A flashback to our YME project. The most important animation lessons in English, Arabic, Turkish, Dutch, Romanian and Italian. For the YME Green Book, more tips and tricks and entrepreneurial guidance, please visit our website www.ymeproject.com and platform yme-platform.net.

Rapidly evolving economic and social structures and conditions lead to imagine new places where people are able to work, learn, create value, in eco-systems that are more compatible with their own flourishing, happiness, well-being and with the preservation of our planet. 3rd Type Places are typically places that enable, foster, sustain such initiatives. Such places already exist, other are developed on project basis. They may take a large variety of size, form, status, etc. They gather different types of actors, with different kind of objectives, and different way of functioning. The Learning Mobilities and study vists in Bologna and Reggio Emilia showed us the Happy Places3T in Italy.

Learning Mobilities Reggio Emilia

The Places3T learning mobilities are taking place on October 4th, 5th and 6th 2021 in Reggio emilia and Bologna. In the spirit of European Projects Erasmus+, a ‘Learning Mobility’is a “training week” for people belonging to partners’ staff. In the Places-3T project, mobilities are designed to have an overview of the situation in another territory and work together to enhance the ability of the participants to better manage and animate third places.

The main objectives of the first learning mobility are mainly:

• to gain knowledge about the Places-3T project, its goals and and its value creation process;
• to gain knowledge about third places animation;
• to develop their abilities in animating and developing a Places-3T
• to update their professional profiles on the Professional Social Network;

The partnership did a few study visits in Bologna and Reggio Emilia. We visited three ‘Places3T’. For sure, BiciBox, nearby the Railway station of Reggio Emilia was one of the most interesting Places3T. At first glance it looks like a bicycle repair shop, but ‘building relationships’ is a more accurate product of the ‘box’. The free library, coffee/meeting place and products they sell (bags, bicycles, etc.) are making networking and active citizenship more easy and natural. The box is the place for meet and greet and’the bike is connecting people’.

Happy Place

On the location of ONLUS we had a few discussions, e.g.: What would be the definition of Places3T? If you look at for instance at the box, you see it should be a happy place, with potential were you want to work and meet people to network and do business with… When people see the potential of the place were you are working, doing a business and can feel the vibe, chemistry and success then it is a places3T. How to create a smooth functioning network and accessibele for everyone who wants to find out whats/he loves to do and do what s/he loves to do and then create and develop as a person and its’product…

Andrea Ascari, director of ONLUS added that the four priorities of the Erasmus+ network also seem very relevant for Places3T:

• Inclusion
• Digital transformation
• Environment and fighting against climate change
• Active citizenship

When you look at the Bici Box three of the four are incorporated (except digital transformation – although the free library can be digitalised as well).

Study Visit Bologna

On the study visit on Tuesday 5th we met with the regional staff on youth policies of the municipality of Bologna and went to Eta Beta. Eta Beta is a social enterprise, youth center and 3rd place in one, combining all elements of social entrepreneurship (hospitality, vegetarian/vegan food, gardens, woodcrafting, etc.

Exploring more about the framework of Places 3T?

It’s clear for the partnership that a good practise in a certain place cannnot be copied and pasted to another place in another country, 1-on-1. It’s important to look at your target audiences. Different activities are more suitable for different target groups and sometimes creating a good vibe is enough to make it a success to any target group. So, how do you create a good atmosphere? It’s important to facilitate and have a good manager to animate and run the place. This is easier said than done. A good manager of a Places3T is not easy to hire. Be aware that the government or the local authorities are not always the right institution to hire this person. Their environment and perspective is usually more conservative, more bureaucratic and within a certain administrative frame work. You need an entrepreneurial person, someone who already has a network and can easily connect with the 3rd place and its people, and is in a natural way accepted by all parties. The Places-3T framework can usually not be ticked within a certain frame work and on all boxes. On Wednesday October 6th we finished with a workshop at CEIS and a study visit to a community in Santa Maria Madalena.

Do you want to Start Up a company in Romania? In 2017 in Romania registered a total of 525,660 companies. A large share of the businesses operating in Romania were registered in the services sector, as stated by the official data provided by the National Statistics Institute (INS). The services sector is also the largest employer of the country. Foreign businessmen who want to set up one of the legal entities should also know that the country has a total of 73,000 multinational groups of companies operating on the local market. Out of these, only a small percentage are represented by companies founded by Romanian businessmen; more exactly, only 5,300. We have already done YME Start Up articles on The Netherlands, Turkey, Italy and United Kingdom. In this article we tell you how to start up in Romania. YME continues…

How to Start Up a Business in Romania?

The services sectors has the largest share of the Romanian active companies, accounting for 46.7% of the total enterprises registered here; it also stands for 35.4% of the total workforce employed in Romania; the total number of Romanian companies – 525,660 – marked an increase of 5% compared to the previous year; the Romanian trade sector accounted for a total of 172,000 companies; 79% of the employees in Bucharest, the country’s capital city, work in the services sector; Bucharest had, at the level of August 2018, a total of more than 1 million employees (the city has a population of more than 2 million citizens). As said, foreign businessmen who want to set up one of the legal entities should also know that the country has a total of 73,000 multinational groups of companies operating on the local market. Out of these, only a small percentage are represented by companies founded by Romanian businessmen; more exactly, only 5,300.

Step 1: Choose legal form

The following legal forms are:

• Societăți comerciale, abbreviated SC (Companies)
• Societăți de persoane (Unincorporated companies, also called Partnerships)
• Societatea în nume colectiv, abbreviated SNC (General Partnership, abbreviated GP)
• Societatea în comandită simplă, abbreviated SCS (Limited Partnership, abbreviated LP)
• Societăți de capitaluri (Incorporated companies, also called Corporations)
• Societatea în comandită pe acțiuni, abbreviated SCA (Company Limited by Shares)
• Societatea pe acțiuni, abbreviated SA (Joint-Stock Company)
• Societăți hibride (Hybrid companies)
• Societatea cu răspundere limitată cu proprietar unic, abbreviated SRL cu proprietar unic
• S.A. (Societate pe Acţiuni): ≈ plc (UK)
• S.C.A. (societate în comandită pe acţiuni): limited partnership with shares
• S.C.S. (societate în comandită simplă): ≈ limited partnership
• S.N.C. (societate în nume colectiv): ≈ general partnership
• S.R.L. (societate cu răspundere limitată): ≈ Ltd. (UK)
• PFA (persoana fizica autorizata): ≈ self-employed (UK) Sole Proprietorship (US)
• O.N.G. (Organizație Non-Guvernamentală): ≈ Non-state pension fund (literally: Non-Governmental Organization)
• limited liability company “societate cu raspundere limitata” (SRL); joint stock company “societate pe actiuni” (SA

The most common legal forms are the SRL (BV, BVBA) and the SA (NV). You choose a legal form:

1.Societate cu răspundere limitată (SRL) – Limited liability company

Societate cu răspundere limitată, abbreviated SRL (Limited Liability Company) represents the most common way to start a business in Romania and it is also the preferred legal entity of foreign investors registering a Romanian company. It is incorporated with a capital of RON 200. It can be founded by a single shareholder. The main feature of a limited company is obviously that the liabilities of social debts is limited to contributions to subscribed and paid shares. As we presented above, the minimum share capital for a Romanian limited liability company is of RON 200, which has to be divided into shares that have a value of minimum RON 10. The maximum number of partners that can associate in a limited liability company is 50.

These shareholders or associates can be legal entities or natural persons. A Romanian LLC can have one or more directors, who may have full or limited powers; they can be Romanian or foreign citizens. The term of a Romanian director may be limited or unlimited. In case the LLC has a sole shareholder, then this shareholder can also be an employee of the respective company (in this case a Labor Agreement must be drafted and filed with the Labor Chamber in Romania).

2. Societate pe acţiuni (SA) – Public Limited Company

The SRL can be 100 percent foreign-owned. The directors may also be of foreign origin. The number of participants in an SRL is at least one and at most fifty. A sole shareholder may not be a sole shareholder in more than one SRL. The one-man business also occurs frequently as an SRL in Romania (asociat unic).

The capital contribution can be made both in cash and in kind and amounts to at least 200 lei (1 Ron = 4.75 euros on 8 April 2019).

The Romanian “Partnership Limited by Shares” Company – Societatea in Comandita pe Actiuni

It is not a very common type of Romanian entity. This business form is similar with the “Sleeping Partnership Company” because it needs to be incorporated by at least two shareholders, and just like in the case of the “Sleeping Partnership Company”, the company’s shareholders have different types of liability, and this can be presented by our team of lawyers in Romania.

The main difference between the two types of companies is that the Partnership Limited by Shares Company has a shared capital formed of stocks. The liability for the company’s obligations is different for the shareholders, thus, there are shareholders that are personally liable for the obligations of the company and they are called ”comanditati”. Our law firm in Romania can provide further details regarding the rights and the obligations of the company’s founders.

The other types of shareholders, “comanditari”, are liable for the company’s debts only to the amount with which they have participated at the company’s share capital. This business form must be incorporated with a minimum share capital of RON 90,000 (or its equivalent in EUR, which is EUR 19,042). The company can be administrated only by the shareholders that are personally liable for the company’s obligations.

What are the advantages of a Romanian SRL?

 Besides the low value concerning the company’s capital, the Romanian SRL provides further advantages to its founders. Our Romanian law firm can provide an extensive presentation on the characteristics of a local SRL, which can be formed with 100% foreign ownership. Other characteristics of the Romanian SRL are the following:

• it can benefit from a fast registration procedure (the company can be formed in a period of three days);
• it can be incorporated by a single shareholder, who can be a foreigner;
• the company’s shares can’t be divided, nor can be sold to the general public;
• it can’t be registered by another company, if the Romanian SRL is incorporated by a single shareholder;
• the company must establish an official business address, where it can receive its official correspondence.

What are the main documents for starting a Romanian SRL?

The registration procedure for each of the company types available in Romania is rather similar. Differences can appear, however, in the types of documents the investors have to prepare upon the registration of the chosen legal structure. In the case of a Romanian limited liability company, investors must submit the following documents:

• the articles of association and the certificate of incorporation, that must be deposited with the National Trade Register Office;

• in the case in which the company has as shareholders corporate investors, it is necessary to deposit the articles of association of the respective companies;

• excerpts issued by the Trade Register Office operating in the country where the corporate shareholders are registered;

• the file must also contain a letter of creditworthiness, issued by a financial institution;

• the standard application form and copies of the company’s representatives’ identification documents.

Step 2: Officially Register your Company with the Chamber of Commerce

The registration process for a new legal commercial entity is the primary function of National Trade Register Office (NTRO) [Oficiul National al Registrului Comertului (ONRC)], a national authority subordinate to the Ministry of Justice.

The legal framework pertaining to the establishment of new companies is primarily defined by the 31/1990 Law which outlines the necessary documents, procedures and capital requirements. An exhaustive list of documents and procedures is made available by the NTRO, both in Romanian and English.

