Offshore banking is increasingly becoming popular among enterprises wishing to expand into new territories.
Dutch in particular, thanks to its banking stronghold and tax treaty infrastructure, affords offshore banking a stable legal and economic base.
In this article, we will show you the most common procedures to conduct offshore banking in the Netherlands as an enterprise.
What is Offshore Banking for Business in the Netherlands?
Offshore banking is the practice of doing banking activities outside of your own country. For a Dutch-based company, offshore banking entails a bank account with a bank that is licensed and supervised by another country.
The following are some of the most important things about offshore banking for businesses in the Netherlands:
- Interest on deposits and earnings from investments on these accounts can receive a preferential tax treatment in line with any double tax treaties between the Netherlands and the account jurisdiction.
- Orders such as overseas payments and investments can be executed more conveniently by a single agent in the offshore bank rather than through a number of offshore counterparties.
- Cash held offshore can more effectively be shielded from political or economic risks in the source country via legal safeguards in the host country.
Offshore banking enables Dutch businesses to have a wider range of banking and investment services abroad while potentially gaining tax and asset protection benefits.
What Types of Offshore Banking Accounts are Available for Businesses in the Netherlands?
The offshore bank accounts offered by the Netherlands include several standard offshore bank accounts:
Corporate Bank Accounts
Corporate bank accounts can be used by corporations to store money, pay suppliers/vendors, collect revenue from clients, and other business banking requirements. Offshore banks usually provide both regular corporate accounts and more specific forms such as escrow or multi-currency accounts.
Savings Accounts
Offshore savings accounts enable companies to hold the excess cash and earn interest — eventually building up cash reserves. Savings accounts charge higher rates than domestic accounts.
Money Market Accounts
Money market accounts offer the compounding power of a savings account as well as the check-writing and liquidity features of a checking account. These offer a tempting cash-management solution.
Fixed Deposit Accounts
Fixed deposits allow companies to reserve money for a certain period of time, such as 6 months, and earn greater interest in return for restricted access to the money until maturity. This is suitable for low, or long-term, holdings.
Securities/Brokerage Accounts
Offshore securities accounts give you the opportunity to invest globally, such as stocks, bonds, futures and so on. This expands wealth creation opportunities beyond national borders.
What combination of types of accounts should be chosen will depend on a business’s particular circumstances, but these services are among the most common for Dutch companies who perform offshore banking.
What Documents are Needed for Offshore Banking for a Business in the Netherlands?
To open offshore bank accounts, you need to provide the right paperwork to verify the company name and operations.
The standard documentation includes:
- Passport/national ID of proprietors/signatories
- Corporation papers
- Company ownership structure chart
- Latest financial statements
- Banker's reference letter
- Documents pertaining to business organizations, such as Memorandum of Association for private/public limited partnerships.
- Energy bill as proof of address for the company.
- Documents — signed application and account set-up contract.
- KYC records such as source of wealth information.
Depending on the size of the business and the transactions, some banks may also ask for extra documents. You should double-check individual bank conditions before signing up.
Is Offshore Banking Legal for Businesses in the Netherlands?
Offshore banking is legal for Dutch companies as long as it’s governed by relevant financial regulations. The Netherlands places no restrictions on legitimate cross-border banking.
Observations on the legality:
- Creating bank accounts outside the country and using them for ordinary business transactions isn’t a violation of Dutch law.
- Money can only come from legal sources because money laundering is illegal. Proper KYC checks are important.
- Worldwide income remains subject to Dutch taxation, with double taxation agreements offering exemptions or foreign tax deductions.
- For bulk transactions or transfers, reporting requirements to regulators such as De Nederlandsche Bank must be observed.
- Enterprises are also required to register foreign accounts using CRS for automatic reporting of financial data to the tax authorities.
As long as a company is honest with its offshore business and meets all compliance obligations, international banking is not restricted in the Netherlands. It is a legitimate way to diversify business.
What are the Benefits of Offshore Banking for Businesses in the Netherlands?
Some of the benefits of offshore banking instead of domestic banking are listed below:
Better Money Control: Depositing and investing in large world currencies such as US dollars and pounds sterling via offshore accounts helps protect against exchange rate fluctuations that can affect import/export profits. It also provides diversification away from the euro exposure.
Greater Access to Larger Pools of Investment: Offshore banks provide access to a greater variety of global financial markets, products, and asset classes than are available locally. This allows businesses to potentially make more money.
Better Interest Rates: Interest on deposits and fixed income placements is higher at offshore banks, offering companies higher yields and cash flow.
Asset Safety: Storing assets in solid offshore countries via trusts or international companies provides additional protection from lawsuits, taxes, creditors, or government interference back home.
Banking Integrity: Offshore accounts keep banking operations running smoothly even if a company needs to relocate some areas of its business abroad for reasons such as growth or political/economic downturn at home.
Potential Tax Advantages: Depending on double tax agreements, offshore income may be taxed at zero or low rates abroad as opposed to the generally higher Dutch corporate tax rate.
Offshore banking enables new channels for better treasury management, wealth creation and risk mitigation for Dutch companies operating globally.
A digital offshore bank such as Jetonbank gives you the best possible access to these benefits via online offshore banking services.
Depending on what accounts one opens, with the right bank such as Jetonbank, licensed and regulated from Dominica, Dutch businesses will benefit from lower interest rates, better investment choices, improved currency management and tax savings.
Offshore banking is a legal, tax-efficient way for businesses to diversify their capital and hedge risk around the world if planned properly and fully in line with regulations at home and abroad.
