EU and free movement

Freedom of establishment within the European Union; English Ltd operating in
The Netherlands.

The European Union allows freedom of movement of Capital, Persons, Services and Goods. Therefor, under circumstances, it is allowed for a Spanish Societad Responsabilidad limitada (let's say Agustin S.r.l.) to establish herself in The Netherlands.

The Netherlands allows only several limited types of entities to be created
in the Netherlands. As discussed before you could start a business as a B.V. (besloten vennootschap) which has as an equivalent the Ltd or a N.V.
(naamloze vennootschap) equivalent to a Spanish S.r.l.

As the EU allows pure free movement of Capital, it is possible to start in
Spain a company X S.r.l. and have sole economic activities in The Netherlands, without having to open a new company in The Netherlands under Dutch rules as a B.V. So, to create X B.V. to start an economic activity is not necessary.

Until 30th of September 2003 the Dutch legislator stated that although one could have a S.r.l. in the Netherlands, the spanish company would have to
undergo the same conditions and requirements as the Dutch equivalent (B.V.). In this way The Netherlands have the guarantee the exotic Spanish company abides by the same law and has the same guarantees to its creditor as the Dutch B.V.

Alas, the Court of the European Union ruled on that day in September 2003 that the Dutch requirement to undergo specific conditions and requirements is a blockade for the free movement of Capital. The Dutch law is non-binding and should be amended.

It is interesting which consequences this may have. I'll give you one: an
English Ltd which, by English law, has much less starting capital and less guarantees against bad corporated governance is allowed to start economic activities in The Netherlands. Imagine this - let's say internet based Ltd - is selling a masterpiece of art to you.

After a couple of months you find
out that the Ltd is bankrupted and you never got the piece of art. If the
company would be a Dutch B.V. it would be relatively easy to get back your money. As the Ltd abides by English law, it will be more costly (you would need an international lawyer) and insecure (lesser creditors guarantees) to get back your money.

Check out how the company which you are dealing with is registered. You can check this easily at www.kvk.nl or mail us at Dnauta@gmx.net.