Any new private limited company founded by persons who have not been an associate or share-holder in another company within the European Economic Area can benefit from a waiver on all set-up taxes and tariffs required by the NTRO as well as certain other benefits

outlined in the 6/2011 Government Emergency Ordinance if they choose to register as an SRL-D (debutant private limited company) microenterprise.

→ 31/1990 Law

→ 6/2011 GEO

→ ONRC

Specific Economic Sector of Start-up

The activity of any company must fall within a registered and regulated economic sector, as classified by the CAEN (Classification of Activities in the National Economy) nomenclature (code).

Specific authorization procedures and permits may be necessary for a variety of specialized economic activities ranging from food processing, natural resources extraction to telecommunications and medical services.

→ CAEN

Step 3: Fiscal regulation and Accountancy 

Accountancy

Taxes and contributions owed by companies and individuals are codified into the Fiscal Code, the 227/2015 Law, updated and modified.

The Romanian fiscal regime for companies is defined by four primary taxes that apply either directly to companies, their owners or consumers as well as two taxes paid by employees (and the self-employed).

Corporate Tax

The corporate tax (16%) payable by all companies on their taxable profit

Dividend Tax

The dividend tax (5%) which covers dividend payments made by the company to associates or share-holders. The microenterprise income tax (1-3%) paid by all microenterprises (private limited companies with a gross income of under 1 million Euro per annum which register as a microenterprise) on their gross income in lieu of the corporate tax. The value added tax (19% or reduced for certain categories) payable by all final consumers, with the option for new companies to be exempt if their gross income is under 65.000 Euro. Additionally, employees will also pay two taxes on their salary, as follows. The income tax (10%) payable on taxable income (differs from gross income primarily by being calculated as the income after paying the mandatory social and medical insurance contributions). The contributions to social (and medical) insurance (25%+10%+2.25% – the last one being paid by the employer). Certain criteria and conditions apply to all tax regimes with specific information being provided by Ministry of Finance.

→ Romanian Ministry of Finance

→ 227/2015 Law

Write a business plan

For all the tips and tricks for writing a business plan we would like to recommend this link to our YME Platform

Step 5: Opening a Business Account

If you wish to have a business account with a Romanian bank you must go in person. The deposit of the share capital in an account opened at the time of incorporation can also be done fiduciary.

Step 6: Environmental Protection Laws and Rules and Applying for Permits

Depending on their economic sector, companies may need to adhere to more stringent or specific rules and regulations regarding environmental protections, especially in the agricultural, energy and industrial areas of activity. As such, a special environmental authorization process may be required with a comprehensive list of economic activities that require such an authorization being made available by the National Environmental Protection Agency trough the 1798/2007 Ministerial Order, updated and modified.

Most Romanian environmental protection laws derive directly from European Union directives and environmental protections and are enforced by the National Environmental Protection Agency which is also charged with publishing any and all legislation pertaining to the environment.

→ National Environmental Protection Agency

→ 1798/2007 MO

→ European Union Environment Portal

Step 7: Privacy / Personal Data Protection (Making a business website)

Personal Data Protection

Data protection regulations in Romania are outlined by the 363/2018 Law, which in turn was developed and adopted in order to comply with European Union regulations, specifically the General Data Protection Regulation.

Data protection rules and regulations are enforced by the National Supervisory Authority for Personal Data Processing, which is also the body that is authorized to investigate GDPR complaints.

→ National Supervisory Authority for Personal Data Processing

→ 363/2018 Law

→ European Union data protection rules

→ GDPR

Step 8: Insurance

In Romania all self-employed (authorized persons) and employees are required by law to participate in and be covered by the national insurance systems for retirement and health, and in certain circumstances, unemployment.

Subsequently, while the insurance contribution liability may slightly vary depending on temporary schemes for business start-ups, generally the liability is similar for an authorized person and an employee, the primary difference consisting in the fact that employees have their contributions retained at the source (by the employer) and paid directly, while the self-employed are personally responsible for handling the payments.

Step 9: Management of human resources

In addition to the fiscal provisions pertaining to employees which have already been specified, the general rules and regulations governing the labour market are outlined by the Labour Code, 53/2003 Law, republished with updates and modifications.

The law outlines normal/usual employee protections and rights in line with European continental norms, such as the right to unionize, the right for collective bargaining, the right for paid leave etc. The standard work week is 40 hours, at a maximum of 8 hours per day, while the minimum paid leave (excluding national holidays) amounts to 20 work days per year.

As with all other areas, European Directives apply and are translated into law per the requirements of the TFEU.

→ European Commission Employment, Social Affairs & Inclusion Portal

→ 53/2003 Law

Step 10: Patents and Brands

The State Office for Inventions and Trademarks (SOIT) [Oficiul de Statpentru Inventii si Marci (OSIM)] is the Romanian national authority charged with the registration and authorization of patents, brands and other intellectual property items.

The primary laws governing intellectual property are the 129/1992 Law, 350/2007 Law, 16/1995 Law, 84/1998 Law and the 64/1991 Law, republished with updates and modifications.

A comprehensive list of tariffs and applicable taxes for trademark registration and similar activities is provided by the SOIT.

→ State Office for Inventions and Trademarks

→129/1992 Law

→ 64/1991 Law

→ 350/2007 Law

→ 16/1995 Law

→ 84/1998 Law

→ Tariffs

Do you want to start up a business in Turkey? Foreigners who want to open a business must obtain a working permit from the Ministry of Labour, Family and Services before starting to work. Read below all you need to know to be a successful young migrant entrepreneur in Turkey. Do you want to know more, join the YME YouTube Multiplier Event (April 22nd 2021): Register here and don’t Miss out !

Setting up a Business in Turkey

There is a provision in the clause (l) of Article 5 of the Regulation on Opening a Business and Working Licenses published in the Official Gazette dated 10.08.2005 and numbered 25902, which includes the provision “Complying with the provisions of the legislation on foreigners regarding opening and employing businesses by foreign nationals”. In accordance with Law No. 6735, foreigners who will open a business must obtain a work permit from the Ministry of Labour, Family and Social Services before starting to work. 

If foreigners want to open a business and work under their own names and accounts, they must apply to MoLFSS to obtain a work permit following the completion of the establishment procedures of the said workplaces before the relevant authorities (such as the publication of the workplace in the trade registry or the trade registry office and obtaining a tax number). As a result of the evaluation to be made by MoLFSS, foreigners whose request is approved and who have been granted work permits must apply to the relevant municipalities with these permits and request a business license and work license.

The procedures and principles for Syrians under temporary protection to work in our country are regulated by the “Regulation on Work Permits of Foreigners under Temporary Protection”, which was published in the Official Gazette dated 15.01.2015 and numbered 29594 , and a work permit from for foreigners MoLFSS under this scope to work in Turkey.

Foreigners working independently on their own behalf and account within the scope of temporary protection, after the completion of the establishment procedures of the workplace on the condition that they have tax numbers, by scanning the documents showing the activity of the workplace such as the trade registry gazette for companies, the relevant chamber registration document for real person merchants, tradesmen and craftsmen, to the automation system during the application. He has to get a work permit before starting to work. The foreigner will be required to have a work permit while granting a business and working license by the competent authorities.

Syrians in Turkey are almost 4 million

Despite their success, young migrant (Syrian) entrepreneurs in all countries are working in an unfamiliar economy and regulatory environment, limited customer base and inconsistent access to incentives and business support. In Turkey, Partnerships with Turkish businesses can help ease some of these challenges. Syrian businesses bring unique competencies, including familiarity with Turkey’s Arabic-speaking consumers and existing links with businesses across Syria, the greater Middle East, and North Africa. Leveraging these competencies can mean new growth opportunities for Turkish businesses. Essentially, while Syrian businesses can offer access to new markets abroad, Turkish businesses can help Syrians crack the market within.

The Turkish Ministry of National Education (MoNE) recommends the following to cultivate greater interaction and eventually partnerships between Turkish and Syrian businesses for mutual benefits:

• Provide Syrian businesses with resources to navigate the Turkish market and regulatory environment.

• Invest in training and capacity development opportunities for Syrian and Turkish businesses, as well as public agencies serving businesses and foreign investors.

• Offer networking opportunities and platforms for Syrians businesses to demonstrate their products and services.

• Reduce policy uncertainties and regulatory burdens to encourage long-term Syrian investment in Turkey and facilitate formalization.

• Increase outreach and equitable access to incentives for Syrian businesses, especially to realize their export potential and brand development.

• Collect and provide access to detailed data on Syrian businesses for further analysis.

Chambers of commerce and industry across all provinces can:

–    Prepare Arabic language guides to help Syrian entrepreneurs navigate the process of establishing and operating a business in Turkey. The Gaziantep Chamber of Commerce has experience doing this.

–    Staff dedicated help desks for Syrian entrepreneurs interested in establishing a business. Provide training and support on Turkish laws and regulations, banking regulations, and available investment and export incentives.

–    Organize business network meetings. Bring Syrian and Turkish businesses together under the umbrella of an impartial chamber.

–    Provide Syrian businesses with a platform and venue to introduce their commercial activities to Turkish businesses. Holding these meetings in English may offer a common working language for some potential partners

Step 1: Choose legal form

Company Types under TCC and Alternative Forms

There are corporate and non-corporate forms for companies under the TCC, which states that companies may be established under the following types:

a.    Corporate forms

Joint Stock Company (JSC)

Limited Liability Company (LLC)

Cooperative Company

Although some financial thresholds (i.e., minimum capital) and organs differ from each other, the procedures to be followed for establishing a JSC or an LLC are the same.

b.    Non-corporate forms

Collective Company

Commandite Company​

Although companies may be established according to these five different types, JSC and LLC are the most common types chosen both in the global economy and Turkey.

Step 2: Officially Register your Company with the Chamber of Commerce

Turkey has introduced reforms with a view to making it easier to do business in order to enhance the investment environment, eliminating red tape in setting up a business and minimizing costs and procedures. To this end, establishing a company is now only carried out at Trade Registry Offices located in Chambers of Commerce and designed to be a ‘one-stop shop’. The process is completed within the same day. The process of establishing a joint stock or limited liability company is fairly simple and straightforward, especially once the notarization and apostille certification or ratification formalities are completed in respect of the documents to be submitted with the application. In order to begin the process of establishing a company in Turkey, certain information must be entered on MERSIS. This step requires, among others, a tax identification number to be obtained for non-Turkish individuals and/or legal entities who will be shareholders and/or directors of the company. Once the tax identification numbers have been obtained from the relevant tax authority and provided to MERSIS, a MERSIS number will be generated for such foreign nationals. 

Upon submission of the articles of association through MERSIS, such articles of association shall be certified by a public notary or the relevant trade registry in Turkey. Upon the certification of the articles of association, the certified articles of association and all other supporting establishment documents (e.g. declarations of signatures by the members of the board of directors and other signatories, letter of blockage from a bank in Turkey certifying that at least 25% of the share capital of the entity has been deposited and blocked in a bank account, etc.), as requested by the relevant trade registry, must be physically submitted for registration.  Once the relevant trade registry certifies all documentation as complete and suitable, a registration certificate is provided which evidences the incorporation of the new company. Trade registry will also provide the mandatory legal and financial books of the newly incorporated company together with the registration certificate. Further reading, click here.

