2013 Investment Climate Statement
Bureau of Economic and Business Affairs
April 2013
Report

Openness to, and Restrictions Upon, Foreign Investment

The Netherlands is the world’s seventeenth largest economy and the fifth largest in the European Monetary Union (the Eurozone), with a GDP of over USD800 B (€600 B). It consistently ranks in the top ten on global foreign direct investment (FDI), both as a recipient and source (UNCTAD statistics FDI 2012).

The Netherlands is recipient of 8% of all FDI inflow into EU. It is the largest single recipient of American investment, at 14% of all U.S. FDI abroad. This reflects a shift over the last decade to the Netherlands as a key export platform and pan-regional distribution hub for U.S. firms, evident by the fact that roughly 60% of total U.S. foreign affiliate sales in the Netherlands are exports, with the bulk to other EU members. As an investor, the Netherlands provides nearly 10% of all FDI in the United States.

The Netherlands regularly ranks as one of the most competitive industrialized countries on various international surveys, with an attractive business and investment climate. Among these, the World Economic Forum (WEF) Global Competitiveness Index places the Netherlands in fifth position among the world's most competitive economies; the Economist Intelligence Unit (EIU) puts the Netherlands fourteenth on its 2012 global business environment ranking. Positive factors include the Netherlands’ stable political and macroeconomic climate, a highly developed financial sector, strategic location, well-educated and productive labor force, and the high quality of its physical and communications infrastructures.

Maintaining this investment-friendly reputation is a high priority for the Dutch government, which provides public information and institutional assistance to prospective investors through the Netherlands Foreign Investment Agency (www.nfia.com). Additionally, an EU format information gateway, www.answersforbusiness.nl, is readily accessible for information on regulations, taxes and investment incentives that apply to foreign investors in the Netherlands.

Strong U.S.-Dutch trade relations are emphasized by the presence in the U.S. of six regional offices of the NFIA (in Atlanta, Boston, Chicago, New York City, San Francisco, and a recently opened office in Houston.) Similarly, the American Chamber of Commerce in the Netherlands (www.amcham.nl) has actively promoted U.S.-Dutch business interests for over 50 years.

The Netherlands' trade and investment policy is among the most open in the world, with combined merchandise exports and imports exceeding GDP. According to UNCTAD 2012 statistics, the Netherlands ranked as the eleventh largest recipient of FDI (as a percentage of GDP) among industrialized countries. The government of the Netherlands maintains liberal policies toward FDI and adheres to OECD investment codes and guidelines.

FDI is concentrated in growth sectors including information and communication technology (ICT), biotechnology, medical technology, electronic components, and machinery and equipment. Investment projects are predominantly in value-added logistics, machinery and equipment, and (luxury) foods.

Structural and regulatory reforms are an integral part of a major reorientation of Dutch economic policy. Product market competition is being strengthened through programs aimed at stimulating market forces, liberalization, deregulation, and legislative quality, along with a tightening of competition policy. With a few exceptions, the Netherlands does not discriminate between national and foreign individuals in the establishment and operations of private companies. Although the government has reduced its role in the economy by introducing market forces in public utility sectors, it has taken measures to ensure key infrastructure remains government-controlled, and there are a number of strategic sectors in which private investment, including foreign investment, may be subject to limitations or conditions. These are, amongst others: transportation, energy, defense and security, finance, postal services, public broadcasting, and the media.

The Dutch comply with EU reciprocity provisions in banking and investment services, and apply non-discrimination, including in government incentives, national rules of incorporation, and access to the capital market. Commercial laws and regulations accord with international legal practices and standards, and apply equally to foreign and Dutch companies.

Air transport is governed by EU regulation and subject to a bilateral agreement between the U.S. and the EU. U.S. nationals can invest in Dutch/European carriers as long as the airline remains majority-owned by EU governments or nationals from EU member states. Additionally, the EU and its member states reserve the right to limit U.S. investment in the voting equity of an EU airline on a reciprocal basis to that allowed by the United States for foreign nationals in U.S. carriers.

More than 50% of Forbes 2,000 companies active in ICT maintain an office in the Amsterdam region. The Netherlands is the second most densely-cabled country in the world. The Amsterdam Internet hub, AMS-IX, is the largest data transport hub in the world. According to Eurostat, the Netherlands leads the EU in Internet penetration (94 % of the households) and broadband connections (38.4 per 100 inhabitants). In 2010 Parliament committed to ensure that everyone in the Netherlands has access to a minimum of 30 MB/s by 2020 in accordance with the European Digital Agenda.

