A quarter of companies wants to leave the Netherlands

A large number of Dutch companies wish to leave the Netherlands, or at least invest their money abroad rather than in this country. That is the alarming finding of a new survey published by employers’ organisations VNO-NCW and MKB-Nederland. A range of factors contribute to a lack of confidence in the Dutch business climate, leading companies to look elsewhere. The survey, which sought insights from over 1,600 companies, found that a whopping 24% of large companies (those with over 250 employees) are considering moving part or all of their activities abroad. That figure is up from 13% the previous year.

Political and economic uncertainty
In the first few months of 2024, inflation is much lower than it was in the past couple of years and most financial analysts expect a series of interest rate cuts from the European Central Bank. On paper, this should be the time when economic confidence is booming. In reality, uncertainty is rife. Even with inflation decreasing, businesses do not expect interest rates to fall to the near-zero levels of the 2010s, which means investment will remain difficult. Moreover, political instability does not encourage putting down roots in the Netherlands. Businesses want to know they are setting themselves up in an environment of long-term stability. 

High tax rates and tax scheme changes
Some companies cite taxation as a key reason for their unhappiness. For example, key members of the technology industry like ASML and NXP have recently criticised the trend of government interfering with business tax schemes. As well as political certainty, businesses value tax certainty. They consider it vital to know the tax schemes they use will not suddenly change their parameters, because that can have a significant effect on their bottom line.

More broadly, many businesses believe tax rates are simply too high. VNO-NCW chairman Ingrid Thijssen stated recently that the favourability of the Dutch business environment is in ‘free fall’. The report attributes this trend in part to a series of tax increases. ‘The costs for our entrepreneurs are now among the highest in Europe,’ says Thijssen. ‘That scares companies away.’ When the state takes a larger slice of company profits and personal incomes, there is less money flowing through the economy, so doing business becomes more difficult.

Anti-immigration sentiment
As well as taxation, tech companies ASML and NXP have criticised politicians’ approach towards immigration. Thanks to political polarisation and the strength of the populist right wing, political sentiment among lawmakers has become hostile to immigration. Entrepreneurs want to know they can do business with people all over the world freely, without becoming bogged down in visa paperwork or encountering obstacles when hiring the workers they want to employ. An anti-immigration political climate thus contributes to dissatisfaction among businesses.

Unpredictability in regulation
Another key factor in business unhappiness is the fast-growing regulatory burden. Complying with new regulations is often a costly endeavour. Entrepreneurs cite the erratic and unpredictable nature of government as a problem. ‘All the rules drive you crazy,’ says Brabant entrepreneur John Martens. ‘The government seems not to trust companies to do anything.’

Unpredictable regulations come from Brussels as well as The Hague. Even in the face of a strong performance for the populist right wing in the upcoming EU parliament elections, the European Union is introducing a slew of new regulations for businesses on everything from tech and agriculture to health and the environment. Regulations are important, but when companies cannot predict which bold new initiative is coming around the corner next, doing business fast becomes a nightmare.

A way forward?
The Dutch government and the European Union, like all lawmaking bodies, often have political goals which are at odds with what companies want. There is a delicate balance to be struck between achieving their political aims without making it unduly difficult to create and grow a business. The current slump in business confidence in the Netherlands suggests lawmakers have leaned too far towards politics and away from the market’s wishes. If a quarter of companies really do leave the Netherlands, the economic consequences would be disastrous. There is only so much time left for politicians to notice this trend and make changes.

Written by Jason Reed