Step 3: Fiscal regulation and Accountancy

TURKISH TAXATION SYSTEM

Turkish direct taxation system consists of two main taxes; income tax and corporate tax. An individual is subject to the income tax on his income and earnings, in contrast to a company which is subject to corporate tax on its income and earnings. The rules of taxation for individual income and earnings are provided in the Income Tax Law 1960 (ITL). Likewise, the rules concerning the taxation of corporations are contained in the Corporation Tax Law 1949 (CTL). Despite the fact that each is governed by a different legislation, many rules and provisions of the Income Tax Law also apply to corporations, especially, in terms of income elements and determination of net income.

INCOME TAX:

Taxable Income:

The income tax is levied on the income of individuals. The term individuals mean natural persons. In the application of income tax, partnerships are not deemed to be separate entities and each partner is taxed individually on their share of profit. An individual’s income may consist of one or more income elements listed below:

– Business profits,

– Agricultural profits,

– Salaries and wages,

– Income from independent personal services

– Income from immovable property and rights (rental income)

– Income from movable property (income from capital investment)

– Other income and earnings without considering the source of income

Tax Liability:

In general residency criterion is employed in determining tax liability for individuals. This criterion requires that an individual who has his place of residence in Turkey is liable to pay tax for his worldwide income (unlimited liability). Any person who remains in Turkey more than six months in a calendar year is assumed as a resident of Turkey. However, foreigners who stay in Turkey for six months or more for a specific job or business or particular purposes which are specified in the ITL are not treated as resident and therefore, unlimited tax liability does not apply to them.

In addition to residency criterion, within a limited scope, nationality criterion also applies regardless of their residency status, Turkish citizens who live abroad and work for government or a governmental institution or a company whose headquarter is in Turkey, are considered as unlimited liable taxpayers. Accordingly, they are subject to the income tax on their worldwide income.

Non-residents are only liable to pay tax on their income derived from the sources in Turkey (limited liability). For tax purposes, it is especially important to determine in what circumstances income is deemed to be derived in Turkey. The provisions of Article 7 of the Income Tax Law deal with this issue. In the following circumstances, the income is assumed to be derived in Turkey.

Business profit: A person must have a permanent establishment or permanent representative in Turkey and income must result from business carried out in this permanent establishment or through such representatives.

Agricultural income: Agricultural activities generating income must take place in Turkey.

Wages and Salaries:

– Services must be rendered or accounted for in Turkey.

– Fees, allocations, dividends and the like paid to the chairmen, directors, auditors and liquidators of the establishment situated in Turkey must be accounted for in Turkey.

Income from Independent Personal Services: Independent personal services must be performed or accounted for in Turkey.

Income from Immovable Property:

– Immovable must be in Turkey;

– Rights considered as immovable must be used or accounted for in Turkey.

Income from Movable Capital investment: Investment of the capital must be in Turkey.

Other Income and Earnings: The activities or transactions generating for other income, specified in the Income Tax Act, must be performed or accounted for in Turkey. The term accounted for used above to clarify tax liability of the non-residents means that a payment is to be made in Turkey, or if the payment is made abroad, it is to be recorded in the books in Turkey.

Determination of Net Income:

Business Profit:

Business profit is defined as profit arising from commercial or industrial activities. Although this definition is very comprehensive and includes all types of commercial and industrial activities, the ITL excludes some activities from the contents of business profits. Generally, activities performed by tradesmen and artisans who do not have permanent establishments are not assumed as commercial and industrial activities and are exempt from income tax.

Furthermore, in order to tax income resulting from commercial and industrial activities there has to be continuity in performing these activities. In other words, incidental activities in that nature are not treated as commercial or industrial activities and therefore, the Income Tax Law deals with these activities as the other income and earnings.

The ITL does not list each commercial and industrial activity and only refers to the Turkish Commercial Law for the scope of these terms. Yet several activities are listed namely for clarification in Article 37. These are as follows:

– The operation mines, stone and time quarries, extraction of sand and pebbles operations of brick and tile kilns;

– Stock brokerage;

– Operating of private schools, hospitals and similar places;

– Regular operations of sale purchase and construction of real estate;

– Purchase and sale of securities on someone’s behalf and on a continued basis;

– Fully or partly sale of land which has been obtained by purchase or barter and subdivided within five years of its date of purchase and sold during this period or in subsequent years;

-Earnings from dental prosthesis.

Basically, the taxable income of a business enterprise is the difference between its net assets at the beginning and at the end of a calendar year.

Two method are used to compute business profits: Lump-sum basis and actual basis in the former method, the Income Tax Law specifies estimated business profits for taxpayers who are qualified for such treatment according to the relevant provisions of the Law. The main assumption is that those taxpayers specified by the Law have difficulty to keep accounting books and to determine then income on the actual basis. Therefore, their income taxes are assessed on their estimated profits determined by the Law.

In the latter method business profits is determined on the actual basis: Taxpayers are required to keep accounting books to record their actual revenues and expenses which occur within the calendar year. In general, business related expenses paid or accrued related to business are deducted from revenues:

Expenses to be deducted:

In order to determine net amount of business profits on the actual basis, the following expenses may be deducted from revenues:

– general expenses made for earning and maintaining business profit;

– food and boarding expenses provided for employees at the place of business or in its annexes;

– expenses for medical treatment and medicine;

– insurance and pension premiums;

– clothing expenses paid for employees;

– losses, damages, and indemnities paid based upon written agreements, juridical decrees, or by order of law;

– expenses for travel and lodging relevant to the business;

– expenses for vehicles which are part of the enterprise and used in the business;

– taxes in kind such as building, and consumption, stamp and municipal taxes and fees and charges, related to the business;

– depreciations set aside according to the provisions of the Tax Procedure Law;

– payments to the unions;

Payments, which are not accepted as expenses:

Those payments listed below are not considered as deductible expenses;

– funds withdrawn from the enterprise by the owner or by his spouse or children, or other assets in kind taken by them;

– monthly salaries, wages, bonuses, commissions and compensation paid to the owner of the enterprise, to his spouse, or his minor children;

– interest on the capital invested by the owner of the enterprise;

– interest based on the current account of the owner of the enterprise, his spouse, his minor children including interests on all form of receivables;

– all fines and tax penalties as well as indemnities arising from unlawful actions. Indemnities incurred as penalty clauses of contracts shall not be considered indemnities of a punitive nature;

– % 0 per cent of the advertising expenses for all kind of alcohol and alcoholic beverages, tobacco and tobacco products (current rate has been reduced to 0 percent by a Governmental Decree).

Step 4: Write a business plan

You can read on the YME platform what sort of Business Plan you need to write.

Step 5: Opening a Business Account

The company must obtain potential tax identity numbers for non-Turkish shareholders, and non-Turkish board members of the company from the relevant tax office. This potential tax identity number is necessary for opening a bank account in order to deposit the capital of the company to be incorporated.

The documents required by the tax office are as follows:

Petition requesting registration

Articles of association (one original)

Copy of the tenancy contract showing the registered address for the company

If the process is going to be followed by proxy, a power of attorney must be issued specifically showing the authority to act on behalf of the company before the tax authority in order to obtain a tax identity number or potential tax identity number.​

Bank Accounts

In the recent years the Turkish Republic has alleviated the processes to open a bank account in Turkey for foreigners with the means of some regulations in order to increase investment and make it more convenient to foreigners. These regulations will enable a foreigner who has come to Turkey for working to send easily money to his family abroad, they will enable that the daily life of a foreigner will get easier by being able to take advantage of banking processes and they will enable that the investment and company financial activities of foreigners will be realized considerably faster and many more advantages. However the opening procedures of a bank account for foreigners varies from bank to bank. While taking not long in some banks, it can be the opposite in another. Some major Turkish banks are İş Bankası (Isbank), Yapı Kredi Bankası, TEB, QNB Finansbank, Halkbank, Vakıfbank, ING Bank, Akbank, Ziraat Bankası and Garanti Bankası.

How is the Procedure ?

There are two types of opening a bank account for foreign citizens in Turkey; the first one is the procedure to open a bank account for persons and the second one is for accounts in the name of a company.

The legal procedures and principles in order to be able for a foreign citizen to open a bank account in Turkey are listed below:

First of all, the person wanting to open a bank account has to determine a correspondence address.

Foreign citizens have to own a tax number to be able to open a bank account in Turkey. The foreign citizen can get a potential tax number by visiting a state tax office with his/her within a time that depends on the density of the office.

With the tax number received from the tax office, the foreigner will be able to open a bank account and realize banking processes.

Some banks may ask for a mobile phone number of its customers. The foreign citizen needs therefore to procure a telephone number from a Turkish operator company.

The legal procedures and principles in order to be able for a foreign company to open a bank corporate account in Turkey are listed below:

Contrary to personal bank accounts, corporate accounts can only be opened by the director owning a signing authority.

A tax number needs to be procured from the tax office for the company. The company for which a bank account is to be opened, does not need to be located in Turkey or have financial activities in Turkey. It is sufficient to have a correspondence address.

In order to open an account, the competent company director applies to the bank together with the tax number and all documents of the company translated and approved by the notary or consulate. These company documents are the main company agreement, trade chamber registries, commercial register, establishment and activity documents and if available licences.

İşbank: Opening a bank account at İşbank is quick and easily. It is necessary to gather the documents below and apply to the nearest İşbank branch.

A valid passport not older than 10 years or a valid residence permit ( if both are not available, and official document approved by the Turkish Ministry of Finance validating the national ID document will be accepted)

Your Foreigner’s Identification Number or Tax Identification Number

Proof (copy of electric, water, natural gas or phone bill addressed to your name and of the last three months) of your valid residence address in Turkey or the printed address on your passport

Garantibank: Visit the branch in order to get a Mobile/Online Banking password to be able to open an account.

Akbank: Visit branch in order to open a bank account or get an online banking password or call the Akbank expat banking service.

Ziraat Bankası: In order to open a Foreign Currency Current Account or a Turkish Lira Current Account you can apply to our branches or our internet branch.

Step 6: Environmental Protection Laws and Rules and Applying for Permits

The Environmental Law and its secondary legislation regulate the protection of the environment and sanction any action which violates the rules in the legislation and may cause pollution to the environment. The Ministry of Environment and Urbanization acts as the regulatory authority through its provincial directorates. Depending on the nature and type of the activity, investors may be obliged to obtain environmental impact assessment reports and environmental licenses. Non-compliance with the Turkish environmental legislation may result in the imposition of administrative ines and civil and criminal liability

ENVIRONMENTAL PERMITS AND ASSESSMENTS 

Pursuant to the Environmental Law, environmental permits and assessments are governed by the Regulation on Environmental Permit and License and the Environmental Impact Assessment Regulation. These regulations introduce an extensive system of licenses and permits required to be obtained pursuant to the environmental legislation. 7.1.2 Environmental Impact Assessment Depending on the risk profile that the activity of an entity possesses vis-à-vis the environment, such entity may be required to obtain an environmental impact assessment report. For large-scale industrial investment, it is almost always mandatory to obtain a report analyzing whether the investment would have significant adverse effects on the environment. The report itself is not sufficient to obtain the clearance of the Ministry of the Environment and Urbanization for the implementation of the project. The applicable legislation also requires public consultation meetings and review by a special independent committee before the Ministry of Environment and Urbanization may issue an “Environment Impact Assessment Affirmative” or “Environment Impact Assessment Negative” decision. 