Taxation

A more friendly tax regime introduced in the late 1990s and a drop in the corporate tax rate to 25% in 2011 make the Netherlands an attractive location for European headquarters. KPMG’s 2012 Competitive Alternatives (Guide to International Business Location Costs) ranked the Netherlands seventh worldwide and first in the Eurozone, both in terms of favorable business costs and in terms of tax costs. The Netherlands is known for its favorable fiscal climate and the high degree of customer service its tax authorities provide to foreign investors. Transparent, precise tax guidance lets investors know what to expect regarding long-term tax obligations. To this end, Advance Tax Rulings (ATR), in combination with Advance Pricing Agreements (APA), are guarantees given by local tax inspectors regarding long-term tax commitments for a particular acquisition or greenfield operation. (More detailed description of Dutch tax policy for foreign investors can be found at http://nfia.com/images/shared/location_factors/WiH_fiscal_Oct12.pdf .)

Dutch tax law is attractive to non-Dutch personnel living and working in the Netherlands. Currently, expatriate staff transferred to the Netherlands on a temporary contract can make use of the “30 percent ruling” providing an exemption of up to 30% of gross employment income under Dutch income tax laws. However, certain qualifying conditions must be met, including minimum salary (50,000 euro, [roughly USD 63,861] with exceptions for scientists), commuting across national borders, and previous residence in the Netherlands.

Dutch corporations and branches of foreign corporations are subject to a corporate tax rate of 25% on taxable profits, which puts the Netherlands in the medium third of the corporate tax bracket in the EU. Since 2011, profits of up to 200,000 euro (roughly USD 338,000) are taxed at a rate of 20%. Dutch corporate taxation generally allows for the exemption of dividends and capital gains derived from a foreign subsidiary (participation exemption). Surveys into the corporate tax structure of EU Member States observe that both the corporate tax rate and the effective corporate tax rate in the Netherlands are average. Nevertheless, the Dutch corporate tax structure ranks among the most competitive in Europe given other beneficial tax measures. No local Dutch income taxes are levied on corporations. The Netherlands also has no branch profit tax and does not levy a withholding tax on interest and royalties.

Furthermore, the Netherlands maintains an extensive network of tax treaties with a large number of countries. A protocol amending the U.S. - Netherlands 1992 Tax Treaty entered into force in 2004. The protocol modernizes anti-abuse rules to prevent exploitation of the treaty by third-country nationals. The protocol also eliminates source-country withholding taxes on certain inter-company dividends, thereby removing a remaining barrier to cross-border investment in both directions. Finally, the Dutch tax authorities in general have a cooperative attitude and often provide tax opinions to prevent tax issues from arising.

National Security Reviews

The Netherlands has no formal foreign investment screening mechanisms, and no foreign ownership quotas, with the exception of certain limitations in the strategic sectors noted earlier (transportation, energy, defense and security, finance, postal services, public broadcasting, and the media.) There is also no requirement for nationals to have an equity stake in a Dutch-registered company.

Corporate Governance

A 2009 survey among European companies ranked the Netherlands second for the transparency of its corporate governance practices. Because elaborate corporate protective measures against hostile takeovers may de facto block acquisitions or takeovers by Dutch and foreign investors, the Dutch government continues to work to address corporate governance issues.

The rules on acquisition, mergers, takeovers, and reinvestment are nondiscriminatory. The Social Economic Council (SER), an official advisory body of government, business, and labor representatives, administers Dutch M&A rules. SER rules are intended, first and foremost, to protect the interests of stakeholders and employees. They include requirements for the timely announcement of M&A plans and for discussions with trade unions.

A corporate governance code of conduct took effect in 2004 aimed at improving transparency in shareholder/management relations, as well as the structure and accountability of management. The voluntary Corporate Governance Code is monitored by a Committee on Corporate Governance, which can also propose adjustments to the Code in areas such as executive salaries, risk management, and shareholders rights and responsibilities. In its December 2011 evaluation report, the Committee underlined that the Corporate Governance Code has a self regulatory character, and therefore enjoys wide support.

The Netherlands maintains no preferential or discriminatory export or import policies, with the exception of those that result from its membership in the European Union. The Dutch also abide by all internationally agreed strategic trade controls.

