Doing Business Internationally: The Netherlands

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Christy: Hello, everyone, and welcome to today's webinar, "Doing Business Internationally: The Netherlands." My name is Christy DeMaio Ziegler, and I will be your moderator. Joining me today is our host Helena Ledic, an associate general counsel for CSC in the Chicago office. Helena.

Helena: Thank you so much, Christy. I'm delighted to be speaking to everyone with the audience, and I'm very, very pleased to introduce you to our two speakers. We have Veronica Gunther. She is the Executive Director of the Corporate and Legal Solutions for CSC in the Netherlands.

Veronica: Hi. Greetings from the Netherlands. Thank you so much. I'm very delighted to be part of this conversation, and I very much look forward to talk about the talking points.

Helena: Very good. And then our other speaker today is Arno Vink, and Arno is at CSC. He is a service leader in the Global Capital Markets group, and he is an EMEA specialist. Arno.

Arno: Thank you very much, Helena. Thank you for having me on this interesting webinar. I'm very happy to tell you a little bit more about what the Netherlands can offer.

Helena: So let's talk today about our Netherlands agenda. First we'll learn a little bit about CSC, and then we'll get into why the Netherlands. We'll learn about some of the legal and regulatory considerations, considerations and pitfalls to avoid, and of course how CSC can help you doing business in the Netherlands.

For more than 120 years CSC has been the partner of choice for companies around the globe, trusted to handle everything from incorporating a company through maintaining compliance to corporate transaction work, protecting digital assets from the threats of the online world, and everything in between. We offer the solutions and technology that keep businesses running in the background, allowing clients to focus on the important work of growing their business.

CSC has offices and capabilities in more than 140 jurisdictions across Europe, the Americas, Asia-Pacific, and the Middle East. We're a global company capable of doing business wherever our clients are, and we accomplish that by employing local experts, such as Veronica and Arno, in every business we serve.

Let's learn a little bit about the Netherlands first. The Netherlands is located within the heart of Europe and is the sixth largest economy in the eurozone. It's known for its very stable business climate and commitment to environmentalism and sustainability. The Netherlands has attracted many corporations to set up their headquarters, and it's used as a hub to expand through Europe. Specifically, the Netherlands is home to the European Medicines Agency and has attracted more than 3,100 life sciences and 420 biopharma companies.

Even though the Netherlands is actually smaller in size than the state of West Virginia, it has a thriving agricultural export business, and it's second only behind the United States due to its fertile soil, optimal climate, and advanced practices, such as vertical farming. In fact, 15 of the top 20 agri-food companies have established major production or R&D operations in the Netherlands.

Beyond agriculture, the other main industries in the Netherlands are in petroleum refining, chemicals, and of course financial services.

So Veronica, can you tell us some of the critical reasons for doing business in the Netherlands?

Veronica: Well, we can proudly say that we have an amazing pro-business climate, being ranked first for trading across borders in the World Bank's Ease of Doing Business report and 24th for starting a business. To highlight another [inaudible 00:04:54] is that in the Netherlands it only takes around three and a half days and about four procedures to set up your business. Would you ever expect that this is significantly lower than the OECD average?

Another [teaser 00:05:07] why the Netherlands is attractive to do business is that we have a highly skilled, multilingual workforce. At least 90% of the Dutch population is fluent in English. The country ranked first out of 100 countries on the EF English Proficiency Index 2020. In Amsterdam English can be used as a means of communication. However, you must know most publications and administrative documents are to be done in Dutch. Having said that, we cover both worlds.

Arno: To continue with that, you could consider the Netherlands as Europe's top logistic hub. Just think about Amsterdam Airport Schiphol or Rotterdam being Europe's largest seaport and the world's 10th largest. We are rated second in the world for logistics performance by the World Bank due to our central position as a European gateway and our excellent logistics infrastructure.

Another strong argument is our highest broadband in the world position. That means that at least 99% of the Dutch households are connected to digital telecom networks, offering one of the world's fastest average broadband speeds. Amsterdam is a key connection point in terms of service within Europe.

To continue with even another strong point why the Netherlands is so positive is that there's a strong focus on sustainability. It's one of the largest offshore wind farms and the largest floating solar energy parks in Europe. The Dutch government is also committed to providing 50% of electricity through the renewable sources by 2025, through means like wind and solar power. And to conclude, the port of Rotterdam is working with businesses to produce sustainable biofuels.