In the former case, the investor can proceed with the investment, subject to other necessary clearances being obtained (if any), whereas the latter restricts any future activity in connection with the investment. Moreover, for the activities subject to environmental impact assessment without getting the EIA Affirmative decision, no other public procedure such as tenders, incentives, and plan approvals could be conducted. EIA behaves like a prerequisite for whole other procedures

Environmental Permits 

Investors are obliged to obtain either a “Environmental Permit” or “Environmental Permit and License” depending on the impact of their activities on the environment. The Ministry of Environment and Urbanization issues an “Environmental Permit” in connection with air emission, environmental noise, deep sea discharge, or hazardous waste discharge from a facility. Investors have to obtain an “Environmental Permit and License” in relation to the technical sufficiency of the relevant facility. Each permit and license issued under the Environmental Law is valid for 5 years from the date of issuance and is renewable for additional 5-year periods thereafter. As a general rule, entities active in the energy, mining, construction and building materials, metal, chemical, surface coating, forest products, food, agriculture and stockbreeding, and waste management sectors and industries are required to obtain either an “Environmental Permit” or an “Environmental Permit and License”, depending on their production capacity and their discharge requirements. Even if an entity is not subject to licensing under the environmental legislation, it must still comply with the same whilst engaging in activities. 

Other Environmental Obligations 

Although most of the environmental obligations are covered by (i) Environmental Law, (ii) Environmental Permits and Licenses Regulation and (iii) Environmental Impact Assessment Regulation, other (in particular sector-specific) environmental obligations are included in other regulations. Entities should also comply with other environmental obligations with respect to the area of activities, specified in the Industrial Air Pollution Control Regulation, Regulation on Assessment and Management of Environmental Noise, Regulation on Protection of Wetlands, Waste Management Regulation, Oil Waste Control Regulation, Packaging Waste Control Regulation, the Regulation on Mitigating the Impacts and Preventing the Severe Industrial Accidents, Radiation Safety Regulation. 

SANCTIONS 

The Environmental Law introduces a strict no-fault liability regime for non-compliance with the law and polluting the environment. Polluters are liable for the loss occurred due to their actions, regardless of the degree of fault. In case of a violation, the accused company may be given a reasonable time (not exceeding 1 year) to remedy the breach failing which it may face sanctions. Although most sanctions exist in the form of an administrative ine, violating the Environmental Law and its secondary legislation may also lead to criminal liability for the polluter. For 2019, the administrative ines due to non-compliance with the Environmental Law and its secondary legislation may reach up to TRY 6,017,320 depending on the severity of the breach. Each year, applicable administrative ine is increased pursuant to a rate announced by the President

Step 7: Privacy / Personal Data Protection (Making a business website)

The General Data Protection Regulation (“GDPR”) came into force in May – as every business in Europe knows. Turkey has similar legislation, although some differences exist. Companies doing business in Turkey need to know how these laws work in practice.

Enacted in 2016, Turkish Data Protection Law (“DPL”)  is accompanied by other regulations and communiqués, while draft versions of secondary legislation have been published by Turkey’s supervisory authority, the Personal Data Protection Board (“DPB”). Under these changes, data controllers have to comply with multiple obligations when dealing with personal data, while the legislation also affects every employee, making it important for companies operating in Turkey to understand the consequences of compliance failure.

In examining the differences between DPL and GDPR, the key point is how they affect businesses operating in Turkey. Originating from EU Directive 95/46/EC, DPL features various additions and revisions. Although it contains nearly all the same fair information practice principles, DPL does not allow for a “compatible purpose” interpretation while any further processing is strictly prohibited. If data is compiled for a purpose where the subject has given consent, the controller can use it for another purpose, provided that additional specific consent is given, or if further processing is needed for what are deemed to be legitimate interests.

Grounds for processing under DPL are comparable to those which apply for GDPR, save that explicit consent is required when sensitive and non-sensitive personal data is processed – a much more time-consuming exercise. At first blush, such a burdensome obligation should give DPL a higher level of data protection than GDPR. However, DPL’s definition of explicit consent needs to be set against GDPR’s regular consent. Both require “freely given, specific and informed consent” but GDPR also provides that there has to be “unambiguous indication of the data subject’s wishes by which he or she, by a statement or by a clear affirmative action, signifies agreement to the processing of personal data relating to him or her.”

Under DPL, the cross-border transfer of personal data to a third country is similarly troublesome: the country of destination has to have sufficient protection, according to criteria decided by the DPB. Alternatively, parties must commit to provide sufficient protection that meets DPB approval. But DPL also includes the following: “In cases where interests of Turkey or the data subject will be seriously harmed, personal data shall only be transferred abroad upon the approval of the Board by obtaining the opinion of relevant public institutions and organizations.” This obliges data controllers to evaluate whether a transfer might possibly cause serious harm, and if it does, they need to obtain the DPB’s approval. However, it is unclear how such interests are to be determined. GDPR requires controllers to maintain internal records, although there is no general requirement to register with the data protection authorities, whereas DPL provides a hybrid solution, combining registration and record-keeping requirements: a registration mechanism mandating data controllers to register with a data controllers’ registry. The draft DPB regulation requires them to hand over their Personal Data Processing Inventory and Personal Data Retention and Destruction Policy to the DPB before completing their registration. For any business that is subject to both DPL and GDPR, the best way to avoid duplication of compliance effort is to formulate a flexible compliance model that satisfies the demands of regulatory authorities in multiple jurisdictions. Further Information, click here.  

Step 8: Insurance

The social security system in Turkey is predominantly similar to Bismarck model, one of four basic insurance systems which are Continental Model (Bismarck), Liberalistic Model (Beveridge), Northern European Model and Mediterranean Model. Bismarck Model refers to a system where the premiums paid over the wages of employees according to their insurance status are collected in a joint pool and the benefits are provided based on the paid premiums only when old-age pension is entitled. The amount of the benefits to be granted to the insurance holders in cases of retirement, accident and sickness varies by the income they previously had. The main actors in this system are employees, employers and representatives in public sector. This system has more regulatory measures in labor market than liberalistic system, which hinders labor market flexibility. Concordantly, strict rules and collective bargaining mechanisms have come to the fore.

Turkish Social Security System has also some elements of the Mediterranean Model as well as Bismarck Model. The Mediterranean Model is derived from the Continental Model and bears a resemblance to this model in the sense that the paid social insurance premiums provide a basis for future social security benefits. Another aspect of the Mediterranean Model similar to Turkish Model is the wideness of informal economy. For this reason, the system does not cover many people; however social risks are tried to be eliminated through family ties. This model has brought into prominence the concepts of traditional family and agricultural society; thus people are supported by their families without considering whether the state provides benefits or not in case of revenue loss or social risks.

By this reform, a number of structural changes have been made on Turkish social security system. A transition has been realized from the system which entitles various rights to different professional groups to the system which ensures the unity of standards and norms in terms of retirement insurance. Having the aim to ensure the sustainability of the system, these structural changes have not led to deviation from the Mediterranean Model-Continental Model.

Social Security Reform

Since 1990s, a number of financial problems have been experienced in Turkish social security system due to various reasons such as early retirement implementations, high rates of unregistered employment and income replacement and low rates of premium collection and earning subject to contribution. This system does not include the entire population and not have adequate safeguards against poverty. The provision of services by different social security institutions in nonsystematic way hinders the unity of norms regarding rights and obligations of employees. It became compulsory to make reforms in social security system as a result of all these problems and ageing tendency of the population which is one of the major factors affecting the financial sustainability of the system.

For the purpose of restructuring the social security system, a reform was realized in 2008 when the Law No. 5510 entered into force for seeking solutions to the prominent problems such as the existence of increasing deficit of the system and different implementations that the institutions had in the provision of health and insurance services.

The primary aim of the social security reform is to create an equitable, easily-accessible and financially sustainable social security system that provides more effective protection from poverty.

The social security reform consists of 4 complementary components:

Universal Health Insurance providing an equitable, protective and quality healthcare services for the entire population,

An aid system which enables all needers to access the services with the combination of non-contributory payments and social benefits provided disorganized,

A single retirement regime including short and long term insurance branches apart from health insurance,

A new institutional structure facilitating daily life of our citizens through modern and efficient services.

The social security reform particularly includes the regulations regarding the enhancement of the retirement system and expenses. From this point of view, a set of changes have been made on pension replacement rate, updating coefficient, number of paid premium days and age parameters and a transition period has been envisaged. As the previous rules continue to be followed until the completion of transition period, the effect of these parametric changes on social security deficit cannot be seen exactly in the short term until the 2040s.

The reforms made up to now aim at increasing the services for insurance holders as well as removing defects in the social security system. In this context, various regulations have been made in the field of both health and retirement so that insurance holders can receive services at the shortest time. A number of implementations have been put into practice to facilitate insurance holders’ access to hospital services and the relevant procedure requiring a long wait has started to be made on internet.

The primary objective in a people-oriented system is to provide services at local levels. For this reason, the system where services are provided from center has been left and Social Security Centers have been built in many districts with a view to enable insurance holders at local levels to receive services easily.

Financing of Social Security

Social security is generally financed through premiums or contributions collected from workers, employers and state around the world.

There are two ways to follow in financing social security system:

Capitalization or saving method (fund management)

Pay as you go (allocation) method

The pay-as-you-go method is used for financing social security system in Turkey. Under Turkish social security system, premiums are collected for long and short term insurance; unemployment insurance and universal health insurance. In order to lessen the effects of early retirement on national economy, social security premium is collected from pensioners who continue to work after retirement.

The following table indicates insurance branches and rate of premiums paid under these branches:

Individuals to Pay Premiums

Individuals to pay premiums vary according to the status of insurance holders:

The long and short-term insurance, universal health insurance and unemployment insurance premiums of the individuals working on service contract (workers) shall be paid to the Social Security Institution by their employers by deducting the amount equal to the rate of premium collected over total earnings from workers’ wages and adding the amount of premium to be paid by the employers.

The long and short-term insurance and universal health insurance premiums of the individuals working on own names and accounts (employers) shall be paid to the Social Security Institution by themselves.

The long-term insurance and universal health insurance premiums of civil servants shall be paid to the Social Security Institution by the Public Institution where they work by deducting the amount equal to the rate of premium collected over total earnings from civil servant’s salary and adding the amount of premium to be paid by the institution.

The long-term insurance and universal health insurance premiums of optional insurance holders shall be paid to the Social Security Institution by themselves.