In summary, Dutch domestic restrictions on foreign investment remain minimal, with no new restrictions planned. The right-left coalition government that assumed office in October 2012 emphasizes the importance of business and trade, and aims to create a more (international) entrepreneur friendly environment. It has identified nine so-called ‘top sectors’ (creative industries, logistics, horticulture, agro & food sector, life sciences, energy, water, chemical industry, and high tech) at the center of government’s industrial policy. The policy focuses on improving cooperation between businesses, knowledge institutions, and (local) government. At the same time – partially due to government’s austerity measures – there will be fewer business subsidies.

If a scroll bar appears below the following table, swipe the table to move left/right of the dashed line.

Measure

Year

Ranking

EIU Global Business Environment ranking

2012

16

TI Corruption Index

2012

9

Heritage Economic Freedom

2012

15

World Bank Doing Business

2013

31

World Economic Forum Global Competitiveness Report

2012

5

IMD World Competitiveness Yearbook

2012

11

Capital Conversion and Transfer Policies

The Netherlands is a founding member of the EU and one of the initial entrants in the Eurozone. As such, monetary policy is under authority of the European Central Bank.

There are no restrictions on the conversion or repatriation of capital and earnings (including branch profits, dividends, interest, royalties), or management and technical service fees, with the exception of the nominal exchange license requirement for nonresident firms.

Expropriation and Compensation

The Netherlands maintains strong protection on all types of property, including private and intellectual property, and the right of citizens to own and use property. Expropriation of corporate assets or the nationalization of industry requires a special act of parliament, as seen in the nationalization of ABN Amro during the 2008 financial crisis. In the event of expropriation, the Dutch government follows customary international law, providing prompt, adequate compensation and ample process for legal recourse. The U.S. Consulate General is unaware of any recent expropriation claims involving the Dutch government and U.S. or other foreign-owned property.

Dispute Settlement

Dutch contract law is based on the principle of party autonomy/full freedom of contract. Signing parties are free to draft their agreement in any form, any language, based on the legal system of their choice.

Dutch corporate law provides for a legal and fiscal framework that is designed to be flexible. This element of the investment climate makes establishment in the Netherlands especially attractive to foreign investors. Since January 1st 2013, further liberalization of corporation law has been implemented that allows for even more flexibility in corporate governance structure, legal entity of the enterprise and governance of holdings.

The Dutch civil court system has a special chamber dedicated to business disputes, the Enterprise Chamber. This feature is unique among EU member states and the Enterprise Chamber has received positive reviews from institutional investors, companies and investors around the world. Enterprise Chamber judges include experts in commercial fields as well as the legal profession. They have proven their ability to act swiftly and decisively in a wide range of corporate disputes, including conflicts regarding corporate control.

As a member of the International Center for the Settlement of Investment Disputes (ICSID), the Netherlands accepts binding international arbitration between foreign investors and the state. The Netherlands is one of the initial signatories of the New York Arbitration Convention (UNCITRAL) and permits local enforcement of arbitration judgments decided in other signatory countries.

Performance Requirements and Incentives

There are no trade-related investment performance requirements in the Netherlands. General requirements to qualify for investment subsidy schemes apply equally to domestic and foreign investors.

There are no requirements for employment of local capital or managerial personnel. In practice, however many chief executives of major U.S. subsidiaries in the Netherlands are Dutch or other EU nationals. This is because highly professional managers are available at a cost less than that of posting an American abroad.

Industry-specific, targeted investment incentives have long been a well-publicized tool of Dutch economic policy to facilitate economic restructuring and to promote energy conservation, regional development, environmental protection, R&D, and other national socioeconomic goals. Such subsidies and incentives are available to foreign and domestic firms alike and are spelled out in detailed regulations. Subsidies are in the form of tax credits that are usually disbursed through corporate tax rebates or direct cash payments in the event of no tax liability.

Since 2011, successive Dutch governments have pursued a targeted stimulus program for nine sectors. The stated ambitions for this policy are to improve the Dutch role in knowledge-intensive industries to reach a top 5 rank among global knowledge-based economies by 2020; to increase the percentage of R&D efforts to 2.5% of GDP by 2020; and, to establish Innovation Consortia wherein both public and private sectors participate with a budget over €500m. In a joint effort with academia and the private sector, the government has instituted preferential policy that releases over a €1B in additional funding for R&D and product innovation in the following top sectors in the ‘business economy’/private sector:

1. Agriculture and Food: is the third largest top sector in terms of turnover, €73B, and employs the largest number of self employed, 91,000.

