Netherlands flag Netherlands: Investing in the Netherlands

Foreign direct investment (FDI) in the Netherlands

FDI in Figures

According to UNCTAD's 2021 World Investment Report, FDI flows to the Netherlands fell to USD -115 billion in 2020 due to large equity divestments following the economic crisis triggered by the Covid-19 pandemic. Some large ICT and petrochemical holding companies were liquidated or restructured in several countries in 2020. Total FDI stocks stood at USD 2.89 trillion in the same year. Outflows from the Netherlands - usually among the largest investing countries in Europe - fell by USD 246 billion to USD -161 billion in 2020, due to corporate reconfigurations and holding company liquidations. The main investing countries are the United States, Luxembourg, the United Kingdom and Switzerland. The vast majority of investments are allocated in the financial and insurance services, followed by manufacturing, wholesale and retail trade. According to the latest figures from OECD, FDI inflows to the Netherlands were still negative in the first semester of 2021(at USD -5.6 billion), although they increased in comparison with the same period one year earlier (when disinvestments reached USD 101.1 billion).

The Dutch investment policy is characterized by a strong international orientation and a liberal policy towards foreign investment. Many Dutch companies are multinational by nature and some of these are listed on foreign stock markets. The Netherlands offer a competitive fiscal climate, advanced infrastructures, and a strategic location. The country also hopes to benefit from international companies leaving London following Brexit and seeking a new base in Europe. On the other hand, the country has a small internal market and is heavily dependent on the economic performance of its partners (especially in the EU). There is currently no general FDI screening regime other than an assessment of certain transactions in the energy and telecom sectors. Nevertheless, in 2021 draft legislation was submitted to the Parliament introducing a notification obligation for investments in designated critical companies that are active in the area of sensitive technologies. The country is ranked 42nd in the latest Doing Business report published by the World Bank, losing 6 positions compared to the previous year.

 
Foreign Direct Investment 201820192020
FDI Inward Flow (million USD) 87,67148,963-115,300
FDI Stock (million USD) 1,492,6391,491,6942,890,579
Number of Greenfield Investments* 309334286
Value of Greenfield Investments (million USD) 13,86711,1276,335

Source: UNCTAD, Latest available data

Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.

 
Country Comparison For the Protection of Investors Netherlands OECD United States Germany
Index of Transaction Transparency* 4.0 6.5 7.0 5.0
Index of Manager’s Responsibility** 4.0 5.3 9.0 5.0
Index of Shareholders’ Power*** 6.0 7.3 9.0 5.0

Source: Doing Business, Latest available data

Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action.

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What to consider if you invest in the Netherlands

Strong Points

The main assets of the country's economy are :

  • An overall stable political and macroeconomic environment above the European average, healthy public finances and a highly developed financial sector; 
  • Highly developed communication and transport infrastructures
  • A qualified, productive and multilingual workforce that makes it suitable for export trade
  • A strategic geographical location, which makes it a gateway to the main European markets
  • Exports are diversified and external accounts are in surplus thanks to export-friendly structures and infrastructure.  
Weak Points

The main weaknesses of the country for FDI are:

  • High costs of the workforce
  • The small size of the internal market
  • A great dependence on the world economic situation and, in particular, the EU
  • Banks dependent on wholesale financing (loans/deposits = 136%) and real estate
Government Measures to Motivate or Restrict FDI
The Dutch government offers several types of financial support: grants, tax incentives, guarantees, credits, participations, subordinated loans stimulating innovation and sustainable foreign investment and entrepreneurship.

  • The WBSO (Research and Development Act). This is an R&D tax credit from the Ministry of Economic Affairs and Climate Policy. It aims to offer entrepreneurs an incentive to invest in R&D, allowing companies to decrease costs for R&D.
  • Energy Investment Allowance (EIA): allows companies to deduct 45% of the investment cost of energy-saving equipment from the taxable profit in addition to the deduction of the customary depreciation.
  • Environmental Investment Deduction (MIA): allows companies to deduct up to 36% of the investment costs for an environmentally friendly investment on top of the regular investment tax deductions
  • Arbitrary depreciation of environmental investments (Vamil): allows companies to amortize 75% of the investment costs of a qualifying environmentally friendly investment at once.
  • Innovation box: Income that is a result from R&D is taxed at an effective rate of 7% (the normal tax rate is 25%).
  • Dutch Good Growth Fund supports SMEs that are prepared to invest in developing countries and emerging markets.
  • Export Credit Insurance is focused on promoting Dutch exports.

Moreover there are the regional incentives offered by the EU:
The European Regional Development Fund (ERDF). The ERDF is mainly focused on strengthening economic and social cohesion in the EU by correcting imbalances between its regions.
The European Territorial Co-operation (INTERREG). This programme, which is financed by the European Regional Development Fund (ERDF), finances and supports international co-operation within particular European regions.

All government measures can be consulted on the website of the Netherlands Foreign Investment Agency.

Bilateral investment conventions signed by the Netherlands
The Netherlands has signed BITs with a large number of countries. You can consult the list on the UNCTAD's website. 

Find out more about Investment Service Providers in the Netherlands on GlobalTrade.net, the Directory for International Trade Service Providers.

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Latest Update: June 2022

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