Step 9: Management of human resources

Under Turkish law, labour legislation is applicable to almost all employees, regardless of the size of the employer for which they work. The most significant piece of labour legislation in Turkey is the Labour Law. Other significant pieces of legislation relating to employment matters are as follows: (i) the provisions of Article 14 of the Law No. 1475 which govern severance payments, (ii) the Labour Health and Safety Law, and (iii) Trade Union and Collective Bargaining Agreements. Moreover, the Turkish Code of Obligation includes a chapter on employment agreements, which will be applicable in cases where the above-mentioned legislation does not address the matter in question. 

EMPLOYMENT AGREEMENT

Employment agreements are treated differently than other private agreements under Turkish law. The main objective of employment agreements is to protect the employee and maintain a social balance between the employee and the employer. In order to ensure that these objectives are met, the legal rights and benefits granted to employees under the Labour Law are mandatory and cannot be excluded or altered contractually to the detriment of the employee. However, contractual arrangements which enhance the legal rights and benefits granted to employees under the Labour Law are permitted. It is mandatory to execute a written agreement should the term of the employment relationship be for one or more years. Except where a contract has not been executed, the employer shall, no later than two months after employment begins, provide a written document containing general and special terms relating to working conditions, daily or weekly working hours, remuneration and supplementary salaries, payment terms, and provisions that both the employer and the employee are required to fulfil upon termination of the agreement. Otherwise, a monetary fine may be imposed on the employer for each employee working without a written agreement. If employment agreements are not in writing, they are still valid; however, the employee may demand from the employer a document bearing his signature and stating the general and, if any, special terms of employment at any time 

Definite – Indefinite Term Employment Agreements

 Under Turkish law, employment agreements can be made for a fixed or indefinite term. An employment agreement between an employer and employee will be deemed to be for a fixed term if it is concluded in writing and any one of the following conditions exists: (i) if it is concluded for a definite term work, (ii) if its term depends on an objective condition such as completion of a certain task, or (iii) if its term is subject to the completion of a certain aim. A fixed-term employment agreement cannot be renewed more than once, save where there is a material reason which justifies renewal. If an employment agreement does not meet the above conditions, it will be considered an indefinite term employment agreement. 4.2.2 Part-time – Full-time Employment Agreements Employment agreements can stipulate whether an employee works on a part-time or full-time basis. If the weekly working hours of the employee are considerably lower than those of a full-time employee, the employment agreement is deemed to be a part-time employment agreement. Part-time employment can be for an indefinite term or fixed-term if the fixed term employment conditions referred to in the section above are met. 

For more information: Click here.

Step 10: Patents and Brands

The Turkish Patent Institute provides effective protection and widespread usage of industrial property rights ensuring that Turkish industry and technology plays a leading role in global competition. It strives to be a leading institution in the world of industrial property.

Mission

* To provide effective protection of patents, trademarks, industrial designs and other industrial property rights.

* To contribute to the development of Turkish economy and technology by encouraging creativity and innovation.

* To disseminate the awareness and knowledge of industrial property rights throughout the country and to cooperate with the related sectors.

* Providing a customer orientated, timely and high quality service to constitute an effective industrial property system by strengthening legal, technical and human infrastructure.

* To represent Turkey on international platforms and strengthen co-operation for the protection of the interests and development of the Turkish economy.

Normally, national patent applications should be filed in Turkish and a translation thereof (English, German, or French) depending on the searching authority must be supplied upon requesting the search. However, a national patent application may also be filed in English, German or French provided that an additional fee is paid for supplying the translation in Turkish within one month.

Requirements of a national patent application in Turkey

Applicants must supply the following items in order to meet the basic requirements prescribed by the law:

–    Petition of filing requesting grant of a national application,

–    a description of the invention,

–    one or more claims,

–    any drawings referred to in the description or claims,

–    an abstract,

–    payment of the official fees.

Examination stage

Official fees: Official Fee of the competent Examination Authority.

If applicant selects an examination authority who acted for the same application also as the searching authority, special discounts apply. However, searching and examination authorities are not needed to be necessarily the same.

Turkish Patent Institute applies “examination cycles” if the first examination report contains a negative opinion. Applicant is then invited to respond to the first examination report and pay again the examination fee (second cycle). If the second examination report still contains a negative opinion as to patentability, a third chance, which is actually the last chance, is given to overcome the objections in the negative report where applicant needs to pay again the examination fee (third cycle). If the third examination report does not allow any claim in the claims set, application is eventually refused. If the examination reports reference at least one claim as being patentable, application may proceed to grant based on the allowed claim(s).

Once the application is found to be allowable by the TPI, applicant is invited to pay the grant fee mentioned above in order to proceed to grant and publish the same in the official bulletin. Turkish patent applications are subject to renewal fees from the second and each subsequent year calculated from the filing date of the application. A renewal fee is due on the same day of the month containing the anniversary of the date of filing of the national patent application. If the applicant fails to do so, such renewal may still be paid within an additional term of six months with surcharge.

Failure to pay the renewal fees within the additional 6 months results in loss of rights which can only be remedied with a request for re-establishment of rights. TPI strictly applies the “all due care” criterion such that the reason for failure was caused by unforeseeable reasons and applicant has duly spent every effort for not to cause any loss of rights.

Appeal

Normally decisions of the TPI can be brought into the attention of Board of Re-examination and Evaluation acting as a kind of Board of Appeal. However, decisions pertaining to substantive issues such as patentability, generally do not deviate from the findings of the Examination Reports. Therefore, this Board mostly reviews procedural matters such as whether a procedural violation ever had occurred in the grant procedure. Decisions of this board can be appealed before the Specialized IP Courts in Ankara.

Oppositions / Third Party Observations

The current patent law does not allow post-grant oppositions to the granted patents in Turkey. As a post-grant action, third parties may only proceed with filing a lawsuit requesting nullity of the concerned patent before the competent courts.

Third party observations, however are allowed only in certain points of the grant procedure. Therefore, observations filed in other time points of the procedure have no effect at all.

First time point is that, observations can be filed within six months after publication of the search report in the official bulletin. This would have no substantial effect if the observations are not filed in two languages (i.e. Turkish and the language of the competent Examination Authority) simply because the foreign Examination Authority should be able to interpret the observations. Observations may be considered by the applicant and can be regarded as a warning pushing the said applicant to restrict the claims’ scope or even withdraw the application depending on pertinence of the cited prior art.

However, the applicant has also the chance to ignore the observations and request an unexamined patent. This request is published in the official bulletin giving a chance to third parties to request examination of the application, and along with this request, file their observations in two languages (i.e. Turkish and the language of the competent Examination Authority). As noted, examination request is made by the third parties and therefore the relevant fees must be paid by them. It should be borne in mind that there is no other chance to file observations in subsequent stages, such as in the examination procedure.

YME YouTube Multiplier Event (April 22nd 2021): Register here and don’t Miss out !

What is Communication? How do you communicate as a young entrepreneur. The YME Project has it all spelled out for you ! Do you want to know more then read this article en join our YME YouTube event on April 22nd 2021. Don’t miss out, and sign up here !

What Is Communication ? (O3yme): Tips how to Communicate as a Young Entrepreneur

Practice Your Listening Skills (and Your Paying Attention Skills Too):

When others are speaking, are you really listening ? We often confuse ‘listening’ with ‘being quiet’ but just because you aren’t talking while others are talking doesn’t mean you’re really listening. Learn to turn off your own internal dialogue and truly tune into what others are saying. It often helps to repeat what you’ve heard so that you know you’re paying attention and they know it too.

Collaborate, Don’t Dictate:

Lectures, monologues, and ramblings don’t belong in business communications. If you find you’re speaking more than a few moments (except when giving a presentation or leading a demonstration), stop. Simplify what you’re trying to say as much as possible. Allow others to offer their input on the issue. Communication is about give and take, not dictating how things are going to be or how you think they should be.

Pay Attention to How You Spend Your Leisure Time

You probably didn’t expect this to be on the list. What do the TV shows you watch, the things you read, and your hobbies have to do with business communications? Well, the answer is twofold. First, they have the potential to expose you to new perspectives and important current events that help you grow your business intelligence. Odds are people who watch an hour of reality television daily aren’t going to be as capable of carrying a business-oriented conversation as well as those who spend their free time reading business journals and networking with successful mentors. Second, you will glean tremendously useful ideas and insights from more intellectual pursuits than from watching or reading less helpful material during your off time.

Invest in the Right Communication and Collaboration Tools:

If you’re depending on email and social media for your communications, you’re probably receiving a lot of useless and redundant information and perhaps missing out on the most important conversations. A collaborative tool like Vmoso is the ideal way to streamline communications, collaborate on important projects, and build meaningful business relationships.

Don’t Wait Too Long to Bring Up Sensitive Issues

Allowing a situation to build and fester is a recipe for a breakdown in communications. It’s much easier, effective, and more professional to address an issue as soon as it pops up, while it’s still in its infancy, than to wait until it grows into a big, ugly, angry monster. Most of the time, a quick, direct discussion can resolve any interpersonal or professional issues without negatively affecting the relationship.

Learn to Have and Use a Good People Memory

Is Sheila a morning person, or is it better to approach her with a problem later in the afternoon? Does Samuel prefer a bagel when you swing by to pick up breakfast, or is he more of a sausage biscuit kind of guy? Is it Tuesdays or Thursdays that Becky has to leave as soon as possible to get her child to his orthodontist appointment? Do these little details seem meaningless to you? People are important. When you can remember details about their personal lives, it shows that you care for them beyond their work. This fosters a deeper, more meaningful relationship that will spill easily into a better, more rewarding business relationship

What Is Communication ? (O3yme)

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Source: www.ymeproject.com / (Source: 6 Tips for Improving Your Business Communication Skills)

It’s very important to choose the right indicators in the evaluation of the startup: actionable indicators and not vanity indicators. For example, a supermarket can set a vanity indicator – number of customers, but an actionable indicator is the volume of revenue per day. The number of customers may increase, but they can buy considerably less in time.

Ten Tips and Tricks to be successful as an Entrepreneur

Here are our best 10 tips and tricks to help you make it as a successful entrepreneur. We have made this article with help from this blog source: https://www.santam.co.za/blog/business-advice/10-tips-for-becoming-a-successful-entrepreneur/

1. Do Solid business planning

Planning plays a crucial role in any business success. A business plan (see also previous paragraph and chapter 4) is a good place to start – defining your skills and weaknesses, what you offer, how it’s unique and how you plan on growing your offering. What’s more, try to prepare yourself mentally and practically for anything that could go wrong and how you would deal with it. For example, what happens if you get injured? What if clients pay you a month late? What if a weather disaster affects you? Or a trusted supplier goes bankrupt?

2. Prepare for Financial Challenges

Cash flow was by far their biggest challenge when starting up a business (survey Santam) https://www.santam.co.za/blog/business-advice/10-tips-for-becoming-a-successful-entrepreneur/ ). Deal with cash flow blows by saving for a month’s worth of expenses or by getting creative with how you lower your overheads. You could offer clients a discount if they pay a deposit or the full amount upfront, or even an incentive – e.g. pay 10% less if you deliver your product or service a week earlier. Whatever you do, be extremely careful of debt – this is one of the biggest killers of small business success.