2. Chemical Industry: accounts for nearly 8% of production and consists of companies with a large number of employees. Three quarters of the sector is focused on innovation, more than the other sectors.

3. Creative Industry: nearly 97,000 different firms are active in this sector, but in economic terms it generates 2% of private sector production.

4. Energy: a capital-intensive sector with few firms, production (€55B) and investments (€5B) are very high.

5. High tech systems and materials: the largest Top Sector by production, added value and export. Highly committed to innovation, this sector accounts for nearly half of the R&D efforts made in the Netherlands.

6. Life sciences & Health: this sector contains the fewest number of firms, just over 2,000, but represents nearly 13% of Dutch R&D investments.

7. Logistics: one of the most important sectors of the Dutch economy, accounting for 11% of production (€126B), 10% of all added value in the Netherlands and 12% of employment.

8. Horticulture and propagation materials: this sector is characterized by the large export component, as nearly three quarters of production (€21B) is sold abroad.

9. Water: this sector consists of the subsectors maritime production, drinking water, and delta engineering. It generates 2.2% of Dutch GDP, but it contributes nearly 9% of all R&D investments (€468m).

Nearly a quarter of all firms in the Netherlands are active in one of these Top Sectors, which generate 21% of overall employment, account for 27% of value added, and represent 38% of total Dutch production. These sectors are also highly export-orientated, accounting for 40% of Dutch exports. Over 95% of R&D expenditures on proprietary research within the Netherlands take place in these Top Sectors. In the coming years, more funding is expected to be available as additional government policies in taxation, SME support, and product development are rolled out. By 2015 the government share in the national Top Sector program is expected to amount to €2B.

Foreign investors are free to apply for government grants as the Dutch government reviews applications on a case-by-case basis with no preference for nationality of the bidder.

Although much coordination of investment support is executed at the Ministry and NFIA level, the Netherlands has a strong tradition of regional development agencies. These agencies advise both business and local authorities on the best use of regional development funds. Many of these have evolved into investment agencies that provide equity participation for up-and-coming enterprises in the region. Also, funding from the EU for regional development is distributed through the regional development agencies. Regional non-tax incentives are available in the form of cash grants, low interest loans, and local government participation and export guarantees for selected areas.

Right to Private Ownership and Establishment

There are full rights of private ownership and establishment of business enterprises in the Netherlands, except in some cases in the strategic sectors noted earlier. Legal guidelines on mergers, acquisitions and reinvestment are applied without regard to nationality.

Thirteen of Fortune 500 companies have global headquarters in the Netherlands, and another 16 have located their Euro Zone headquarters in the Netherlands. Of the 400,000 registered companies in the Netherlands, nearly 6,000 enterprises are 100% -owned by foreign firms. Most of these have EU origins, but outside the EU area the U.S. is the most important country of origin: approximately 20% of foreign owned enterprises in the Netherlands are American.

Although they amount to 1% of the total number of firms in the Netherlands, foreign owned companies account for nearly 15% of employment in the business economy. American owned firms alone represent around €20B in added value to the Dutch economy and employ some 170,000 staff.

Protection of Property Rights

IPR: The Netherlands has a generally strong set of laws and regulations that protect intellectual property rights (IPR). With the implementation of EU Directive 2004/48 on the enforcement of intellectual property rights, IPR holders have more instruments at their disposal to enforce their rights in civil court.

The Netherlands is a member of the World Intellectual Property Organization (WIPO), has signed on to the Paris Convention for the Protection of Industrial Property, and conforms to accepted international practice for the protection of technology and trademarks.

Despite its participation in the negotiations on the Anti-Counterfeiting Trade Agreement (ACTA) treaty, the Netherlands will not sign this treaty in its current form. The EU has requested the European Court of Justice to advise on the compatibility of ACTA with existing European treaties, in particular with the EU Charter of Fundamental Rights.

Copyright: The Netherlands has implemented the European directive 98/44/EC in 2006 after significant delay, bringing domestic legislation in line with the WIPO 1996 Copyright Treaty (WCT) and the WIPO Performance and Phonogram Treaty (WPPT). There is consensus among policy makers on the need for measures aimed at raising awareness of IPR rules and regulations and to strengthen enforcement.

