According to Dutch legislation corporations are subject to the laws of the country of establishment of such corporations. However, under particular circumstances directors of branches of foreign corporations having a branch in the Netherlands can be held personally liable under Dutch law.
Dutch legislation rules that Article 138 of the 2nd Book of the Dutch Civil Code ('C.C.'), regarding the liability of directors in case of bankruptcy, also applies to foreign companies operating in the Netherlands, whenever:
The main criterion for taxation of branches of foreign companies in the Netherlands is the presence of a permanent establishment in the Netherlands.
A company can be declared bankrupt by a Dutch Court in case it has (or has had) offices (i.e. a permanent establishment) within the Netherlands. Although such declaration of bankruptcy will not have effect in other countries, it will be sufficient for application of the liability rule of Art. 2:138 C.C. mentioned above.
A bankruptcy can be declared upon request of a creditor if the company is unable to pay him and at least one other debt appears to be outstanding.
The first paragraph of Art. 2:138 C.C. provides as follows: "On the involuntary liquidation of a company limited by shares, each managing director shall be jointly and severally liable to the estate for the amount of the liabilities to the extent that these cannot be satisfied out of the liquidation of the other assets if the management has manifestly performed its duties improperly and it may be assumed that this is an important cause of the involuntary liquidation."
As far as relevant in the present context, the remaining nine paragraphs of the article provide that:
The above also applies to local managers, i.e. those who are in charge with management of the operations in the Netherlands, even if they are not members of the Board of Management.
Under particular circumstances the director of a permanent establishment in the Netherlands of a foreign company can furthermore be held personally liable for tax debts of the company, in case such taxes are due to the Dutch tax authorities and left unpaid.
This is a subsidiary liability: the primary debtor is of course the company itself. It is also the company itself that is primarily obliged to pay the taxes.
This director's liability regards all national taxes (as opposed to local taxes), such as corporate income tax, dividend tax, wage withholding tax and VAT, yet only taxes owed by the company itself to the Dutch tax authorities.
Once the tax authorities have made the director liable for overdue taxes imposed on the permanent establishment, it is up to the director to prove that the tax debt was left unpaid for reasons not attributable to him.
A personal liability also exists with regard to payment of national insurance contributions and advance payments regarding such contributions: the manager of a permanent establishment in the Netherlands of a foreign company is jointly and severally liable for the national insurance contributions and advance contributions.
The Dutch law regarding the Trade Register provides that the person in charge with the (daily) management of a company having its registered seat outside the Netherlands is obliged to register the company properly as soon as the branch starts its operations (such as the name of the company, its registered seat outside the Netherlands, the personal data regarding the managers and members of the supervisory board of the foreign company). If such person does not fulfil this obligation, in theory he might be prosecuted for an offence for which there is a severe penalty.