3. Be Cautious – Remember you’re starting up a business

Resist the temptation to splash out on fancy offices, expensive equipment and over-the-top marketing. Your company’s livelihood depends on what’s in your wallet so every rand and cent must be triple-checked. Maintain a low overhead and manage your cash flow effectively. For one of our 1001 days survivors Jamie Pike, this meant foregoing a physical shop at first and selling his wares at a market; for design duo JesseJames it meant sharing their premises with other small businesses.

4. Ask for help!

There are loads of resources out there for networking, knowledge sharing and advice. Networking is not just for new business opportunities; it can be a wonderful source of support and fresh ideas. Attend events of your industryand regional business networks. Ask for advice from those around you (such as your intermediary, bank manager, landlord or neighbouring businesses),  or online forums and Facebook community groups in your area.

5. Put your faith in a trusted mentor

It can be a family member, former boss or colleague or even a trusted online source or blog. A mentor is an invaluable sounding board – someone who’s been where you are; someone with whom you can have regular, non-judgmental check-ins.61.9% of respondents in our survey didn’t have mentors – however those that did said that they found mentors to have a significantly positive impact on their businesses.

“My mentor pushed me beyond my biggest fears”, said one female entrepreneur who took part in our survey. “It’s not somebody who will take over”, agrees Cooked Inc’s Mariam Jakoet Harris. “It’s someone who’s going to nurture and help you.”

6. Marketing on a small budget

Marketing your new business is extremely important but doesn’t have to cost to much. Social media is your friend – creating your business page on Facebook or LinkedIn is free and will help your online search ranking. So is submitting your website URL to search engines like Google and Bing – it’s completely free.

Also keep an eye out for community Facebook groups – some will require a small advertising fee while others allow you to advertise your business on certain days of the week. The bottom line with marketing is to try anything and everything. You won’t know what will work for you until you try it.

7. Look after number one

Entrepreneurship is a lifestyle – the days of 9-to-5 are over. That’s not say that you must work yourself into the ground. Exercise regularly, eat healthily and find the time to relax or you’ll end up being less productive. Of Entrepreneurial respondents, 64% said that they had to give up precious time with their family and friends due to work responsibilities (source Santam). Working on your time management skills will help you clear enough time in your day to spend with loved ones.

8. Build a team that shares your vision

It’s simple: great people make a great company. As your business grows, you might need to hire staff. Firstly, take the time to interview people thoroughly to ensure that they fit your culture and share your values. Secondly, it can be hard to let go but it’s important to learn how to delegate tasks. Finally, don’t expect people to be your clones. Be open to new opinions and suggestions. It’s always good to get fresh perspectives on old ways of working.

9. Life Long Learning

Starting your own business is a constant process of growth and learning. It’s important to enrich yourself with both practical and emotional skills. Take a look at free or low-cost e-learning resources such as the Hubspot Academy, Udemy and Inc.edu.

Sharpen your project or time management skills, learn a new software programme or teach yourself how to run your own social media campaigns. You can also work on your management, presentation and motivational skills. If you travel a lot, podcasts and things like TED talks are great ways to inspire and educate yourself.

10. Safeguard your venture

The best entrepreneurs don’t seek risk, they seek to mitigate risk. Small business insurance is one of the best ways to look after you livelihood, and it’s more affordable than you think. Make sure that your precious stock and premises are covered in an emergency such as a fire or theft.

YME Videos coming up

Coming up soon, YME videos about our products:

A study by the Global Entrepreneurship Monitor (GEM) found that immigrants are far more likely to be entrepreneurial than people born and brought up in the UK… Three times as much in fact. Figures from the Dutch Chamber of Commerce show that one in five starters was not born in the Netherlands.

UK Stats

A new analysis from Zirra reports that, of the UK’s top 10 unicorn (valued at $1bn or more) businesses such as Shazam and Funding Circle, in nine out of the 10 businesses there is at least one immigrant or a child born to first-generation immigrants in the founding team.

Studies and analysis aside (e.g. Startups.co) shows that there are a vast number of incredibly inspiring immigrants who have moved to the UK to set up and build businesses which have driven economic growth and supported job creation.

In nine out of the 10 businesses there is at least one immigrant or a child born to first-generation immigrants in the founding team.

Zirra

In previous years, we’ve tracked the success of business moguls like London’s deputy mayor Rajesh Agrawal, the Indian immigrant who founded £1.3bn foreign exchange company RationalFX back in 2005, alongside Australian-born Alicia Navarro and her international multi-million pound affiliate marketing agency Skimlinks. So What about start-up founders? Last month we profiled London Junk founder Harsha Rathnayake and shared his rousing story of coming to the UK when he was 18 and not being able to speak any English. He would go on to learn English fluently – self-taught – and, with just £160 from his life savings, start a business that now employs 10 people and is on target to hit £1m turnover.

Immigrant Entrepreneurship does not harm Dutch Economy at all

The share of entrepreneurs who were not born in the Netherlands rose last year by a percentage point to 16 percent, ie one in six. Almost a quarter of the starters were not born in the Netherlands. Most have a business in the hospitality, logistics and construction industries. Many starting migrant entrepreneurs are located in the provinces of North and South Holland and Flevoland.

Figures from the Dutch Chamber of Commerce for 2015 show that one in five starters was not born in the Netherlands. Notable risers: entrepreneurs from Syria and Iraq. Immigrant entrepreneurship does not do the Netherlands any harm. The report The Economic Value of Ethnic Entrepreneurship shows that more than 600,000 people work in the companies of these alleged entrepreneurs. The gross added value of these companies amounts to more than 37 billion euros. Watch this great example of successful young Dutch entrepreneur:

Watch this iFly Magazine video about Omar Munie who fled from Somalia to the Netherlands with his brothers when he was just nine years old. Now, 18 years on, he is one of Holland’s most popular bag designers, and his hand-made products are sold throughout the world. One of Omar’s latest projects involves a partnership with KLM, designing a limited edition series of bags made from former KLM uniforms.

Another successful Entrepreneur is Hien Kieu. The director of Kieu Engineering from Sprang-Capelle tells how he left Vietnam in a boat with his parents’ savings as a fourteen-year-old boy. How he was one of the few immigrants to end up in a village in Brabant. Lts went without even speaking a word of Dutch. And how one teacher at that school believed in him. “I will never forget it. He asked the class: Do you know which one of your engineers will be? He is. That little Hien. “The teacher was right. And after lts, mts and hts ’that little Hien’ started in 1998 with Kieu Engineering for himself. This has now grown into a large company with seventy employees in the Netherlands and Vietnam, specialized in product development for machine construction. With clients such as Nedtrain, Tata Steel and Philips. When he opened his branch in Vietnam more than ten years ago, it was pioneering. “This was something completely new. We do not outsource production, but the labor-intensive CAD drawing work. Not only for ourselves, but also for our customers. “It was a leap of faith, but now it is starting to pay off, says Kieu. “The knowledge remains in the Netherlands. This gives our customers more time for innovation, which is good for the Netherlands, for example. “

How to formally start your own business?; Where do you start? And what rules, laws and regulations you have to take into account?  It’s the question that many starting entrepreneurs ask themselves. The YME Project has made a step-by-step plan to make you legally and officially ready for the start of your company in the United Kingdom, the Netherlands, Romania, Italy, Turkey. Below a little part of our YMe Guide in which we tell you how to start up a business in Holland.

Going Dutch – Starting a business in The Netherlands can be a lengthy process with all the laws, regulations and rules, but also with all the possibilities and opportunities. It may be hard, but it’s rewarding as the Netherlands offer a huge amount of support for all business whether it’s with legal issues, monetary support, consulting, etc. With places like “Area 071” in Leiden/Leiderdorp for example, you will have everything and everyone you need to support you and your newly started business, but on top of that, Dutch Tax and Customs Associations as well as Commercial Register are willing to help and they are stated in every province in the Netherlands.

In order to start a business legally in the Netherlands, you have to meet certain conditions and follow strict and thorough laws, rules and regulations. If you wish to set up a new business in the Netherlands, you must observe various government and other rules. Some of these laws might be sector specific so you would need to check within the sector-specific information for your business to see what applies to you and your business.

For starters, Entrepreneurs who intend to stay in the Netherlands must fulfil a number of conditions. If you are not an EU citizen, you will also need to apply for a temporary (e.g. Visa) and permanent (e.g. Dual Citizenship) residence permit simultaneously. On top of that, If you plan to start doing business in the Netherlands, you will also need to have or apply for a business bank account (e.g. IBAN). Writing a business plan is not a necessity when starting a legal business, however it does help to do so. When it comes to a business, you always need to select a legal business structure and the said structure determines such issues as liability, tax obligations and many more. Briefly talking about the legal business structures, some examples that can be given is a Sole Proprietor or a Private Limited Company.

Choose legal form

Every company must be registered in the Trade Register of the Chamber of Commerce (Kamer van Koophandel – KvK)

Overview legal forms in PDF:

https://www.kvk.nl/download/SchemaRechtsvormen_tcm109-389297.pdf)

There you must immediately indicate which legal form applies best to your company. The legal form you choose has consequences for, among other things, the liability of the organization and certain tax obligations. There are many legal forms to choose from. We have made a breakdown below.  Most starters opt for a sole proprietorship (eenmanszaak). Are there multiple owners? Then they often opt for a partnership (VoF) or BV. The ones which are the most appropriate for a young entrepreneurs are further described.

The Dutch legal forms to choose from are:

• Sole Proprietorship (Eenmanszaak)

Most people decide to set up a ‘sole proprietorship’ (eenmanszaak), when starting a business for themselves.

Being a Freelancer and/or ZZP’er (Zelfstandige zonder personeel = Self-employed without staff) is not a legal form. You must also choose a legal form as a self-employed person or freelancer. For example, a sole proprietorship.

 Setting up as a sole trader has some advantages – it’s quick and easy to do, and often offers more tax benefits than setting up a private limited company, especially in the early years. A disadvantage of establishing yourself as a sole trader is that you’re personally liable for your business debts.

The only thing you’ll need to do to set up as a sole trader in the Netherlands is register with the Netherlands Chamber of Commerce, and this process costs €50. You can only set up one sole proprietorship, but you can operate under various trade names, perform different commercial activities and work from multiple premises.

Running a sole proprietorship, your business is not a legal corporate entity. This means you’re liable for all your actions and finances.

• General Partnership (VoF)

A general Partnership is called Vennootschap onder Firma (VoF): In a VoF you start a company together with one or more other entrepreneurs. It is the intention that all partners contribute something to the company. Often this is an amount of money, but sometimes also goods or working hours. You do not need starting capital for a VoF. You lay down the mutual agreements in a VOF contract. Each participant is privately liable for the entire VOF. If you want to start a VoF, register with the Trade Register of the Chamber of Commerce (KvK). All basic data such as the name, activity and the names of the partners are registered.

