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The Netherlands

Executive Summary

The Netherlands consistently ranks among the world’s most competitive industrialized economies. It offers an attractive business and investment climate and remains a welcoming location for business investment from the United States and elsewhere.

Strengths of the Dutch economy include the Netherlands’ stable political and macroeconomic climate, a highly developed financial sector, strategic location, well-educated and productive labor force, and high-quality physical and communications infrastructure. Investors in the Netherlands take advantage of its highly competitive logistics, anchored by the largest seaport and fourth-largest airport in Europe. In telecommunications, the Netherlands has one of the highest levels of internet penetration in the European Union (EU) at 96 percent and hosts one of the largest data transport hubs in the world, the Amsterdam Internet Exchange.

The Netherlands is among the largest recipients and sources of foreign direct investment (FDI) in the world and one of the largest historical recipients of direct investment from the United States. This can be attributed to the Netherlands’ competitive economy, historically business-friendly tax climate, and many investment treaties containing investor protections. The Dutch economy has significant foreign direct investment in a wide range of sectors including logistics, information technology, and manufacturing. Dutch tax policy continues to evolve in response to EU attempts to harmonize tax policy across member states.

Until the COVID-19 crisis, economic growth had placed the Dutch economy in a very healthy position, with successive years of a budget surplus, public debt that was well under 50 percent of GDP, and record-low unemployment of 3.5 percent. This allowed the Dutch government significant fiscal space to implement coronavirus relief measures. In response to COVID, the Dutch government implemented wide-ranging support for businesses affected by the COVID crisis, including support to cover employee wages, benefits to self-employed professions to bridge a loss of income, and compensation for fixed costs other than wages. The financial support measures added up to about $70.5 billion (€60 billion) in the first year of the crisis. These programs prevented a wave of bankruptcies – bankruptcy filings in 2020 and 2021 were the lowest in two decades.

The new coalition government announced in early 2022 plans to be climate neutral by 2050. The government said it would adjust domestic climate goals to at least 55 percent CO2 reduction by 2030 compared to 1990, with ambitions to aim higher for a 60 percent reduction.  The government has named a Minister for Climate and Energy Policy to work on domestic issues in addition to a Climate Envoy focused on international efforts.  The Netherlands joined the U.S.-EU Global Methane Pledge and promised to end all investment in new coal power generation domestically and internationally.  In April 2022, the government joined the AIM for Climate initiative.

The 2019 National Climate Agreement contains policy and measures to achieve climate goals through agreements with various economic sectors on specific actions.  The participating sectors include electricity, industry, “built environment,” traffic and transport, and agriculture.

The Netherlands business community suffered a two-pronged loss in the planned departure of two of its major national corporate champions. Energy leader Shell and food and household products conglomerate Unilever announced in 2021 a relocation of their corporate headquarters from The Hague and Rotterdam, respectively, to London. The companies cited concerns with Dutch tax law relative to dividend taxation and need for consolidated management structure. (Note: Both companies previously split their corporate governance between the Netherlands and the UK. End Note.)

In March 2022, the Dutch Central Planning Bureau (CPB) published its 2022 economic projections. Due to the Russian invasion of Ukraine, the outlook was marked by uncertainty and flagged “even higher” energy prices as the most important economic consequence. Because of increased energy prices and high inflation from the COVID pandemic, CPB estimates a 5.2% inflation rate for 2022 with a range of 6.0% and 3.0% depending on how long energy prices remain high. CPB estimated economic growth of 3.6% in 2022 and 1.7% in 2023. CPB predicted unemployment at 4 percent in 2022, down from 4.2% in 2021. The low unemployment rate reflects a similar challenge also faced by the United States – businesses are finding it difficult to recruit qualified staff. Government debt is expected to rise to 61 percent of GDP by 2025 due to increased spending under the new coalition government, including on defense, outlays to support an aging population, and support to low-income families to offset inflation in energy and food prices.

According to the U.S. Bureau of Economic Analysis (BEA), when measured by country of foreign parent, the Netherlands is the second largest destination for U.S. FDI abroad in 2020 after the UK, holding $844 billion out of a total of $6.1 trillion total outbound U.S. investment – about 14 percent. Investment from the Netherlands contributed $484 billion FDI to the United States, making it the fourth largest investor at the end of 2020 of about $4.6 trillion total inbound FDI to the United States– about 10.5 percent. Measured by ultimate beneficial owner (UBO), the Netherlands was the seventh largest investor at $236 billion. For the Netherlands, outbound FDI to the United States represented 14 percent of all direct investment abroad.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2021 8 of 180 https://www.transparency.org/en/cpi/2021 
Global Innovation Index 2021 6 of 132 https://www.globalinnovationindex.org/analysisindicator
U.S. FDI in partner country ($M USD, historical stock positions) 2020 $844 million Bea: Netherlands – International Trade and Investment Country Facts
World Bank GNI per capita 2020 $ 51,060 https://data.worldbank.org/indicator/NY.GNP.PCAP.CD

