Netherlands Pestle

Topics: Tax, Netherlands, Economics Pages: 8 (1428 words) Published: May 7, 2012
Netherlands Report
(Combine PESTLE analysis issues)

-Dutch government is a parliamentary democracy with the Queen as the Head of The State. However, the real power lies within the prime minister and the cabinet ministers.

Flexible Dutch system allows import and export tax to be levied. Attractive tax environment for investment
Dutch culture encourages foreign international companies Free of corruption
-Unstable government

-Increasing development in international relations
Increasing development in infrastructure
Early election before the end of the four year-parliamentary term Public protest against bankers’ bonuses
Disagreement over immigration and foreign policy can lead to the disintegration of coalition


-Dutch economy benefits from the country’s liberal policies towards FDI. There is a substantial stream of FDI inflows and outflows due to no regulatory restrictions. Other benefits include: -Tax Incentives

Corporate income tax rate for foreign companies is only 25.5%. (domestic: 26.9%)

-VAT for import and export
Due to Article 23 of the Turnover Tax Law, companies do not have to pay VAT on imported goods and can transfer it instead if they have a VAT Transfer Permit. VAT is normally charged at 19% for imports and 6% specifically for foodstuffs. Challenges

Firstly, due to a multi-coalition government, disagreements are inevitable as no party has the ruling majority. Secondly, the Party of Freedom Policy wanting to reduce non-western immigrants could pose a problem for new businesses. Thirdly, the Labour Party’s decision to withdraw Dutch troops from Afghanistan has resulted in strained relations with the U.S.A. Future Outlook

-Despite the multi-coalition government, Dutch economy continues to prosper due to peaceful relations between the government and companies. - Furthermore, the Netherland's political risk scores remains at 3. ECONOMIC:

-Strong infrastructure
-High openness to FDI
-High saving ratio.
- High minimum wages
-Cuts in spending
-Improving international economic ties.
-Increase in unemployment.
-Increasing fiscal deficit.
-Slower economic recovery.
Current Challenges:
- High minimum wages
Future Prospects:
- Cut in spending
- Improving international economic ties.
Future Risks
- Increases in unemployment
- Increasing fiscal deficit
- Slower economic recovery.
- GDP is 16th largest, and 6th largest in the EU. Its economic performance is strongly correlated to EU’s performance, because the economy is heavily reliant on trade and international business. 72.4% of GDP is generated from service and merchandise trade. The WEF measures its global competitiveness in 7th in the world.


There are two transportation hubs, Amsterdam airport (6th largest) and Rotterdam Seaport (3rd largest). Well-developed infrastructure leads to lower transportation cost, which leads to form solid supply chain both domestically and internationally for supermarket industry.

2.High openness to FDI
- The Netherlands is the sixth largest FDI recipient, due to a friendly tax regime introduced in 1997 and 30% tax breaks for highly qualified foreign corporations. -the regulation does not discriminate between foreign and domestic companies.

3.Low Saving Ratio
Compared to average EU level, Netherlands has lower saving ratio, meaning high proportion of disposable income is used for consumption

High minimum wages compared to other EU countries is disadvantage for supermarket industry (large sector of economy) -, as it pushes up cost.

Future Outlook
The EU’s economic performance is expected to struggle in next 5 years by IMF. Thus, the Netherlands is expected to have a slower growth in the near future. - the...
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