Patents: The Netherlands is a signatory to the European Patent Convention, which provides for a centralized Europe-wide patent protection system. This convention has simplified the process for obtaining patent protection in EU Member States. Infringement proceedings remain within the jurisdiction of the national courts, which could result in divergent interpretations detrimental to U.S. investors and exporters. The Netherlands has been a staunch supporter of the forthcoming single, harmonized European patent procedure that will allow for easier application in just three languages. This so-called unitary patent will be under jurisdiction of a single European patent court to adjudicate disputes.

Patents for foreign investors are granted retroactively to the date of the original filing in the home country, provided the application is made through a Dutch patent lawyer within one year of the original filing date. Dutch patents are valid for 20 years. Legal procedures exist for compulsory licensing if the patent is inadequately used after a period of three years, but these procedures have rarely been invoked. Patent applications can be filed in English, but the conclusion must be written in Dutch.

Since the Netherlands and the United States are both parties to the Patent Cooperation Treaty (PCT) of 1970, patent rights in the Netherlands may be obtained if a PCT application is used.

Beside the possibilities civil action, all IPR laws contain penal bylaws and reference to the Criminal Code. In 2012, parliament passed legislation that strengthens the oversight and coordination of seven different collective institutions that concern themselves with the control, administration and remuneration of commercial use of works under IPR holdership.

The Dutch government has recognized the need to protect intellectual property rights, and law enforcement personnel have worked with industry associations to find and seize pirated software. Dutch IPR legislation currently in place explicitly includes computer software as intellectual property under the copyright statutes.

A government proposal to include a download ban as an instrument in the enforcement of IPR was rejected in parliament in December 2012. The government will continue the existing policy of placing a copy surcharge on the sales of blank content holders such as CDs, DVDs and USB sticks.

Transparency of Regulatory System

Laws and regulations that affect direct investment, such as environmental rules, and health and safety regulations, are non-discriminatory and apply equally to foreign and domestic firms.

As an EU member and as a eurozone country, the Netherlands is firmly integrated in the European regulatory system with national and European institutions exercising authority over specific markets/industries, consumer rights and competition behavior of individual firms.

In early 2013, the new Authority Consumer and Market (ACM) will succeed the three separate market regulators for Consumer Protection (Consumenten Autoriteit), Post and Telecommunications (OPTA) and Market Competition (NMA).

Financial markets are regulated by the central Bank DNB and the Financial Market authority, AFM, in an interconnected EU and national system of prudential and behavioral oversight. Their EU counterparts are ECB and ESMA.

Efficient Capital Markets and Portfolio Investment

The Netherlands is home to the world’s oldest stock exchange – established four centuries ago – and to Europe’s first options exchange, both located in Amsterdam. The Amsterdam financial exchanges are part of the NYSE/Euronext group that operates stock exchanges and derivatives markets in Amsterdam, Brussels, London, Lisbon, New York and Paris.

Dutch financial markets are fully developed and operate at market rates, facilitating the free flow of financial resources. The Netherlands is an international financial center for the foreign exchange market and for Eurobonds and bullion trade.

The flexibility that foreign companies enjoy in conducting business in The Netherlands extends into the area of currency and foreign exchange. There are no restrictions on foreign investors' access to sources of local finance.

Dutch financial institutions were hurt by the 2008-2009 global financial crisis, leading to the nationalization of Fortis Bank Nederland and the Dutch activities of ABN Amro Bank, and the provision of capital injections and government guarantees to other large financial institutions in autumn 2008-spring 2009, including the ING Group, SNS Reaal Bank, and insurance company Aegon.

By and large, the Dutch financial sector is recovering from the financial crisis and has nearly paid back the 2008 state support funding. Challenges remain, as it is currently still hampered by the worldwide recession.

Competition from State-Owned Enterprises (SOEs)

There is very little state intervention in the private sector, and little or no direct or indirect state support is provided to industry. The state’s equity stake in (former) state owned enterprises has been decreasing for decades.

Traditionally the Dutch government has had equity stakes or complete ownership in companies that provide some form of public good or play an important role in strategic sectors.

The financial crisis did bring about a necessary nationalization (bail-out) of ABN Amro Bank and ASR insurance company. The Dutch government has stated its intention to reprivatize ABN Amro through stock issuances by 2014.

Government-controlled entities will retain dominant positions in gas and electricity distribution, rail transport, and the water sector.

Private enterprises are allowed to compete with public enterprises with respect to market access, credits, and other business operations such as licenses and supplies.

The following sectors include companies and organizations in which the government is the majority shareholder (with at least 51 % ownership): transportation and infrastructure, energy, transport, gas trade, nuclear energy, gambling, banking and finance.