• Private Limited Company (BV)

One option is to create a legal entity in the form of a ‘private limited company’: Besloten Vennootschap (BV). The main advantage of a BV is that it’s an autonomous entity. The BV is generally speaking liable for any debts, rather than you as an individual. As a director, you’re an employee of the BV and you act on its behalf. It’s possible to set up a BV on your own or with other individuals and/or legal entities (an example that can be given is Area 071). A private limited company’s equity is divided into shares that are owned by shareholders (The company owners still run the daily errands and the business itself)

Starting a private limited company, or changing your sole proprietorship into a private limited company, has grown a lot easier over the years dues to the flexibility and growth in the Entrepreneurship market.

Running a private limited company, you’re in theory not personally liable for your business’s debts. However, banks generally ask that as a director and major shareholder you co-sign for loans as a private individual for protection and a form of insurance.

• Limited Liability Partnership (LLP)

Limited Liability Partnership (LLP) is a legal form from England that is recognized in the Netherlands. LLP can be compared to a VoF and Maatschap: a partnership between at least two (legal) persons. With an LLP, you are entitled to the start-up allowance, the self-employed person’s allowance and the SME profit exemption. In addition, the LLP ensures limited liability

• Limited partnership (CV)

A limited partnership, Commanditaire vennootschap (CV) is interesting if you do not have enough money to start. A CV has managing and silent partners. The managing partner has the daily management of the company. Silent partners are only lenders.

• Partnership (Maatschap)

In a Maatschap (partnership), 2 or more persons carry out their profession under a common name. Every participant contributes something, such as labor, money or goods. The benefit is distributed.

• Foundation (Stichting)

Do you want to achieve a certain social, social or idealistic goal, such as nature conservation, help to other people or the spread of culture? And do you have money available for this? Then you can opt for the foundation as a legal form. You can set up a foundation alone or with others. The foundation uses any profit to achieve the ideal goal.

• Association (Vereniging)

Do you have a wish or goal and do you want to work with others to achieve this, such as a sports club or interest group? Then you can choose the association as legal form.

• Cooperative association (coöperatieve vereniging)

A cooperative and mutual guarantee society (in full: cooperative association) is a special association that focuses on cooperation and that enters into agreements with and for its members.

Officially Register your Company with the Chamber of Commerce

A visit to the Chamber of Commerce (Kamer van Koophandel – KvK) is compulsory for (almost) everyone who starts their own company. In order to do business, your company must be registered in the Trade Register of the Chamber of Commerce (KvK). Logically, the next step would be to choose an appropriate “Trade Name” for your company. In order to progress any further, the name has to be original and not plagiarizing any other major or minor brand/company. As aforementioned, you need to register your name in the Commercial Trade Register. This must be done no later than one week after you have started. Make an appointment online and then go to a Chamber of Commerce office. When you register, this costs € 50. These are costs that you can deduct from the profit. You will immediately receive a Chamber of Commerce number.

 Fiscal regulation and Accountancy

If you have registered your business in the Trade Register of the Dutch Chamber of Commerce, You do not need to register separately with the tax authorities. That happens automatically.

VAT identification number and sales tax number

There are more legal entities coming into the picture, such as the Tax and Customs Administration. If your business structure is sole proprietor or partnership, you will be issued with a VAT-number, so you don’t have to register with the Dutch Tax and Customs Administration separately. Private Limited Companies have to register via a civil-law notary, who will take care of the registration at the Dutch Tax and Customs Administration on your behalf.

BTW / Value Added Tax (VAT)

VAT (BTW), payable by all final consumers, with sometimes the option for legal forms and or startups to be exempt).

Good facts to know: The Tax Authorities will send you a VAT identification number and sales tax number after a week by post if you are found to be liable for VAT.

• You put the VAT identification number on your invoices, quotes and website

• You use the turnover tax number to file a turnover tax declaration with the tax authorities.

Before 2020 there was only one number: the VAT number. However, this was linked to your BSN, which made it sensitive to privacy. Ultimately, the tax authorities work towards one safe number for customers and pay tax.

Are you an entrepreneur and do you independently run a company or profession? Then you pay VAT (turnover tax) on your turnover. The legal form (eg BV or NV) is not important for paying VAT. A foundation or association also pays VAT if the Tax and Customs Administration considers this as an enterprise.

The conditions for VAT are different than for income tax How much VAT should you charge?

• The standard rate for VAT is 21%. Sometimes you charge a different rate
• For certain services you charge 9% VAT. For example if you repair bicycles or if you are a hairdresser
• For certain goods you charge 9% VAT. For example for food, books and medicines
• Services with 0% VAT are, for example, international passenger transport
• Goods with 0% VAT, for example, are catches that you immediately bring to the auction
• In some branches and in a number of activities you do not have to charge VAT. For example in education or if you provide excursions and tours. You then have an exemption from VAT.

Is it unclear to you what rate to charge? The Tax and Customs Administration (belastingdienst) separately examines the VAT rate for some products and services, if there are any questions about this.

Corporate tax (taxable profit) (VPB)

Do you own, for example, a BV or NV? In that case, you must file a corporate income tax return (vpb) for your company. Corporation tax is a tax on taxable profit. A foundation or association also sometimes has to file a corporate income tax return. Depending on the amount of the profit, an exemption applies.

Paying on taxable profit

Your company pays corporation tax (VPB) on the taxable profit in a financial year. Profits can still be reduced if your company can offset losses. A financial year is often the same as a calendar year. However, a broken financial year (for example from May to April) is also permitted within corporate income tax. The financial year for the corporate income tax return must be the same as the financial year in the company’s articles of association.

Dividend tax

Dividend payments made by the company to associates or share-holders). If your NV or BV makes a profit, the company can distribute part of that profit to the shareholders. This usually takes the form of dividend. The company that distributes the dividend must then pay dividend tax to the tax authorities. In a number of cases you may be eligible for (partial) exemption or refund of the dividend tax.

Step 4: Write a business plan

Starters sometimes dread writing a business plan. But if you are serious about this, it can bring you a lot of benefit:

• You map your business opportunities

• You get a good picture of your risks

• You know who your potential customers are

• You are aware of relevant market developments

• You make more impression on potential investors

When starting a business your intent is always to grow and expand. Growth and expansion mean getting more people involved in your cause i.e. hiring people. If you intend to hire staff, you will first need to register as an employer with the Dutch Tax and Customs Administration.

Step 5: Opening a Business Account

Opening a business account is often the next logical step. Business banking is a good way to keep an overview of your income and expenditure. This also prevents your business and private administration from getting mixed up hopelessly.

In the Netherlands several banks have entrepreneurial schemes for young entrepreneurs:

Qredits has over a hundred million euros to provide in the Netherlands as microcredits. Qredits, the trade name for the Microcredit Netherlands Foundation, jumps into the gap that the banks are dropping. Since the beginning of this year, the foundation has been included on small entrepreneurs, also from disadvantaged groups. Borrowing money from banks has always been a challenge for smaller entrepreneurs, but the financial crisis has made it an impossible task for many (starting) entrepreneurs. That is why the Microkrediet Nederland Foundation wants to help small entrepreneurs throughout click on the Netherlands obtain credit under the name Qredits from Almelo.

Government Grants

From 2020, the Minister of Social Affairs and Employment will make € 48 million available for initiatives aimed at stimulating learning and development in SMEs. In addition, € 1.2 million will become available for the same purpose in large companies in the agricultural, catering and recreational sectors.

Keep a close eye on the website. Any updates regarding the SLIM subsidy scheme are mentioned on this website.

 Step 6: Environmental Protection Laws and Rules and Applying for Permits

In most cases, you will not need a degree or a professional qualification to start a business, however, in some cases, certain professions require degrees or professional qualifications.

As an entrepreneur you sometimes have to take into account applying for permits. Permits are important, and in some cases mandatory, if you want to start a business. At the Chamber of Commerce (Kamer van Koophandel) you can find in detail which permits you need for your company. In addition, the municipality where your company is, will also have certain requirements. Different rules apply to these specific requirements per municipality.

In terms of a business, establishing a physical location plays a big role. A zoning plan needs to be considered in order to progress with your business. If you plan to establish your business at a particular location, this choice of location must be in line with the municipal zoning plan. If this is not the case, you can apply for an “All-in-one Permit for Physical Aspects” to carry out your plans anyway. After a preferred location has been considered in a municipal area, the next step before establishing a business is to consider environmental regulations which may have a negative impact on the environment (e.g. Waste, endangering wildlife/public, etc.). If you think that this could be the case, you must submit a notification of environmental management to your local municipality unless you are in possession of an “All-in-one Permit for Physical Aspects” beforehand.

There are experts at both the Chamber of Commerce and the municipalities who can help you get started in the maze of permits. Below you will find some general information about permits that you definitely need.

Destination plan

In the Netherlands, government zoning plans determine where you can and cannot set up your company. These zoning plans also state what the uses are for your business property and plot and what can change in the vicinity of your company. It is therefore important to know what is in the zoning plan, so that you are not faced with surprises. You also have to take into account that a municipality can change an existing zoning plan. It is important to know the procedure for this, because the future of your company may depend on it.

Environmental regulations and permits for starters

In addition, entrepreneurs often have to deal with environmental regulations in the field of noise, energy and waste. The rules that apply to you may be different per region, field and type of company. To facilitate this, the environmental permit was introduced in 2010. The environmental permit includes about 25 other permits, including the Environmental Permit, Building Permit and Usage Permit discussed below.

Environmental permit

If you want to set up a company in the Netherlands, you will have to deal with the Environmental Management Act. This law applies to almost all companies and is intended to keep environmental pollution within legal standards. If you can cause nuisance, danger, nuisance or damage, you probably need a permit. Some entrepreneurs are eligible for an exemption. Click here for national government information.

Building permit

If you want to (re) build your business premises, you must also apply for various permits, which is possible with an environmental permit. You will then have to deal with the Housing Act, the Building Decree and the municipal building regulations. For more information, you can (re) build at the municipality in which you are going to build.

License to use

The fire safe use permit system has two procedures. Namely;

– a procedure whereby a license for fire safe use is granted. Often known under the name “use permit”, this is necessary when accommodation is provided, children under 12 are present, etc.

– the second procedure is an application for which a “fire safe use report” is requested. This is only mandatory if more than 50 people are admitted to a shop or office building at the same time. The use permit and the report fire-safe use must both be requested in writing (form and drawings) and must be completed with a short procedure.

Other environmental permits

Other environmental permits are:

• demolition permit
• waste order
• housing permit
• monument permits

Do you think you need an environmental permit? Then do the permit check first. You can apply for an environmental permit online via the environment counter.

Local taxes: permits

Each city council draws up a General Local Regulation (APV), which regulates the use of public space (for example for terraces, advertising). The APV usually has a licensing system in which applicable prohibitions do not apply to you if you have received a license for this. There are costs associated with obtaining these permits.