Finally, the Netherlands has a very stable macro environment. It has a stable political and social climate. The Netherlands is also considered a highly reputable country and is ranked eighth on the Transparency International Corruption Perceptions Index, with a score of 80 in 2022. The Netherlands has a well-developed and solid regulatory and legal framework.

Helena: Now what we're going to do is we're going to talk about doing business in the Netherlands, what we need to know. And Arno and Veronica will walk us through the nature of activities, knowing about the legal and regulatory framework, the investment strategy, and of course finding the right local partner. So Veronica, why don't you tell us about some of the key takeaways now to doing business in the Netherlands.

Veronica: Two key takeaways I would like to address today is considering the nature of activities, but also being aware of the local regulatory framework. You must know that our team in the Netherlands includes experts specializing in administration services, dedicated to servicing multinational but also private equity and real estate clients. We can help corporate clients looking to expand into this exciting economy with a full suite of services from our office in Amsterdam. You must know it's our bread and butter. We've talked about how we assist clients to navigate well.

Well, an important takeaway we like to share is that the Dutch legal entities are subject to the Dutch Civil Code, the so-called Book 2, but also to the EU AML directives. In addition, administration, director, or domiciliation services are subject to the Act on Supervision of Trust Offices. In Dutch, we call it WTT. As a corporate service provider, we have the license to operate under the supervision of the Dutch Central Bank. Furthermore, we have lots of experience with business registration. Think about registrations with the Dutch Chamber of Commerce and tax authorities, where we have local understanding and very easy connection. In all, we have the skill set and knowledge to support you.

Arno: In addition to that, a third element I'd like to highlight is that you obviously need to know your investment strategy. As for like I mentioned, we provide a wide range of financial and administrative services to clients operating and investing in the international business environments. So we support companies to expand globally, and we offer support with their restructurings, outsourcings, maybe they want to attract funding on the capital markets, and further developments. So we are the experts in management and administration services, not only to holding and finance structures, but also to operational companies across the globe.

So we can help you with identifying the appropriate investment strategy by navigating our clients to choose the right legal structure, for example foundations, limited liability companies, fund structures, orphan structures, etc. So there's a lot of legal structures to choose from, and you need to be considerate about the right structure.

We also understand tax obligations in the Netherlands very well. So that's also a very important item to keep in mind. We also keep up to date with employment regulations. There are a lot of operational companies where it's very necessary to make sure that you're complying with those regulations. In addition, the Netherlands has a very extensive network of over 120 bilateral tax treaties. So our corporate teams are very well equipped to help you out there in determining the appropriate strategy in consultation and cooperation obviously with the specialist advisors, such as tax and legal advisors.

Finally, there are several tax incentives for R&D activities in information technology, biotechnology, and environmental technology, which might be very interesting for clients to consider as well while entering the Netherlands.

Then let me, if you allow me to touch upon a fourth element for a key consideration, that is finding the right partners. So despite the country's open economy and business friendly climate, newcomers may find the Netherlands' tax and legal system difficult to navigate. So before entering the Dutch markets, foreign investors should rely on professional advice to understand these complex matters. So working with trusted local partners is very essential therefore.

Two other points on that item, there are some specific requirements for licenses, such as licensed activities. One example there is escrow services. Intertrust and CSC are both active in that business, and you would need a PSD2 license to operate escrow services. Another example is depositary services, which is licensed by the AFM, under the AIFMD framework. Another example there is securitization, which is subject to EU Securitization Regulation, whereby also the AFM, the Authority for Financial Markets in the Netherlands is getting involved in the approval process. So those are very important aspects to bear in mind.

Helena: Now that Arno and Veronica have walked us through some of the key considerations for doing business in the Netherlands and some of the things that we need to know, now let's talk about how CSC can help you. So Arno, why don't you get us started off with telling us how CSC can help our clients and our customers in the Netherlands?

Arno: Thank you. I certainly will. So at CSC, we strongly believe in building long-term, fruitful partnerships with our clients. In doing that, we take a proactive approach, are responsive, apply high ethical standards, are honest and transparent in our communication, and we really focus on finding solutions and getting things done.