The Netherlands furthermore has an extensive public broadcasting network, which has its own income through commercials but also receives government subsidies.

SOEs are not obligated to consult with government officials before making business decisions. As with any other firm in the Netherlands, SOEs must publish annual reports, and their financial account must be audited. The Netherlands has no sovereign wealth funds.

Corporate Social Responsibility

The Netherlands is a global leader on corporate social responsibility (CSR). Principles of CSR are promoted and prescribed through a range of corporate, governmental and international guidelines. In general, companies closely guard their reputation for CSR, and consumers are increasingly opting for products and services that are less harmful to animals and the environment.

As adherents to the OECD Guidelines for Multinational Enterprises, the Dutch Ministry of Economic Affairs houses the National Contact Point (NCP) that promotes the Guidelines and helps mediate any concerns that persons, NGOs and enterprises may have regarding the implementation of the OECD Guidelines by a specific company. (For more information, visit www.oecdguidelines.nl)

Dutch firms comprise 2% of the Dow Jones World Sustainability Index, which represents the top 10% of leading sustainable companies in the world in every industry. When specified for Eurozone companies, Dutch firms comprise over 10% of the most sustainable enterprises. Of the nineteen ‘supersectors’ identified by the Dow Jones Sustainability Index, four sector leaders are Dutch: Akzo Nobel (Chemicals sector), UniLever (Food and Beverage), Philips (Personal and Household) and KLM/Air France (Travel and Leisure).

Political Violence

The Netherlands is known for its stable political environment and tolerance for political and social views. Although political violence rarely occurs in the highly consensus-oriented Dutch society, there is public discourse and debate on some issues, including, among others, immigrant integration policies. While rare, there have been politically and religiously inspired acts of violence, including the 2004 killing of controversial filmmaker Theo van Gogh, and the 2002 assassination of anti-Muslim politician Pim Fortuyn.

The Dutch economy derives much of its strength from a stable business climate fostered by partnership between unions, business organizations, and the government. Industrial action is rarely regarded as the primary means to settle labor disputes, with strikes being unusual. However, as the effects of the continuing European debt crisis and newly-introduced government austerity measures – including increasing the retirement age – have become more tangible, there have been more labor strikes since 2010. These strikes were organized by single unions, and addressed a specific cutback. There have not been any general, across the board events.

Corruption

NGO Transparency International ranked the Netherlands ninth on its 2012 Corruption Perception Index, above 13th-placed Germany and 17th-placed U.K. The United States ranks 19th place on this list.

The Netherlands signed and ratified the UN Convention against Corruption and is party to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions.

Anti-bribery legislation to implement the 1997 OECD Anti-Bribery Convention (ABC) became effective in 2001. The anti-bribery law reconciles the language of the ABC with the EU Fraud Directive and the Council of Europe Convention on Fraud. It makes corruption by Dutch businessmen in landing foreign contracts a penal offense, and bribes are no longer deductible for corporate tax purposes.

At a national level, the Ministries of the Interior and Kingdom Relations as well as Security and Justice have taken steps to sharpen regulations to combat bribery in public procurement and in the issuance of permits and subsidies. Most companies have internal controls and/or codes of conduct that prohibit bribery.

Bilateral Investment Agreements

The Netherlands has maintained a treaty of Friendship, Commerce and Navigation with the United States since 1956 that generally provides for national treatment and free entry for foreign investors, with certain exceptions. This Dutch-American Friendship Treaty, also known as DAFT or Dutch American Residency Treaty, gives American citizens preferential treatment to operate a business in the Netherlands. In contrast to other non-EU nationals who want to work in the Netherlands on a self-employed basis, Americans applying under the treaty do not need to satisfy the points-based test which is applied to non-EU businesses.

