HSBC Treasury Management Profiles 2018 -

Current section, Introduction

Introduction

The Netherlands is an important transport hub within Europe, with excellent logistic and transport infrastructure. The world’s second-biggest agricultural exporter behind the USA (in 2017, agricultural exports reached a record high of EUR91.7 billion, a 7 per cent increase on 2016. Trade in agricultural and agriculture related goods contributed EUR44 and EUR4 billion respectively to Dutch GDP), the Netherlands’ economy relies heavily on trade. Exports accounted for 80 per cent of GDP in 2016, imports 69.9 per cent. The country’s open economy is highly competitive; it is also highly susceptible to economic trends, particularly within Europe. The impact of Brexit on the Netherlands’ GDP, for example, could be significant if the two countries fail to secure a trade deal; the UK is an important trading partner, accounting for 9.2 per cent of the country’s exports and 5.4 per cent of imports in 2016. The national economic forecaster CPB has projected an economic loss to the Netherlands’ economy of up to 2 percentage points by 2030. As such, the country is actively strengthening its trade relations beyond Europe, to Taiwan, for example, in areas such as agriculture and offshore wind technology, and India. The country has become a hub for India companies with more than 200 companies operating there and is the fifth-largest investment partner of India globally. The economy is predicted to grow 3.2 per cent in 2017, the highest rate since 2007, on the back of a growth in investments, consumption (reflecting a strong labour market; unemployment fell to below 400,000 in November 2017, for the first time since September 2009) and exports. The government’s fiscal stimulus plan, changes to the tax system, for example, are expected to encourage labour supply and increase output, and an expanding global economy is expected to keep economic growth robust in 2018 and 2019, with GDP predicted to grow 2.7 per cent and 2.5 per cent, respectively.

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Legal and regulatory

  • Foreign exchange and domestic currency (EUR) accounts can be held by residents both domestically and abroad Resident domestic currency accounts are convertible into foreign currency
  • Non-resident bank accounts are permitted in both foreign and domestic currency. Non-resident domestic currency accounts can be held abroad and are convertible into foreign currency
  • Approximately 2,000 resident companies with a high volume of transactions with non-residents are required to report all their financial transactions to the central bank on a monthly basis

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Taxation

  • Resident companies are taxed on their worldwide income
  • Non-resident companies are generally subject to the same rates of corporate taxation as residents on certain types of income sourced in the Netherlands
  • The Netherlands operates a two-tier system with progressive tax rates. The first EUR200,000 of taxable income is subject to a tax rate of 20 per cent. Income in excess of EUR200,000 is taxed at 25 per cent
  • Tax withheld on dividends paid to non-resident individuals and companies may be refunded, provided the recipient is a resident of another EU/EEA member state and is the beneficial owner of the dividend
  • The Netherlands is a signatory to the Multilateral Competent Authority Agreement (MCAA). The first exchanges under the MCAA will begin in 2017-18 based on 2016 information

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Payment instruments and systems

  • Credit transfers are used for both high-value corporate and low-value retail payment transactions. Payment card use continues to rise, constituting 49 per cent of the volume of all cashless payments. Contactless payments and payments via mobile wallet are increasingly popular among consumers
  • SCT Insts (a pan-European, 24/7 instant payment scheme for SEPA credit transfers) are available in the Netherlands the maximum threshold value for SCT Insts is EUR15,000
  • The Netherlands operates three national payment systems: TARGET2-NL, an RTGS system; Equens CSS for low-value retail payments; and STEP2, for domestic and cross-border SEPA payments

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Cash management

  • Domestic and cross-border notional pooling and cash concentration are permitted between resident and non-resident companies. Cross-currency pooling structures are available
  • Automated collection methods are used by medium-sized and large businesses in the Netherlands
  • The Netherlands operates an advantageous tax regime for interest payments within a corporate group. The Group Interest Box regime allows for a low rate of taxation (5 per cent) to be levied on intercompany interest income

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Electronic banking

  • Electronic banking is commonplace in the Netherlands and offered by both domestic and international banks. Large companies can also use SWIFT for corporates
  • Internet and mobile banking services are provided by all of the country’s banks for both corporate and retail use Online and mobile banking services were used by 91 per cent and 63 per cent of individuals respectively in 2016

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Sources:

  • Organisation for Economic Co-operation and Development
  • World Bank Group: World Integrated Trade Solution
  • CPB Netherlands Bureau for Economic Policy Analysis
  • European Commission
  • Statistics Netherlands

The materials contained on this page were assembled in April 2017 (unless otherwise dated).

 

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