Setting up a business in Singapore
Although Singapore is known for its business environment, as an entrepreneur just arrived from the Netherlands it can be quite a hassle to set up your business. Singapore has its own business culture, filled with paperwork and business stamps. Nothing to worry about, just be prepared to discover differences. Isn’t that part of the fun of doing business abroad?
This webpage aims to guide you like a signpost to the various sources of information for new Dutch entrepreneurs, especially for SME’s. This site will help you find your way, whether you decide to do the administration yourself or to hire a specialised company to take care of it.
First step > Get a SingPass
This is the equivalent of the Dutch DigiD. You will need it to manage all relevant processes. You can only obtain for a SingPass if you hold an Employment Pass or a Dependent Pass. Long Term Visitor Pass Holders cannot (unfortunately) get a SingPass. A possible workaround is to ask a Permanent Resident or someone who holds an Employment Pass to be your company’s director and do the relevant government administration for you. Click here for your SingPass
This Starterskit is written by Susanne Prins van Wijngaarden, founder & owner of Singapore Jobs Network Private Limited. For Recruitment and HR projects, please don’t hesitate to contact me in order to discuss opportunities for you and me in our joint network.
Investing in the Netherlands
Dutch Corporate Law for International Investors
Dutch corporate law has found a good balance between the needs of today’s international investment community, and the current-day needs for corporate and tax governance. In the process, the Netherlands has achieved top scores for company establishment and investor-friendly business law. In the changing political and regulatory landscape in the world, this provides a solid and future-oriented base to companies operating cross-border in Europe.
Important changes in the business landscape are taking place in Europe and around the world. The Brexit is creating uncertainty for business. Companies serving the European market from the UK are now looking at an establishment on the European continent that can ensure the same unrestricted market access. At the same time, the OECD principles for taxation under the BEPS (Base Erosion and Profit Shifting) Guidelines are being implemented in tax jurisdictions. This forces internationally operating companies to assess the substance of the establishments in the various countries they work in, to ensure that they continue to comply with these guidelines.
The legal framework for foreign investment offered in various countries is an important factor for companies in selecting the most suitable location for their establishments. The Netherlands is home to an exceptionally large part of the regional headquarters and distribution centres of non-European companies serving the European market. One reason is that these companies find Dutch corporate law very suitable.
Under Dutch law there is no difference between locally and foreign-owned companies. The limited liability company (BV, Besloten Vennootschap) can have one or more shareholders. There is no minimum paid-up capital, there are no nationality-based ownership restrictions, and there is no minimum number of employees. Moreover, there are also no nationality-based restrictions on the directors, and directors can be based abroad. The incorporation process in the Netherlands scores as being one of the fastest in Europe (World Bank 2016). The incorporation by the notary and the registration of a new company’s articles of incorporation with the Chamber of Commerce in the Netherlands takes only four days. The Netherlands scores the highest among the European economies on the supportiveness of law for the creation of firms (IMD, 2016).
Suiting the needs of international investors
For investors, especially in international partnerships, it is essential that they can have their shareholder agreement fully reflected in the articles of association of the company. In Dutch law, the allocation of shares, voting rights and profit entitlement agreed in the shareholders’ agreement can be fully included in the articles of association. In addition to ordinary shares, it is possible to create non-voting shares and shares without profit rights The Dutch system also allows the Anglo-Saxon system of a one-tier board, with executive and non-executive directors. The shareholders can agree to restrict the transfer of shares by using various mechanisms, such as rights of first refusal, lock-up periods, and restrictions on the transferees.
Once operational, foreign companies in the Netherlands can make use of various facilities, such as a deferment to their customers of the VAT that is normally due on imports. This is a large saving on cash outflows. Companies also benefit from a reduced corporate income tax rate of 5% for profits derived from research and innovation of their products in the Netherlands. And expats receive a 30% discount on their taxable salary.
Traits of Continental Law
Continental Law, in which the Dutch legal system has its roots, considers companies to be corporate citizens. It is important to understand that the Director or Board of Directors has an important responsibility for the long-term survival and value creation of the company. The Board, together with supervisors that may be appointed, has to take into account the interests of the stakeholders. This includes not only the shareholders but also suppliers, buyers and employees. The articles of association and the shareholders’ agreement may however require the consent of supervisors or the shareholders for certain types of decisions, such as large investments or major restructurings.
Like in any country, good contracts and written confirmations of what has been verbally agreed, are important to stay out of legal trouble, whether it is with suppliers, buyers or employees. Contracts, however, do not need to be very extensive. Much of the contractual relations between parties is regulated in laws and standard terms and conditions, which have been developed and agreed over time by all stakeholders as the most equitable solutions.
If a dispute still arises, an out of court settlement is the preferred option, even though court dues and lawyer fees are lower than in many other countries. Sector associations are important in the Netherlands, and their members have often committed themselves to codes of conduct. When dealing with a company, it is often useful to check whether the company is a member of a sector association.
The Netherlands corporate law is very accommodating for international investors. This is not only important when choosing a location for European establishment, but also in the expansion of establishments to meet OECD-led substance requirements. These were officiated on 7 June, in a signing by more than 90 countries of the OECD Multilateral Instrument on Base Erosion and Profit Shifting.
These substance requirements now mean that a certain amount of staff, business functions and decision-making authority now need to be embedded in the local incorporated establishment, in order to qualify for, for instance, reduced withholding taxes under tax treaties. There is no uniform definition of these substance requirements, as different tax jurisdictions will apply different standards. Very important is that a company will need to demonstrate that taxation is not the principal purpose for choosing a location for its investment. Placing meaningful management functions and operations in the host country will help to ensure that this can be demonstrated. Many companies are now reviewing their set-up in different countries against this requirement.
Joost Vrancken Peeters, Managing Partner, Kneppelhout Korthals NV
Elmar Bouma, Director Southeast Asia, Netherlands Foreign Investment A