1. Openness To, and Restrictions Upon, Foreign Investment

3. Legal Regime

4. Industrial Policies

5. Protection of Property Rights

6. Financial Sector

7. State-Owned Enterprises

The Dutch government maintains an equity stake in a small number of enterprises and some ownership in companies that play an important role in strategic sectors.  In particular, government-controlled entities retain dominant positions in gas and electricity distribution, rail transport, and the water management sector.  The Netherlands has an extensive public broadcasting network, which generates its own income through advertising revenues but also receives government subsidies. For a complete list of government-owned entities, please see:  https://www.rijksoverheid.nl/onderwerpen/staatsdeelnemingen/vraag-en-antwoord/in-welke-ondernemingen-heeft-de-overheid-aandelen 

Private enterprises are allowed to compete with public enterprises with respect to market access, credits, and other business operations such as licenses and supplies.  Government-appointed supervisory boards oversee state-owned enterprises (SOEs).  In some instances involving large investment decisions, SOEs must consult with the cabinet ministry that oversees them.  As with any other firm in the Netherlands, SOEs must publish annual reports, and their financial accounts must be audited. The Netherlands fully adheres to the OECD Guidelines on Corporate Governance of SOEs.

8. Responsible Business Conduct

The Netherlands is a global leader in corporate social responsibility (CSR).  Principles of CSR are promoted and prescribed through a range of corporate, governmental, and international guidelines.  In general, companies carefully guard their CSR reputation and consumers are increasingly opting for products and services that are produced in an ethical and sustainable manner. The Netherlands adheres to OECD Guidelines for Multinational Enterprises, and the Dutch Ministry of Economic Affairs and Climate Policy houses the National Contact Point (NCP) that promotes OECD guidelines and helps mediate concerns that persons, non-governmental organizations (NGOs), and enterprises may have regarding implementation by a specific company.  For more information, visit  http://www.oecdguidelines.nl.

The Dutch government strongly encourages foreign and local enterprises to follow UN Guiding Principles on Business and Human Rights, which states that businesses have a social responsibility to respect the same human rights norms in other countries as they do in the Netherlands.

Under the law, there is no differentiation for men and women regarding equal access to investment.  Furthermore, no groups are excluded from participating in financial markets and the financial system.

The Netherlands has strong standards for corporate governance.  Publicly listed companies are required to publish audited financial reports.  As of 2017, the EU requires these companies to include a chapter on Responsible Business Conduct.

The Ministry of Economic Affairs and Climate Policy established an independent networking organization on CSR called MVONederland in 2004.  MVONederland currently has over 2050 members, including SMEs, multinational corporations, and NGOs, as well as local and national administrative bodies.  See  https://www.mvonederland.nl/en/about-mvo-nederland/about-csr-corporate-sustainability-and-responsibility/  

The Dutch government also encourages companies to engage in CSR through incentive programs and by setting high standards.  Examples include:

  • The government reviews CSR activities of more than 500 corporations annually and presents an award to the company with the highest transparency score.
  • The government boosts the development of sustainable products through its own sustainable procurement policy.
  • Dutch companies can only join government trade missions if they have endorsed OECD Guidelines for Multinational Enterprises.
  • Companies that observe the OECD Guidelines for Multinational Enterprises are eligible for financial support for their international trade and investment activities.
  • The government supports the Sustainable Trade Initiative (IDH), which helps companies make their international production chains more sustainable.
  • The government conducts sector-risk analyses to identify where problems are most likely to occur and target improvements.
  • The government has completed nine of 13 sector-wide Responsible Business Conduct Agreements it intends to make with the private sector in the area of international CSR.  The nine agreements cover garments and textiles, banking, pensions, insurance, food products, sustainable forestry, natural stone, metals, and gold. See https://www.government.nl/topics/responsible-business-conduct-rbc/responsible-business-conduct-rbc-agreements

9. Corruption

The Netherlands fully complies with international standards on combating corruption.  Transparency International ranked the Netherlands eighth in its 2020 Corruption Perception Index. Anti-bribery legislation to implement the 1997 OECD Anti-Bribery Convention (ABC) entered into effect in 2001.  The anti-bribery law reconciles the language of the ABC with the EU Fraud Directive and the Council of Europe Convention on Fraud.  Under the law, it is a criminal offense if one obtains foreign contracts through corruption.

At the national level, the Ministry of the Interior and Kingdom Relations and Ministry of Justice and Security have both taken steps to enhance regulations to combat bribery in the processes of public procurement and issuance of permits and subsidies.  Most companies have internal controls and/or codes of conduct that prohibit bribery.

