Employed in the Netherlands, made in the U.S.A.

Why does the Netherlands receive so much American investment?

By Caroline van Soelen

Oliver Michell (left) and George Gottl set up their design firm, Uxus, in the Netherlands. (Caroline VS)

In 2003, architect Oliver Michell decided to move Uxus, the design consultancy he owns with his American partners George Gottl and Erika Gottl, to the Netherlands. George and Oliver, who met while working in London, believed Amsterdam was a perfect place to realize their entrepreneurial dreams. Now Erika takes care of their office in California’s Napa Valley, while Oliver and her brother, George, run the Dutch office.

Working on the two top floors of a historic building on a canal in Amsterdam, Oliver feels right at home. “It is really the best of both worlds: you can have an international mindset without the disadvantages of being in a big city,” he says. “But also the cost of living and quality of life are great. And plenty of companies have their European head quarters in the Netherlands, which makes it a good place to meet interesting people.”

Michell is part of a long-running trend. The Netherlands and the United States have a history of trading that dates back for centuries. Today, according to Simon Paul of the US Chamber of Commerce here, nearly 225,000 people are employed by American companies and their subsidiaries in the Netherlands. In 2011, the Netherlands was the largest destination for Americans’ direct foreign investment — $521 billion dollars — a position it’s held for several years.

Bloomberg ranks the Netherlands as the second-best place to conduct business in the world. “The Netherlands is a superb destination for American investment and that is proved by the fact that the U.S. is the largest investor and there haven’t been any major dips in the last 20 years,” says Alan Ras, head of the commercial service for the American Embassy in The Hague.

“It is very easy to negotiate for American companies, the Dutch business environment is very transparent, and Dutch people are very forthright, as are Americans.”

Even-keeled Dutch instability

Even Dutch political instability is a mere hiccup for the flow of American cash. But in April of this year, the Dutch coalition government resigned, the fourth coalition to withdraw due to a political stalemate that’s lasted a decade, leading to the fifth election in a decade on September 12th.

Does this current turbulent political climate have an affect on American investments?

Not really, says Simon Paul, economic policy coordinator at the American Chamber of Commerce in the Netherlands. “This is peanuts compared to all the other things happening in the world. It has no effect on the American investors,” Paul says.

Alan Ras agrees: “I don’t expect any change for American companies after the election. That is the very nature of a coalition government and what makes it a good place for a business to be.”

Dutch governments perennially encourage cooperation with the United States too. “I see great potential for further growth and jobs creation. Dutch business leaders look forward to an intensified dialogue with American authorities to discuss future investment plans and the mutual challenges to realize these,” said former Dutch Prime Minister Mark Rutte in a statement released with the study Economic Ties Between the USA and the Netherlands: A Partnership that Works.

Forget the coffee shops, try the corporate tax rate

According to a report by Deloitte in December 2011, the stable political climate, highly educated employees that speak good English and high-quality infrastructure are other reasons for foreign companies to start their business in the Netherlands. For Americans working in the Netherlands, the country provides some interesting opportunities.

Jonathan Wisler of Amsterdam-based SoftLayer (Caroline Van Soelen)

“In Amsterdam and the Netherlands, there is a real emphasis on creativity and, as we are an innovative company, that’s very important for us,” says Jonathan Wisler, a San Francisco native.

Wisler, General Manager at SoftLayer, a cloud computing firm, lives in Amsterdam with his Italian wife and two children.

“I moved to Amsterdam six years ago to set up the European operations for Ofoto [an online photography service acquired by Kodak]. I found it amazingly easy to settle in,” he says. “Culturally there are a lot of similarities between Amsterdam and San Francisco. I like the food and have plenty of Dutch friends. The only difficulty is learning the language. But I’ll have to start practicing now that my daughter speaks Dutch with her friends.”

The Netherlands attracted Wisler in part because it’s known as a tech-friendly environment. “There is great connectivity across from the United States to Europe and digital distribution through the Amsterdam Internet Exchange,” says Wisler, referring to an independent organization based in the city that helps route different servers to each other. “It is easy to do business, because most of our partners are also set up here.”

Owen Zacheriasse, Sustainability Officer at The Delta Development Group, lives in Amsterdam. He explains the opportunities the Dutch capital has to offer:

“If you can make it in an international business, you can make it anywhere,” he says. “There is even an American business club in Amsterdam that organizes 4th of July barbeques. And there is also a favorable tax treatment for expats, the so-called 30-percent tax ruling.”

This 30-percent ruling allows foreign employees to earn up to 30 percent of their compensation tax-free. They can opt to be released from Dutch taxation on their investments. And Americans can also claim a deduction for employment income allocated to non-Dutch workdays.

“The Netherlands has a very competitive tax climate,” says Paul. “There is a far-reaching tax treaty network and plenty of possibilities to conclude advanced tax rulings. A wide tax treaty network makes it possible to avoid double taxation. Reinvested earnings are actually the largest source of American investments.”

The Dutch corporate tax rate is 25 percent, well below the European Union’s national average of more than 30 percent. That’s among the lowest in Western Europe. Ireland’s corporate tax is 12.5 percent. Switzerland’s is 21.17 percent.

For success, think small

One of the biggest advantages in the Netherlands is that, as a business, you can practice the 30-minutes rule, says Jeroen Toet, a Dutch political scientist and America expert. “Because the Netherlands are relatively small, you can be at an international airport or port in approximately 30 minutes,” says Toet.

Still, Europe has a less flexible labor market that reflects a European, softer version of capitalism. A report from Ernst & Young shows that the high cost of labor and an inflexible labor market make hiring in the Netherlands more complex and expensive than in the United States.

“Dutch employees do have a different work attitude,” Toet says. “Life and work are less integrated than in the United States.”

Josien Suntjens, a Dutch employee at the American company Bal Seal Engineering, agrees. “For Americans, their work is their life. Dutch people work to pay their cost of living,” he says. “That may take some time to adjust for American companies hiring Dutch employees.”

There is plenty of competition from other European countries offering better packages to American companies. Ireland and the United Kingdom are the Netherlands’ biggest competitors in gaining American investors’ favors. Other than language, however, those two countries don’t have a significant advantage.

“The Netherlands is a soft landing spot for American businesses looking to open an office abroad,” says Suntjens. “The pace is different; there is no 24-hour service for everything. But if you keep an open mind, it is a great adventure.”