Netherlands

Originally published: Dec-17-2007

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Official Name: Kingdom of the Netherlands

Internet Domain: .nl
International Dialing Code: +31

Table of Contents

Government

Constitutional monarchy.

• Executive branch: Chief of state Queen Beatrix; Heir Apparent Willem-Alexander; Head of government Prime Minister Jan Peter Balkenende; Cabinet Council of Ministers appointed by the monarch.
• Legislative branch: Bicameral Staten Generaal consists of the First Chamber indirectly elected by the country's 12 provincial councils and the Second Chamber directly elected by popular vote.
• Judicial branch: Supreme Court or Hoge Raad, justices are nominated for life by the monarch.

Legal System

Based on civil law system incorporating French penal theory; constitution does not permit judicial review of acts of the States General; accepts compulsory ICJ jurisdiction with reservations. There are no commercial courts. Therefore, all matters, including payment disputes, are heard in the civil courts.

People and Geography

• Population: 16,570,613 (July 2007 est.)
• Population growth rate: 0.464% (2007 est.)
• Ethnic groups: Dutch 83%, other 17% (of which 9% are non-Western origin mainly Turks, Moroccans, Antilleans, Surinamese, and Indonesians) (1999 est.)
• Languages: Dutch (official), Frisian (official)
• Literacy: 99%

The Netherlands is one of the world's most densely populated nations. As in many European countries, over-65s make up an increasing percentage of that population, leading to greater demands on the welfare system.

It borders the North Sea on the west and north, Belgium on the south, and Germany on the east. Almost 20% of the total area of the Netherlands is water.

Economy

The Netherlands has a prosperous and open economy, which depends heavily on foreign trade. The economy is noted for stable industrial relations, moderate unemployment and inflation, a sizable current account surplus, and an important role as a European transportation hub. Industrial activity is predominantly in food processing, chemicals, petroleum refining, and electrical machinery. A highly mechanized agricultural sector employs no more than 2% of the labor force but provides large surpluses for the food-processing industry and for exports.

The Netherlands was one of the first EU member states to qualify for the Economic and Monetary Union (EMU). Its fiscal policy has sought to strike a balance between further reductions in public spending and lower taxes and social security contributions. After an unexpected sharp economic downturn in 2003, the government was able to achieve a 0.6% budget surplus in 2006. A 0.2% surplus is expected for 2007.

Currency: Euro (EUR)

• EUR per USD: 0.69333 (12/17/07)

Leading Markets (2006): Germany 25.5%, Belgium 14%, UK 8.9%, France 8.6%, Italy 5.1%, US 4.5%

Leading Exports-commodities: machinery and equipment, chemicals, fuels; foodstuffs

Leading Suppliers (2006): Germany 17.1%, Belgium 9.4%, China 9.4%, US 7.8%, UK 5.9%, Russia 5.1%, France 4.5%

Leading Imports-commodities: machinery and transport equipment, chemicals, fuels, foodstuffs, clothing

Top Industries: agroindustries, metal and engineering products, electrical machinery and equipment, chemicals, petroleum, construction, microelectronics, fishing

Leading Agricultural Products: grains, potatoes, sugar beets, fruits, vegetables; livestock

Economic Indicators

(e) estimate (f) forecast

Comparative Economic Indicators - 2006

* 2007 estimate

Credit and Collections

• Collection Experience: Good
• Exchange Delays: 2 months
• Preferred Credit Terms: Sight draft
• Minimum Credit Terms: Open account

Interest Rates on Unpaid Accounts: Where a sales agreement makes no mention of interest rate, the rate of interest applicable is the European Central Bank's refinancing rate, marked up by seven percentage points.

Payments: Checks and bills of exchange are rarely used in the Netherlands and, under Dutch law, they serve mainly to substantiate the existence of a debt. Bank transfers are the most common means of payment. All leading Dutch banks are linked to the SWIFT electronic network.

Dispute Resolution: Resolving commercial disputes in the Netherlands, as in most civil law countries, is based on written submissions before a judge. Ordinary proceedings for claims under EUR 5,000 are heard by a district court. Larger claims are heard by a court of first instance. Unless the parties expressly request the right to make an oral submission, which is rarely the case, the judge bases his ruling on the principal case documents provided by the parties.

For complex cases requiring special examination, the judge will follow a more formal procedure based on the examination of each litigant's brief and counter-briefs. In such matters, the judge carefully assesses the parties' compliance with the general terms and conditions of sale appearing on invoices and purchase orders.

Recourse to arbitration is common in the Netherlands. Most arbitration bodies work in specific fields and arbitrators are often selected from among specialist lawyers. Arbitral awards tend to be based on equity rather than on legal considerations.