The Netherlands shares bilateral investment treaties (BITs) which afford certain investor protections with a number of countries including: Albania, Algeria, Argentina, Armenia, Bahrain, Bangladesh, Belarus, Belize, Benin, Bolivia, Bosnia- Herzegovina, Brazil, Bulgaria, Burkina Faso, Burundi, Cambodia, Cameroon, Cape Verde, Chile, China, Costa Rica, Croatia, Cuba, Czech Republic, Dominican Republic, Ecuador, Egypt, El Salvador, Eritrea, Estonia, Ethiopia, Gambia, Georgia, Ghana, Guatemala, Honduras, Hong Kong, Hungary, India, Indonesia, Ivory Coast, Jamaica, Jordan, Kazakhstan, Kenya, Kuwait, Laos, Latvia, Lebanon, Lithuania, Macau, Macedonia (FYROM), Malawi, Mali, Malaysia, Malta, Mexico, Moldova, Mongolia, Montenegro, Morocco, Mozambique, Namibia, Nicaragua, Nigeria, Oman, Pakistan, Panama, Paraguay, Peru, Philippines, Poland, Romania, Russia, Senegal, Serbia, Singapore, Slovak Republic, Slovenia, South Africa, South Korea, Sri Lanka, Sudan, Surinam, Tajikistan, Tanzania, Thailand, Tunisia, Turkey, Uganda, Ukraine, Uruguay, Uzbekistan, Venezuela, Vietnam, Yemen, Zambia, and Zimbabwe. (Visit www.rijksoverheid.nl for the official list and legal status of these agreements.)

OPIC and Other Investment Insurance Programs

The Overseas Private Insurance Corporation (OPIC) does not operate in the Netherlands. However, OPIC insurance and funding is available for U.S. companies partnering with Dutch companies in those third markets where OPIC operates. The Netherlands is a member of the Multilateral Investment Guarantee Agency (MIGA).

Dutch-registered companies investing abroad can insure their investments against non-commercial risks through the privately-owned Atradius Dutch State Business N.V., which issues export credit insurance policies and guarantees to businesses on behalf of the Dutch government.

The legal basis for investment insurance is laid in the Framework Act for Financial Provisions. Insurance covers assets and cash, as well as loans related to an investment. Both new and (under certain circumstances) existing investments are eligible.

Labor

The Netherlands has a strongly regulated labor market (nearly 85% of labor contracts fall under some sort of collective labor agreement), comprised of a well-educated, multilingual, and motivated workforce. Legislation has been passed or is in progress to increase labor market flexibility. Labor/management relations in both the public and private sectors are generally good in a system that emphasizes the concept of social partnership. Although wage bargaining in the Netherlands is increasingly decentralized, there still exists a central bargaining apparatus where labor contract guidelines are established.

The terms of Collective Labor Agreements apply to all employees in that sector, not only the union members. To avoid surprises, potential investors are advised to consult with local trade unions to determine which, if any, labor contracts apply to workers in their business sector prior to making an investment decision. Collective bargaining agreements negotiated in the past few years have, by and large, been accepted by the rank and file without much protest, despite only moderate wage increases. Days lost to strikes are relatively few.

The Dutch economy derives its strength from free trade and a stable industrial climate fostered by partnership among unions, employers’ organizations, and the government. There is substantial labor involvement in corporate decision-making on matters affecting workers. Each company in the Netherlands with at least 50 workers is required by law to institute a Works Council, with which management must consult on a range of issues including investment decisions. The Dutch government has introduced legislation governing employee participation of European companies (companies operating in at least two EU member states). Under this legislation, company management and workers must conclude an agreement on employee participation. Trade unions and management are generally receptive to foreign investment, especially where this leads to improved employment possibilities and related benefits. U.S. companies generally perceive Works Councils as contributing to better management-worker relations and a benefit to the company.

As a result of sustained economic growth in recent years, unemployment had been decreasing until mid-2009, when the effects of the financial crisis set in. The annual unemployment rate was estimated to be approximately 7 % in 2012 in comparison to 3.9 % in 2008, but it remains well below EU average of 10%. The working population consists of 7.9 million persons. Workers may be found through government-operated labor exchanges, a rapidly growing number of private employment firms, or through direct hiring.

Since 2002, the Netherlands has had the highest part-time work rate in the OECD. This has contributed to labor market flexibility in a market otherwise characterized by collective labor agreements. An increase in the participation of women in the workforce led to a 37% increase in the share of part-time workers in the total working population. Two-thirds of women and one in four men work less than a 36-hour week. Labor market participation, especially by older workers, is slowly but gradually growing.

Increased labor market participation is regarded as critical to ensuring continued economic growth and to coping with the impact of a rapidly aging population. The official retirement age will increase from 65 to 66 in 2020, and increase again in 2025 to 67 years, with some details still to be negotiated. Government labor market policies are targeted at increasing productivity of the labor force, including by expanding working hours. The maximum average workweek was increased from 50 to 60 hours in 2004. In a related move, 2007 legislation increased the number of hours a worker must complete before earning a break. New legislation has also been adopted which will increase the flexibility in the operating hours of companies and shops.