As a professional service provider, we strive to deliver high-quality services to our clients and the legal entities involved in a transaction. Typically, a client first engages with professional advisors. However, we are very keen to get involved in an early stage to ensure we can add value during the setup phase of a transaction given our extensive experience. We provide a full suite of management and administration services during the life cycle of a transaction in close cooperation with our client and its advisors. Our experts always aim to provide tailored solutions to complex transactions.

Zooming in on the services a little bit, it goes from entity formation to entity management and administration to termination and entity liquidation. In addition to these basic ingredients of our service delivery, we have a wide range of bespoke services we can offer, which ranges from fund solutions, depositary services to capital market services.

Veronica: Arno, I love how you refer to the life cycle of the client entities that we service, and I must say that, from a client service delivery perspective, we provide end-to-end services. Think about entity formation, where we provide the clients with formation and implementation of their structure in the Netherlands, but also the opening of a bank account, domiciliation, and management services, all things that we help our clients to take away administrative burden.

In addition, we also look at entity management and administration. That's the core of the Dutch structure, where we provide corporate accounting and reporting. But also think about not the so much typical holding finance structures, but also the operational entities that we look after. Those could be clients who do have a Dutch company in the Netherlands with employees on the payroll. We provide the clients with the payroll services. So we are really a one-stop shop.

In addition, we also look after tax compliance services, where we help our clients to assist with withholding tax filings, [VAT 00:16:43] returns, assistance with country by country reporting, all things to help the clients to navigate and for them to flourish their business.

Arno: Yeah, thank you, Veronica. And as mentioned before, in addition to these core services, I would say we have expertise in a couple of specialist areas. For example, in looking at the capital markets services, just to name out an example there on the loan administration and loan agency/facility agent space, typically those roles or those services are being provided by the major banks active for example in a syndicated loan. There's a tendency that there's an increased need for an independent third party to take up that role for a various number of reasons, which I won't go into detail now. But this is a perfect area where we can chip in and leveraging our expertise in the administration and reporting area and also apply that to the facility agent loan administration space. And in the Netherlands, we leverage a global operating model that we have in place for this specific service. So it's a perfect example.

Another example maybe to briefly touch upon is the trustee services. So looking at security trustee, that is a very specific type of service whereby we are representing bondholders, note holders, investors in the market, in the capital markets to safeguard their interest and to make sure that the transaction operates in accordance with transaction documentation to make sure that the interests of those investors are safeguarded. So it's a very, very, very specific type of service that we can offer and have an excellent track record on.

Moving over to the fund solutions area, there's a bespoke team in the Amsterdam office focusing on all of the aspects that come with fund administration and accounting, which also includes investor reporting, calculations of net asset value, making sure the fund is compliant. So there's a lot of very bespoke elements there, and typically investors appreciate the administration of a fund to be separate from the fund manager that is managing the fund. It's a segregation of duties, and that's an area that we have a good track record in and can really help our clients with.

Then maybe to conclude, there's a final item I'd like to touch upon that is depository services, which is derived from the AIFMD regulation that was imposed on the market following the Madoff scandal, which happened in the U.S., and new regulation was imposed to have an additional layer of oversight on the operation of a fund. And a fund manager is required above certain thresholds to appoint a depositary, which is very comparable to another type of function whereby the depositary is looking after a lot of oversight activities, is managing cash flow, is verifying cash flows, etc. So that is another good example of where we can chip in or we have a dedicated specialized team that can help clients to meet those requirements.

Helena: So Veronica, we have been speaking so much about the Netherlands. But why don't you tell us a little bit about CSC's global coverage?

Veronica: Yes, of course. Thank you, Helena, and I'm thrilled to say that what we consider being the crown jewel of CSC is our GSM proposition. What does this entail? So GSM stands for Global Subsidiary Management, and CSC has a great, distinct advantage when it comes to servicing our clients where they are. We have regional hubs around the globe, with in-country experts who understand the ins and outs of various jurisdictions. So you will work with a dedicated service team in your time zone fulfilling all service needs. So in all our team is wherever you need us to be.

Helena: As you have learned today from Veronica and Arno, CSC is the business behind business. As you can see from our solutions listed here, we're the partner of choice for global companies needing expertise in business administration and compliance, fund solutions, transactions and lending, capital markets, and domain security and brand protection. Whatever your company needs to stay in compliance, transact business, or become secure against threats of the online world, the CSC experts can help you.