Risk Assessment

Coface Country Risk Rating: A1 -- The steady political and economic environment has positive effects on an already good payment record of companies. Very weak default probability

Ducroire Delcredere Political Risk Rating: 1 – lowest risk
Ducroire Delcredere Commercial Risk Rating: A – lowest risk

Business Climate

The Netherlands is a strong proponent of free trade and is a member of international forums like WTO and OECD. It has an open trade and investment policy and the Dutch economy is one of the most internationally oriented in the world.

The average tariff rate is low and business regulation is efficient. Virtually all commercial operations are simple and transparent. Inflation is low, and investment in the Netherlands is actively promoted. The country's financial sector is highly developed, and it has been a European banking hub for centuries. The judiciary, independent of politics and free of corruption, has an exemplary ability to protect property rights.

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

Intellectual Property Rights: The Netherlands has generally adequate legislation and regulations for the protection of intellectual property rights. The Netherlands belongs to the World Intellectual Property Organization (WIPO), is a signatory of the Paris Convention for the Protection of Industrial Property, and conforms to accepted international practice for the protection of technology and trademarks. However, the enforcement of anti-piracy laws remains a concern to producers of software and digital media.

Conversion and Transfer Policies: 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 non-resident firms.

Corruption: Corruption by Dutch businessmen in landing foreign contracts is a penal offense, and bribes are no longer deductible for corporate tax purposes. At a national level, Dutch Justice and Interior Ministries have taken steps to sharpen regulations to combat bribery in public procurement and in the issuance of permits and subsidies.

Economic Freedom: According to the 2007 Index of Economic Freedoms, the Netherlands is 77.1% free, making it the world's 14th freest economy. The Netherlands is ranked 7th out of 41 countries in the European region, and its overall score is much higher than the regional average. The Netherlands enjoys high levels of investment freedom, trade freedom, financial freedom, property rights, business freedom, freedom from corruption, and monetary freedom.

For more detailed information on these topics, visit the 2006 Investment Climate Statement – Netherlands, of the U.S. Department of State.

Business and Cultural Practices

Appointments: Punctuality is essential and expected in Dutch business culture.

Business Cards: It is unnecessary to have your business card translated, as most Dutch businesspeople are fluent in English. Promotional materials and instruction manuals, however, should be translated, especially when dealing with complicated terminology. There is a deep respect for higher education in this country; so be sure to include any university degree above a B.A. on your business card.

Business Attire: Business dress is fairly conservative, depending upon the profession. In certain industries, the higher a person's rank, the more informally he or she is permitted to dress. For example, in some offices, sales clerks wear suits while the boss dresses in jeans and a sweater. Because of the stress on egalitarianism in this society, the wealthier and more successful a Dutch executive becomes, the more he or she must make an effort to maintain an ordinary appearance.

Names and Titles: Formality prevails in Dutch business culture at first contact. A courtesy or professional title, followed by a last name, should always be used unless you are invited to do otherwise. Academic titles are hardly ever used in spoken conversation.

Conversation: The Dutch respect qualities such as straightforwardness and honesty. Bluntness is preferred over deceptiveness or evasiveness. Usually, constructive criticism is felt to be more useful than compliments. Therefore, when you want to say “no”, tentative answers such as “I'll consider it”, “We'll see”, or “perhaps” are not acceptable to the Dutch.

Gifts: Wait until you have established a relationship with your Dutch contacts before presenting them with gifts. Any gift should be of good quality but not obviously expensive. Modest gifts are usually the safest choices.

Meetings and Negotiations: This is a society of concrete facts, statistics and hard data. Data and information are crucial to a sale, but do not throw in self-appraisals like “we're #1.” Large is not necessarily felt to be good. Quality usually comes before quantity.

Acceptable Public Conduct: The bear hug is virtually unknown in the Netherlands, and not welcomed. Using toothpicks or chewing gum in public is unacceptable in business circles. Talking with your hands in your pockets is considered rude, as is breaking a promise.

For more detailed information on these topics, visit Netherlands, on the Executive Planet web site.

Sources for further information on doing business in the Netherlands

American Chamber of Commerce in The Netherlands

Embassy of the Netherlands in the U.S.

Embassy of the United States in The Hague (Netherlands)

The Holland International Distribution Council: Provides assistance to foreign companies seeking to help with logistics and distribution of their products in the Netherlands.

Netherlands American Chamber of Commerce

The Netherlands Chamber of Commerce

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This information is provided by ABC-Amega Inc. Providing international receivable management and debt collection services for exporters to more than 200 countries including the Netherlands. For further information, contact info@abc-amega.com. This report represents a compilation of information from a wide variety of reputable sources.

Risk Assessment information: Provided with permission by Coface Country Rating. Also Belgian credit insurance company Ducroire Delcredere

Information on credit terms and the probability of prompt payment are provided, with permission, from Overseas Press and Consultants (OP&C) as published in IOMA's Report on "Managing Credit, Receivables & Collections," December 2007.