E-commerce companies in the Netherlands

What are they and what are their advantages for you?

While the term “e-commerce”, which is an abbreviation of “electronic commerce”, quickly gained widespread adoption in the mainstream in the second half of the 1990s and the 2000s especially, the term is actually considerably older than that. Internet legend has it that the term was coined for the first time back in 1984 as part of the title and text for the Electronic Commerce Act in California (United States). That was one of the first official pieces of legislature aimed at controlling how electronic commerce may be conducted and it defined “e-commerce” as the activity of buying and selling goods and services over the internet.

An e-commerce company is a company that conducts its business (almost) exclusively over the internet. This can be business-to-business (B2B), business-to-consumer (B2C), consumer-to-consumer (C2C) or consumer-to-business (C2B). As a result, the larger e-commerce industry is divided into two broad parts, namely online retail shopping that connects with customers through websites and/or apps, and online marketplace selling where third-party sales (including customer-to-customer) take place.

What is an e-commerce company in the Netherlands?

A stable and preferably powerful internet connection and overall infrastructure are indispensable for the running of a successful e-commerce company. That is one of the main reasons why setting up an e-commerce company in the Netherlands has been such a popular stop for entrepreneurs and executives from outside the European Union, especially from English-speaking jurisdictions like the United Kingdom, the United States, and the United Arab Emirates, over the past years. There are more than a few other advantages to starting an e-commerce company in the Netherlands as well though, and we will cover the major ones on this page.

Advantages of an e-commerce company in general.

The development and growth of the internet have changed the business world forever. E-commerce has changed the way in which commercial parties can interact with each other and offers an alternative to traditional brick-and-mortar stores that dominated people’s shopping experiences for centuries. As usual, what an e-commerce company in the Netherlands or anywhere else can mean for you largely depends on your objectives, but overall, e-commerce companies offer a whole range of considerable advantages to their owners.

• No more physical storefronts.

E-commerce companies come with a bunch of advantages and the most obvious one is probably the fact that you no longer need to invest in a physical store in order to start your commercial activities. This can have a very positive impact on costs like rent and utilities, while you don’t need to worry about factors like store design and security either, for example. Of course, if your e-commerce company for whatever reason still requires a physical presence somewhere, you will still need to deal with such costs, though chances are that they will be lower than for a physical store as the online nature of your business demands less space.

• The world is your market.

An e-commerce company allows you to reach a massive audience, though “the world is your market” might be a bit too optimistic. You still need to deal with the laws and rules of national and international trade after all. Take, for example, an e-commerce company in the Netherlands. By setting up such an operation, you will not only have access to the entire Dutch market, but to the other 27 markets of the European Union as well, plus all of the countries and jurisdictions with which the EU has trading agreements. Without any physical presence in those regions, your e-commerce company in the Netherlands can turn people from those regions into customers very quickly. With the right approach and marketing, this allows tiny local e-commerce companies to grow into major international players. Achieving something similar with a physical storefront somewhere in the Netherlands, to continue with our earlier example is much more difficult.

• Scalability.

Besides reach, scalability is often also a bit of an obstacle for brick-and-mortar stores. A physical store can only grow so much before the need for either a bigger location or a second store arises. While this can be an excellent strategy for growth, it tends to be a capital-intensive approach as well. In other words, scaling a traditional offline business can be quite expensive. On the contrary, a successful e-commerce company will find it much easier to scale and grow as it does not require an expensive physical move. Scaling your online business is not free either, as you will need to expand (and improve) your digital infrastructure, but it will be considerably less expensive than buying or renting a new store.

• Faster buying process.

So far, we have mainly focused on the advantages of an e-commerce company from a cost perspective for you as owner, but there are serious advantages on the sales side as well. Probably the biggest of all is how e-commerce generally speeds up the buying process for customers. Assuming you are running a well-designed online store or operation, customers will need much less time to find and purchase the products they want. They can easily browse lots of items in very little time and buy them with just as much ease, from the comfort of their own home or office, for example. Naturally, this is very positive for your business, because the easier it is for your customers to buy what you’re offering, the better it should be for your bottom line.

• Lower marketing expenses.

Like with offline marketing and advertising, you can make the online marketing of your e-commerce company as affordable or as expensive as you want. This depends entirely on what you are selling and how you want to approach that process. From online marketplaces and search engine optimisation to link building and partnerships; the options are practically endless. Fortunately, for those e-commerce companies with a limited marketing budget, the world of e-commerce offers many affordable and quick ways to market online.

Advantages of setting up an e-commerce company in the Netherlands.

As we mentioned earlier, there are lots of advantages to setting up not just any e-commerce company, but an e-commerce company in the Netherlands, especially when you come from a region outside of the European Union and your primary language is English. Allow us to briefly explain why setting up an e-commerce company in the Netherlands can be an excellent decision.

• Whether you are setting up a holding company, a financing company or an e-commerce company in the Netherlands, one aspect immediately stands out: the favourable fiscal climate. For 2023, the Personal Income Tax rate in the Netherlands is between 36,93% and 49,50%, depending on your income, while the rates for corporate tax and dividend withholding tax currently sit at 19% – 25,8% and 15%, respectively. What’s more, limited liability companies recording annual profits of less than € 200.000 pay just 19% tax on those profits. With some smart and responsible structuring, the fiscal benefits of a trading company in the Netherlands are practically unrivalled in the European Union.
  
  
• On top of the previous point, the reinvestment of profits is not taxed in the Netherlands, which gives you additional flexibility as an owner in regard to how you want to structure your company’s fiscal footprint.
  
  
• Apart from the attractive tax regime, the actual creation of an e-commerce company in the Netherlands is quite simple and very affordable. Picking a limited liability company (“besloten vennootschap” or BV, in Dutch) as a legal entity for your operation means that your private assets will be protected from potential troubles arising from your commercial operations. The “BV” creates a clear distinction between your own assets and those that belong to the company, which is a crucial part of your activities as an entrepreneur, trader or executive. Do remember that a shareholder can still be held liable for his or her own assets in exceptional situations, for example when serious negligence can be proven or in cases where the annual accounts are not filed in time.
  
  
• As for the cost of setting up the limited liability entity for your e-commerce company in the Netherlands: since 2012 the capital requirement was adjusted to just € 0,01, downwards from € 18.000. Do take into account that not injecting more capital than the legal minimum does keep (some of) your personal liability as an owner alive. Besides that, there are other costs associated with setting up an e-commerce company in the Netherlands as well, such as notary costs, compliance costs (bookkeeping, VAT returns, CIT returns, etc…), and possible legal fees.
  
  
• With an English literacy rate of about 92%, the Netherlands boasts one of the highest levels of English literacy in the world for countries where English is not an official language. That makes this country particularly practical from a purely commercial point of view, especially for entrepreneurs and executives from major English-speaking trading nations like the United Kingdom, the United States, and the United Arab Emirates.
  
  
• The Netherlands is located in the very heart of Europe and the European Union, one of the wealthiest trading blocs in the world. Setting up an e-commerce company in the Netherlands gives you direct access to 27 markets, including the Netherlands itself, that together represent a GDP of € 14,5 trillion.
  
  
• As the owner or director of an e-commerce company in the Netherlands, you can also benefit from a very high standard of living, including world-class professional infrastructure, a stable and innovative economy, and top-notch international education, just to name a few.
  

Are you considering setting up an e-commerce company in the Netherlands and would you like to know more about the possibilities in regard to the specific situation of your operation? Get in touch with CompanyNL, so we can discuss the optimal approach for you and your company, naturally in an entirely non-committal way!