a meaningful share of the companies that ask us this question, the permanent establishment already exists. A Netherlands-based salesperson who habitually concludes contracts creates Dutch taxing rights whether or not anything has been registered. Where that is the position, the question has already moved on: what matters is what to do about the presence that exists, which means regularising the past as well as structuring the future. That is a materially different conversation, and a better one to open yourself than to have opened for you.

Where we come out

For a US company building a lasting Dutch presence, our default recommendation is the BV. The additional formation cost is recovered quickly, the liability separation has no substitute, and the profit position is easier to defend on audit. The branch earns its place when the presence is genuinely temporary or very small, and in those cases we will say so.

As always, the outcome depends on the facts of the individual case and on how the position is presented to the Dutch tax authorities. No structure guarantees a particular treatment.

9. What comes after the structure decision?

Choosing between a BV and a branch is the first decision, not the only one. In the same planning cycle, expect to address:

• VAT registration and filing, which follows the activity, whatever the legal form.

• Payroll and employment. Dutch employment law is materially more protective of employees than US at-will employment, and the exposure sits in dismissal.

• The 30% ruling. For employees recruited from abroad who meet the conditions, an employer may pay a tax-free allowance of 30% of salary for up to five years in 2026, which changes the cost of relocating US staff considerably. The percentage is scheduled to fall for new arrivals from 2027 and the conditions have been revised repeatedly, so verify the position for the year in which the employee actually starts.

• Transfer pricing on any charge between the Dutch operation and the US parent: management fees, royalties, intercompany financing.

• Director residence and substance. Where the Dutch entity is managed from matters both for its residence and for its access to treaty benefits. An entity directed entirely from the US is exposed on both counts.

For the wider picture, see our guide to relocating your business to the Netherlands and our overview of Dutch corporate tax rates.

Additional frequently asked questions

How much does it cost to form a company in the Netherlands?

BV formation costs comprise the notarial fee for the deed of incorporation, the Commercial Register filing fee, and the cost of obtaining and apostilling the US parent's corporate documents. Registering a branch is cheaper because no notary is involved. The figures that matter more are the recurring ones: bookkeeping and annual accounts, corporate income tax and VAT compliance, payroll administration and transfer pricing documentation. The recurring difference between the two structures is small enough that it rarely decides the question; where it does, that is usually a sign the Dutch activity is too small to warrant either structure yet.

Can a non-resident set up a Dutch BV?

Yes. There is no Dutch residence or nationality requirement for shareholders or directors, and incorporation can be completed by proxy without travelling to the Netherlands. Two practical points. The notary carries out identification and anti-money-laundering checks on shareholders, directors and ultimate beneficial owners, and opening a Dutch bank account for a foreign-owned entity often takes longer than the incorporation itself. Separately, a BV directed entirely from abroad can be challenged both on its tax residence and on its access to treaty benefits, so board composition is a structuring question, and worth deciding early.

Disclaimer: this article is intended as general information and does not constitute legal or tax advice. Every situation depends on its own facts. Port Sight Tax advises on Dutch and international tax law; we do not advise on US federal or state tax. The US points referred to above are context only and should be confirmed with US counsel; we are happy to refer you to one of our US partner firms. Please contact a tax adviser before acting on any of the above.