Wages rose by 1.6% on average in 2012 and by 1.1% in 2011, growing slower than the rate of inflation for over two years. Due to the economic crisis, Dutch labor productivity dropped by 2.8% in 2009, but was compensated by a 2.0% increase in 2010, mainly as a result of increased international trade and government measures to combat the crisis. Effective January 1, 2013, the minimum wage for employees older than 23 years is EUR 1,469.40 (USD 1130) a month.

Foreign-Trade Zones/Free Trade Zones

The Netherlands has no free trade zones (FTZs) or free ports in the sense of territorial enclaves where commodities can be processed or reprocessed tax-free. However, FTZs exist which are reserved for bonded storage, cargo consolidation, and reconfiguration of non-EU goods. In this regard, the Dutch economy has a very large component in the area of transport, transit, logistics and distribution. Dutch customs authorities oversee a large number of customs warehouses, free warehouses and free zones along many of the Netherlands trade routes and entry points.

Schiphol Airport alone handles over 1.5 million tons of goods for distribution. Specific premises in the Schiphol area are designated a customs-free Zone. The Port of Rotterdam is Europe’s largest seaport by volume, handling over 37% of all cargo shipping on the Le Havre – Hamburg coastline, and processing over 442 million tons of goods in 2012. Many agents operate customs warehouses under varying customs regimes on the premises of the Port of Rotterdam.

Foreign Direct Investment Statistics

Inbound: The Dutch Central Bank (DNB) reported the total stock of FDI in the Netherlands at €440B (USD 569B) in 2011; this comprised 68% of its GDP. In 2011 the Netherlands received a USD 13.6B inflow of FDI (OECD). Some 24% of U.S. FDI in Europe resides in the Netherlands, and 14% of all U.S. FDI, making it the largest recipient of U.S. investment in the world (US DOC; Bureau of Labor Statistics).

Outbound: The Dutch Central Bank DNB records the total stock of Dutch FDI abroad as €516B (roughly USD 680B), about 85% of GDP, at the end of 2011. A flow of some USD 34.8B Dutch FDI went abroad in 2011 (OECD). The United States is a prime foreign destination for Dutch firms, who recorded an estimated USD 240B (nine percent) in affiliate sales in the U.S. during 2010. (USDOC/BEA)

The Netherlands is home to over 6000 companies with 100% foreign ownership. Over 20% of foreign owned companies established in the Netherlands are of U.S. origin. Although foreign-owned firms comprise just 2% of all firms located in the Netherlands, they account for 15% of private sector employment with 800.000 employees. U.S.-owned firms alone contributed over €20B of added value to the Dutch economy, employing more than 180,000 workers and investing nearly a billion dollars in research and development.

The top fifteen U.S. investors in the Netherlands are: ExxonMobil, PACCAR, Sara Lee, Cargill, Phillip Morris, Nike, Dow, Johnson & Johnson, American Express, Merck, IBM, Boston Scientific, NXP, Mars, and Medtronic.

Other prominent U.S. investors in the Netherlands include 3M Nederland BV, Amgen BV, Abbott Labs, Starbucks, General Electric, Honeywell, Heinz, Arco Chemical, Hewlett-Packard, Ernst & Young, Eastman Chemical, UPS, and Cisco. (For more information, visit www.nfia.com.)

U.S. Bureau of Economic Analysis 2012 statistics: FDI flows from U.S. to Europe and the Netherlands (in USD millions)

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Europe

Netherlands

Dutch share of Europe bound FDI (%)

All Industries Total

212,760

55,195

26%

Mining

6,986

290

4%

Total Manufacturing

28,529

2,916

10%

Food

1,588

-71

-4%

Chemicals

7,779

430

6%

Primary and fabricated metals

910

29

3%

Machinery

3,504

344

10%

Computers and electronic products

3,980

74

2%

Electrical equipment, appliances, and components

840

526

63%

Transportation Equipment

2,595

67

3%

Other Manufacturing

7,333

1,516

21%

Wholesale Trade

11,326

3,235

29%

Information

8,452

152

2%

Depository Institutions

1,157

-10

-1%

Finance (except depository institutions) and insurance

9,995

1,536

15%

Professional, scientific, and technical services

4,108

395

10%

Holding Companies (nonbank)

128,778

44,941

35%

Other Industries

13,429

1,741

13%

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