The Netherlands: Most attractive country in Western Europe to foreign companies

The Netherlands: Most attractive country in Western Europe to foreign companies

Of the countries in Western Europe, the Netherlands is the most attractive to foreign countries wishing to establish in this part of Europe. This is shown by the study ‘Competitive Alternatives’ that KPMG conducts bi-annually into the business costs facing start-up companies in different countries.

The costs are the lowest in the Netherlands, followed by the UK and France. Germany is the most expensive in Western Europe for start-ups. Globally, Japan appears to have increased its attraction for foreign companies considerably.

“Because of the persistent low inflation and the sharp drop in the value of the yen in the past two years, Japan’s competitive position has improved strongly compared to 2012”, says Elbert Waller, International Affairs Executive of KPMG. Waller: “The Netherlands’ leading position in Western Europe is partly thanks to the low cost of (office) facilities, the uniform cost structure and the specific incentive schemes for companies active in the field of research & development.”

Low financing costs

The KPMG survey shows that the total costs that a business has to incur to establish itself in a country increased by only 1.2% compared to 2012.

Waller: “The exceptionally low interest rate means financing costs for companies are very low at the moment. But, at an average of 0.25%, labour costs in the surveyed countries also increased only a fraction. This partly compensates for higher tax rates in some countries and the increased costs for, among other things, transport, gas and electricity.” In addition to the tax charges, the costs for energy, transport, telecommunications and labour, etc. were also reviewed. Of all these, labour costs remain the most important cost item. For businesses active in the production sector, labour costs average 45 to 60% of the total overheads and 75 to 90% in the service sector. Globally, the total labour costs are by far the lowest in Mexico. Additionally, the UK, Canada and Italy also have relatively low wage costs. Furthermore, transport costs are an important factor. These costs for production companies vary between 7 and 24% and are the cheapest in Japan, the US and Germany.

Uniform cost structure

Waller believes that internationally-operating companies, regardless of their size or the sector in which they operate, increasingly realise that choosing the correct location can be vital for success.

Waller: “To remain competitive, businesses will have to look critically at the various costs they face. The fact that the Netherlands scores well in cost comparisons is therefore also an important signal to foreign companies that, precisely in these times, put the accent on cost as a criterion for selecting their location.”

About KPMG

KPMG has been offering high-end services in the field of audit, tax and advisory since 1917. Internationally we are active in 155 countries and employ 155,000 people. More than three thousand partners, professionals and supporting staff are active at KPMG in the Netherlands, based in eleven offices. The Dutch head office is based in Amstelveen.

 

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