Several agencies combat corruption.  The Dutch Whistleblowers Authority serves as a knowledge center, develops new instruments for tracking problems, and identifies trends on matters of integrity.  The Independent Commission for Integrity in Government is an appeals board for whistleblowers in government and law enforcement agencies.

The Netherlands signed and ratified the UN Anticorruption Convention and is party to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions.

10. Political and Security Environment

Although political violence rarely occurs in the highly stable and consensus-oriented Dutch society, public debate on issues such as immigration and integration policy has been contentious.  While rare, there have been some politically and religiously inspired acts of violence.

The Dutch economy derives much of its strength from a stable business climate that fosters partnerships among unions, business organizations, and the government.  Strikes are rarely used as a way to resolve labor disputes.

11. Labor Policies and Practices

The Netherlands has a strongly regulated labor market (over 75 percent of labor contracts fall under some form of collective labor agreement) that comprises a well-educated and multilingual workforce.  Labor/management relations in both the public and private sectors are generally good in a system that emphasizes the concept of social partnership between industry and labor.  Although wage bargaining in the Netherlands is increasingly decentralized, there still exists a central bargaining apparatus where labor contract guidelines are established.

The terms of collective labor agreements apply to all employees in a sector, not only union members.  To avoid surprises, potential investors are advised to consult with local trade unions prior to making an investment decision to determine which, if any, labor contracts apply to workers in their business sector.  Collective bargaining agreements negotiated in recent years have, by and large, been accepted without protest.

Every company in the Netherlands with at least 50 workers is required by law to institute a Works Council (“Ondernemingsraad”), through which management must consult on a range of issues, including investment decisions, pension packages, and wage structures.  The Social Economic Council has helpful programs on establishing employee participation that allow firms to comply with the law on Works Councils.  See https://www.ser.nl/en/SER/About-the-SER/What-does-the-SER-do.

The working population consists of 9 million persons.  Workers are sought through government-operated labor exchanges, private employment firms, or direct hiring.  At 50 percent, the Netherlands has the highest share of part-time workers in its workforce of all EU member states (in 2017, the EU average of part-time workers was 19 percent).  A rise in female participation in the workforce led to a 37 percent increase in the share of part-time workers in the total working population.  Three-quarters of women and one quarter of men work less than a 36-hour week.  Labor market participation, especially by older workers, is growing, and the number of independent contractors is rapidly increasing.

To ensure continued economic growth and address the impact of an aging population, increased labor market participation is critical.  The age to qualify for a state pension (AOW) will increase from age 66 to 67 by 2024.  Governmental labor market policies are targeted at increasing productivity of the labor force, including the expansion of working hours.  For example, access to daycare is improving in order to raise the average number of hours per week worked by women (28 hours), which is 11 hours below the average of hours worked by men.

Effective January 1, 2022, the minimum wage for employees older than 21 years is €1,725 ($1,850) per month.

13. Foreign Direct Investment and Foreign Portfolio Investment Statistics

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy
Host Country Statistical source* USG or international statistical source USG or International Source of Data:  BEA; IMF; Eurostat; UNCTAD, Other
Economic Data Year Amount Year Amount
Host Country Gross Domestic Product (GDP) ($M USD) 2021 $859,001 2020 $914,000 GDP (current US$) – Netherlands | Data (worldbank.org)
Foreign Direct Investment Host Country Statistical source* USG or international statistical source USG or international Source of data:  BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in partner country ($M USD, stock positions) 2019 $976,750 2020 $844,000 BEA data available at https://apps.bea.gov/international/factsheet/
Host country’s FDI in the United States ($M USD, stock positions) 2020 $744,720 2020 $484,000 BEA data available at https://www.bea.gov/international/direct-investment-and-multinational-enterprises-comprehensive-data
Total inbound stock of FDI as % host GDP 2019 170% (excluding SFI) 2020 318% UNCTAD data available at

https://stats.unctad.org/handbook/EconomicTrends/Fdi.html     

* Source for Host Country Data: Netherlands Bureau for Economic Policy Analysis (CPB): GDP, Dutch Central Bank (DNB): FDI.

Table 3: Sources and Destination of FDI
Direct Investment from/in Counterpart Economy Data
From Top Five Sources/To Top Five Destinations (US Dollars, Millions)
Inward Direct Investment Outward Direct Investment
Total Inward 4,512,447 100% Total Outward 5,876,798 100%
United States 1,190,180 26% United Kingdom 801,255 14%
Luxemburg 435,166 10% United States 792,311 13%
United Kingdom 433,383 10% Switzerland 521,553 9%
Germany 332,293 7% Germany 418,576 7%
Switzerland 226,734 5% Luxembourg 330,020 6%
“0” reflects amounts rounded to +/- USD 500,000.

14. Contact for More Information

Tracy Taylor
Economic Unit Chief
John Adams Part 1
2244 BZ Wassenaar
Telephone: +31 (0)70 3102276
Email: TaylorTL1@state.gov

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