For international businesses looking to gain a foothold in Europe, the Benelux countries – Belgium, the Netherlands and Luxembourg – provide the perfect place to establish operations, with comprehensive infrastructure, attractive business conditions and a wealth of experienced local advisers.
The Benelux nations have a long history of working together, going back to the 16th century when the 17 Provinces were the Imperial states of the Habsburg Netherlands. These provinces roughly covered modern Belgium, the Netherlands and Luxembourg.
More recently, the countries signed up to a customs union agreement in 1948 and have since joined the European Union, giving them the benefits of EU membership as well as Benelux membership. For instance, there is automatic recognition of all diplomas and degrees within the Benelux, a Treaty on Police cooperation and common road inspections.
The Benelux countries have long been known for welcoming foreign investors. The countries have a strategic location as a gateway to Europe and all have ultra-modern transport and communications infrastructures. The education systems are the best in Europe, resulting in a highly educated workforce. In addition, academia works closely with business to develop innovative new products and solutions.
Elsewhere, the respective governments are strongly supportive of domestic and international business and provide a range of incentives from relatively low tax levels to generous subsidies and grants for certain types of businesses.
Belgium is a dynamic economy that is renowned for encouraging SMEs and foreign start-ups. According to EU statistics, there are some 620,000 active businesses in Belgium and the majority of these are SMEs generating 62% of value to the Belgian economy. Foreign owned businesses in Belgium account for around 28% of value in the private sector.
The Netherland is ranked fourth in the world by IMD’s World Competitiveness Ranking 2020. The country is home to 15,000 foreign companies and an estimated 50% of Dutch GDP is derived internationally. According to the 2019 ranking of the Competitive Index of World Economic Forum (WEF), the Netherlands has the most competitive economy in Europe and is one of the top countries for business investment in the world.
Meanwhile, Luxembourg continues to attract foreign businesses. The country is an important financial centre, where investment funds, banks, reinsurance businesses and holding companies have expanded rapidly during the past 30 years. It has made its name as an investor-friendly destination to do business, with a strong legal, tax and regulatory infrastructure, and an experienced multi-lingual and multi-cultural workforce.
Luxembourg is the second after the US in matter of net assets owned by Luxembourg investment funds totalling euro5.5 billion. More than seven major Chinese banks have established their European headquarters in the country, while Luxembourg was the first and remains the main stock exchange listing specifically qualifying “green” or ESG compliant securities.
While the economies of each of these Benelux countries is wellrounded and highly attractive for foreign investment, high-tech businesses in particular are thriving in the region – with more than 10% growth in the sector in Belgium alone in the years 2015 to 2019 – providing opportunities for investment or acquisition for overseas companies.
As the Benelux economies recover from the COVID-19 pandemic, business has quickly picked up and mergers and acquisitions, in particular, are now back on the corporate agenda. This includes many deals now reactivated since being put on hold in 2020. Likewise, businesses are looking increasingly for growth capital again as confidence grows in the future of the Benelux economies following the vaccine rollout.
Any overseas business or investor looking to make a move to the Benelux countries must be aware that while the tax and corporate regimes are favourable and relatively straightforward, business legislation is strictly applied for anyone setting up in the region. These include laws on company establishment, corporate governance, taxation, employment law and accountancy and transparency and all investors would do well to hire a seasoned local professional services firm before setting up shop. The laws in Belgium alone can be mind boggling for US investors, as an example.
Local legal and accounting experts will understand the intricacies of the business culture and accounting law in their respective countries. Importantly, they will also know the local quirks of the market, have all the relevant contacts at government level and will know who the local big players are and will recommend other professional services experts to help any deal or investment.
Over the next pages, we profile IR Global members in the Benelux countries who can provide in-depth commercially focused legal and financial advice for international clients doing business in Belgium, the Netherlands and Luxembourg.