Work From Home

Sometimes choosing a new location for your business might not be ideal if you plan to start small or do not require an excess of space. Essentially, you could start a business from your own house and if you plan to run a business from your home, you are normally obliged to report this plan to your local municipality. You must also bear in mind various tax and mortgage issues.

Step 7: Privacy / Personal Data Protection (Making a business website)

Nowadays, a company can not do without a business website, which you can then promote on the well-known social media.

The Netherlands has a high percentage of general Internet, social network site, and smartphone users. The Dutch Constitution contains a provision on the protection of privacy of personal data. The Personal Data Protection Act broadly governs the protection of personal data; online privacy is addressed in particular by the Telecommunications Act, which was recently amended to incorporate privacy provisions deemed by some commentators to be stricter than those of the EU. The Netherlands has incorporated key European Union directives on privacy, such as the Directive on Personal Data, the Data Retention Directive, and the Privacy and Electronic Communications Directive, into its national law.

The processing of any personal data in the Netherlands requires the data subject’s unambiguous consent; certain types of personal data, such as that concerning a person’s religion may not be processed, however. Internet service providers have an obligation to protect the privacy of users and subscribers. The Dutch Data Protection Authority is a key agency involved in the protection of personal data, but two other agencies play a role in supervising telecommunications service providers and the telecom market. Among possible future changes in the Dutch legal framework of online privacy is the adoption of a constitutional amendment on the protection of digital rights.

Legal Framework

The  Constitution  of  the  Kingdom  of  the  Netherlands  provides  for  the  protection  of privacy in article 10, which states as follows:

Everyone shall have the right to respect for his privacy, without prejudice to restrictions laid down by or pursuant to Act of Parliament. Rules to protect privacy shall be laid down by Act of Parliament in connection with the recording and dissemination of personal data. Rules concerning the rights of persons to be informed of data recorded concerning them and of the use that is made thereof, and to have such data corrected shall be laid down by Act of Parliament.[7] The Constitution also provides for the inviolability of the person[8] and the home[9] and protects against the violation of the privacy of correspondence and of the telephone and telegraph, except as otherwise provided by acts of Parliament.[10]

When it comes to Personal Data Processing, the storing and processing is regulated by the General Data Protection Regulation(GDPR). The GDPR consists of a number of rules for the (automatic) processing of personal data. This EU regulation forces you as an entrepreneur to act more carefully and responsibly when dealing with personal data of customers, personnel or others. That means that your website needs to be GDPR proof  website. This law gives people stronger privacy rights and organizations more responsibilities. For example, organizations are obliged to show which personal data they collect and how they use and secure them. People

have the right to have data deleted if they no longer want an organization to process personal data about them.

GDPR manual | General Data Protection Regulation (AVG)

Instructions

To help managers and entrepreneurs to be prepared in time for all changes, the Ministry of Justice and Security (JenV) has issued a 98-page manual that fully explains how the new law and the necessary measures must be implemented and monitored. The document, entitled ‘Manual General Data Protection Regulation and Implementation Act General Data Protection Regulation’, was compiled by consultancy Consideration under the auspices of the Ministry of JenV. In addition, an external sounding board group was also consulted during the preparation of the manual.

The comprehensive user guide runs step by step along the various points that are important for those who will have to deal with the AVG. This is also the first point that the document deals with: to whom does the AVG actually apply? In general, it can be said that the law applies to anyone who deals with the storage and processing of personal data of EU citizens. This may concern companies and institutions as well as people, such as self-employed persons. There are, however, some exceptions. For example, the law does not apply if the processing is exclusively intended for purely personal or household activities that are not related to business activities. In addition, the processing of personal data by the police in detecting criminal offenses is exempt from the regulation. The separate Police Data Act applies to this.

The transition to the new legislation has, even now, a major impact on companies and institutions. In order to ensure that the organization is well organized in time to comply with the stricter rules, it is often necessary to make major adjustments with regard to processes, systems, working methods, culture, personnel and policy.

Companies that do not have their affairs in order run a high risk: in cases of non-compliance, large fines can be distributed, rising to as much as € 20 million, or even 4% of the worldwide annual turnover of a company if this is more than € 20 million.

Data Protection Officer

An important new duty for many of the companies and institutions that deal with the AVG is the appointment of a Data Protection Officer (DPO), whose job is to monitor compliance with the rules. In this way, the DPO must also keep in mind that the various elements within an organization are well-armed against the current cyber threats. This involves, for example, ensuring that employees handle data carefully and keep cyber criminals out of the (digital) door. Click her for the Guide regarding privacy law regulations.

 Step 8: Insurance

An accident – whether it is a physical or psychological problem – is in a small corner. Where as an employee you could still count on the support of your employer, as an entrepreneur you are responsible for the (financial) consequences of illness and accidents.

For freelancers/self-employed professionals in the Netherlands it is not, unlike for employees, compulsory to have insurance for illness, invalidity or unemployment at the moment. Therefore, they must make arrangements for these kind of social insurances themselves if they want to receive any benefit if they become ill or unfit for work, for example. There are, however, benefits schemes for maternity leave and childcare available. National insurance schemes (social security), however, do also apply to freelancers/self-employed professionals.

Voluntary insurance

Former employees or benefit recipients in the Netherlands who start their own business, can take out several insurances with the Dutch Employee Insurance Agency (UWV, in Dutch). To be able to do so, they need to register within 13 weeks after their compulsory employee insurance scheme through former work or benefit has been cancelled.

Every freelancer/self-employed professional can take out voluntary insurances against a number of business risks with an insurance company. In the future, it may become compulsory to take out insurance against occupational disability. You will find information about insurance schemes regarding disability, provision for old age and liability on the Insurances for self-employed website (Verzekeren voor Zelfstandigen).

For people who have been working independently for more than 1 year, it is also possible to set up a ‘bread fund’ (Broodfonds, in Dutch) with a group of other self-employed professionals. This is a voluntary scheme where participants (20-50 people) all pay into a fund to be able to support each other in case of illness.

National insurance schemes

National insurance schemes are compulsory for everyone working or living in the Netherlands. Freelancers/self-employed professionals in the Netherlands pay national insurance contributions through their income tax. Additionally, there are several ways to ensure your business’s assets in the event of legal liability or any other any other risk you can’t afford to cover.

Step 9: Management of human resources

General

The taxation of employees in the Netherlands consists of the levy of personal income tax and social insurance contributions. The employer has a withholding obligation for taxes due over the employee’s salary (wage  ax) and the social security contributions which become due over the employee’s salary.

The Dutch social security contributions consist of the national social insurance contributions and the employee social insurance contributions. The national social insurance contributions are basically due by every Dutch individual tax payer, regardless the nature of the income. The levy of the national social insurance contributions is integrated in the income tax and wage tax levy.

The employee social insurance contributions are only due by employer and employee on account of qualifying employment income. The levy of the employee insurance contributions is separated from the levy of income tax. For employees who are temporarily assigned to the Netherlands an exemption from the Dutch social insurance system may apply by virtue of applicable treaties and/or EU regulations.

Personal income tax

Resident individuals are subject to individual income tax on their worldwide income.

Income earned outside the Netherlands may qualify for an exemption by virtue of applicable tax treaties or the Dutch unilateral rules for the avoidance of double taxation.

Non-residents are only subject to individual income tax on certain types of Dutch source income, including income from employment

Real estate situated in the Netherlands

Income derived from shareholdings in a Dutch corporation, provided that the interest equals or exceeds 5% of the shares. Special rules apply to certain categories of tax payers like for instance sportsmen or artists.

The centre of vital interest will be decisive for qualifying as a Dutch resident e.g. physical presence of the taxpayer and his family in the Netherlands.

A non-resident taxpayer earning Dutch source income can opt for the status of resident tax payer if this for whatever reason is beneficial. Usually this is done to qualify for personal allowances and deduction of certain expenses which are generally not allowed for non-resident tax payers.

Under most tax treaties a foreign employee who is assigned to the Netherlands by a foreign employer is exempt from Dutch income tax/wage tax if the employee’s working days in the Netherlands do not exceed 183 days in a tax year. This rule generally does not apply if the foreign employee has a Dutch employer. Special rules may apply for foreign based employment agencies.

As from 2001 the Dutch individual income taxation is based on three types of income (boxes of income). Each box has its own tax rate:

Box 1: taxable income from work and home (progressive rate, see under Dutch tax rates for individuals – 2017)

Box 2: taxable income from substantial shareholdings (fixed rate of 25%)

Box 3: taxable income from savings and portfolio investments (fixed rate of 30% over fictitious income of 4%)

Each form of income is taxed in one box only (all “emoluments” of employment – for example, salary, bonus, company car and benefits in kind – are subject to income tax in Box 1). There can never be double taxation. If the income in one box is negative, this can in most cases not be offset against positive income in another box. However, it is in principle possible to offset the negative amount against a positive income in the same box in past or future years.

The personal income tax year is the calendar year.

Wage tax and national social insurance contributions

Wage tax or wages withholding tax (‘Loonbelasting’) is an advance payment for the individual income tax. Wage tax and national social insurance contributions (‘volksverzekeringen’) are levied jointly on income from employment.

All Dutch employers, including non-resident employers with a permanent establishment in the Netherlands, are obliged to withhold wage tax and national social insurance contributions from salary payments and, in this respect, act as a withholding agent for the Dutch tax authorities.

The rates are progressive and depending on the bracket of income. For the rates we kindly refer to the page Tax rates for individuals – 2018. Wage tax rates are basically equal to individual income tax rates, although through the much broather taxable basis of the income tax the ultimate effective rates may deviate. For many individuals the wage tax is however a final tax.

Depending on the level of income from employment and other criteria, individuals may have the legal obligation to file an income tax return. The filing of a tax return is followed by the issuance of a tax assessment in which the wage tax already paid is offset against the final income tax liability.

Employee social insurance contributions

In addition to the national social insurance contributions that form part of the lowest two income tax rates, social security contributions (‘werknemersverzekeringen’) on employment income are payable by employees. The contributions are calculated on gross salaries (with a maximum amount), less pensions premiums withheld and adjusted for some technical differences with the income for tax purposes.

Employees furthermore pay a social insurance contribution (including medical insurance) and an unemployment insurance contribution.

The rates are dependent on your lines of business. For more information please contact us.

Income tax rates

For an overview of the rates for the Dutch personal income tax and the national social insurance contributions we refer to the page Dutch tax rates for individuals.

Step 10: Patents and Brands

The Netherlands Patent Office (Octrooicentrum Nederland) is the official Dutch government body that grants Dutch patents, implements national and international patent regulations in the Netherlands, and promotes patents as a source of information and inspiration. The Netherlands Patent Office is a department of the Netherlands Enterprise Agency (RVO).

The Netherlands Patent Office provides support and guidance to business owners (SME’s, start-ups), the services sector, scientists, researchers, teachers and students. You can consult with the Netherlands Patent Office free of charge about any patent-related queries or other ways to protect your intellectual property (IP).

Sources: www.ikgastarten.nl en kvk: https://ondernemersplein.kvk.nl/